1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
PENOBSCOT SHOE COMPANY,
PSC ACQUISITION CORP. AND
XXXXXXX CORPORATION
DATED AS OF OCTOBER 6, 1999
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TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.................................................................................1
Section 1.2 Company Actions...........................................................................4
Section 1.3 Directors.................................................................................6
Section 1.4 The Merger................................................................................6
Section 1.5 Effective Time............................................................................7
Section 1.6 Closing...................................................................................7
Section 1.7 Directors and Officers of the Surviving Corporation.......................................7
Section 1.9 Stockholders' Meeting.....................................................................8
Section 1.8 Merger Without Meeting of Stockholders....................................................8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock...............................................................9
Section 2.2 Exchange of Certificates..................................................................9
Section 2.3 Demanding Shares / Dissenting Shares.....................................................11
Section 2.4 Termination of Company Option Plans and Options..........................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization.............................................................................13
Section 3.2 Capitalization...........................................................................14
Section 3.3 Authorization; Validity of Agreement; Company Action.....................................15
Section 3.4 Consents and Approvals; No Violations....................................................15
Section 3.5 SEC Reports and Financial Statements.....................................................16
Section 3.6 No Undisclosed Liabilities...............................................................16
Section 3.7 Absence of Certain Changes...............................................................16
Section 3.8 Employee Benefit Plans; ERISA............................................................17
Section 3.9 Litigation...............................................................................19
Section 3.10 No Default; Compliance with Applicable Laws.............................................20
Section 3.11 Taxes...................................................................................21
Section 3.12 Property................................................................................22
Section 3.13 Environmental Matters...................................................................22
Section 3.14 Intellectual Property ..................................................................24
Section 3.15 Material Contracts......................................................................24
Section 3.16 Labor Matters...........................................................................25
Section 3.17 Restrictions on Business Activities.....................................................26
Section 3.18 Year 2000 Compliance....................................................................26
Section 3.19 Vote Required...........................................................................26
Section 3.20 Brokers.................................................................................27
Section 3.21 Opinion of Financial Advisor............................................................27
Section 3.22 Information in Proxy Statement; Schedule 14D-1..........................................27
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Section 3.23 Takeover Statutes.......................................................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 27
Section 4.1 Organization.............................................................................28
Section 4.2 Authorization; Validity of Agreement; Necessary Action...................................28
Section 4.3 Consents and Approvals; No Violations....................................................28
Section 4.4Financing.................................................................................29
Section 4.5 Information in Offer Documents; Proxy Statement; Schedule 14D-9..........................29
Section 4.6 Purchaser's Operations...................................................................29
Section 4.7 Brokers or Finders.......................................................................30
Section 4.8Ownership of the Company..................................................................30
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................................................30
Section 5.2 Access to Information....................................................................33
Section 5.3 Consents and Approvals...................................................................33
Section 5.4 No Solicitation .........................................................................35
Section 5.5Publicity.................................................................................35
Section 5.6Notification of Certain Matters...........................................................36
Section 5.7 Directors' and Officers' Insurance and Indemnification ..................................36
Section 5.8 Further Assurances ......................................................................37
Section 5.9 Fees and Expenses .......................................................................37
Section 5.10 Employee Matters .......................................................................37
Section 5.11 Takeover Statute .......................................................................39
Section 5.12 Solvency After the Closing..............................................................39
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger...............................39
Section 6.2 Conditions to Obligation of Company to Effect Merger.....................................36
Section 6.3 Condition to Obligation of Parent and Purchaser to Effect Merger.........................36
ARTICLE VII
TERMINATION
Section 7.1 Termination..............................................................................42
Section 7.2 Effect of Termination....................................................................42
Section 7.3 Payment of Non-Recommendation Termination Fee............................................42
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification...............................................................43
Section 8.2 Non-Survival of Representations and Warranties...........................................43
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Section 8.3 Notices..................................................................................44
Section 8.4 Counterparts.............................................................................45
Section 8.5 Entire Agreement; Third-Party Beneficiaries..............................................45
Section 8.6 Severability ............................................................................45
Section 8.7 Governing Law ...........................................................................45
Section 8.8 Jurisdiction ............................................................................45
Section 8.9 Assignment...............................................................................46
Section 8.10 Waiver..................................................................................47
Section 8.11 Headings ...............................................................................47
Section 8.12 Specific Performance ...................................................................47
Section 8.13 Obligations of Parent and the Company of Parent and the Company ........................47
Section 8.14 Limitations on Warranties ..............................................................47
Section 8.15 Schedules ..............................................................................48
Section 8.16 Interpretation .........................................................................48
Section 8.17 Execution ..............................................................................48
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GLOSSARY OF DEFINED TERMS
All capitalized terms used herein shall have the meanings given thereto
in this Agreement. The following capitalized terms are defined in the Section
set forth opposite such terms.
SECTION OF
DEFINED TERM DEFINED TERM
------------ ------------
Acquisition Proposal........................................................................Section 5.4(e)
Agreement.........................................................................................Preamble
Appointment Date........................................................................... Section 1.3(b)
Articles of Merger.............................................................................Section 1.5
Benefit Plans...............................................................................Section 3.8(a)
Certificates............................................................................... Section 2.2(a)
Claim.......................................................................................Section 5.79a)
Closing....................................................................................... Section 1.6
Closing Date.................................................................................. Section 1.6
Code....................................................................................... Section 2.2(d)
Company.......................................................................................... Preamble
Company Assets................................................................................Section 3.12
Company Common Stock............................................................................. Recitals
Company Material Adverse Effect................................................................Section 3.1
Company SEC Documents..........................................................................Section 3.5
Confidentiality Agreement...................................................................Section 5.2(b)
Continuing Directors........................................................................Section 1.3(a)
Demanding Common Stock........................................................................ Section 2.3
Disclosure Schedule............................................................................Article III
Dissenting Common Stock....................................................................... Section 2.3
ERISA.......................................................................................Section 3.8(a)
ERISA Affiliate.............................................................................Section 3.8(a)
Effective Time.................................................................................Section 1.5
Environmental Laws......................................................................Section 3.13(b)(i)
Environmental Liabilities.............................................................Section 3.13(b)(iii)
Environmental Permits..................................................................Section 3.13(b)(ii)
Exchange Act............................................................................... Section 1.1(a)
Expiration Date............................................................................ Section 1.1(a)
Fee.........................................................................................Section 7.3(a)
GAAP...........................................................................................Section 3.5
Governmental Entity............................................................................Section 3.4
Hazardous Substances...................................................................Section 3.13(b)(iv)
IRS.........................................................................................Section 3.8(b)
Indemnified Party...........................................................................Section 5.7(a)
Insured Parties.............................................................................Section 5.7(b)
Intellectual Property.........................................................................Section 3.14
Knowledge...................................................................................Section 3.8(e)
Liens.........................................................................................Section 3.12
MBCA....................................................................................... Section 1.2(a)
Maine Secretary............................................................................... Section 1.5
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Majority Shareholders.............................................................................Recitals
Material Contracts............................................................................Section 3.15
Maine Secretary................................................................................ Section 1.5
Material Contracts............................................................................Section 3.15
Maximum Premium.............................................................................Section 5.7(b)
Merger........................................................................................ Section 1.4
Merger Consideration....................................................................... Section 2.1(c)
Minimum Condition.......................................................................... Section 1.1(a)
Most Recent Audited Balance Sheet.............................................................Section 3.12
Multiemployer Plan..........................................................................Section 3.8(d)
Offer...................................................................................... Section 1.1(a)
Offer Documents............................................................................ Section 1.1(d)
Offer Price................................................................................ Section 1.1(a)
Offer to Purchase...........................................................................Section 1.1(b)
Option Plan....................................................................................Section 2.4
Options........................................................................................Section 2.4
Ordinary Course of Business....................................................................Section 3.6
PBGC........................................................................................Section 3.8(c)
Parent........................................................................................... Preamble
Paying Agent............................................................................... Section 1.1(e)
Payment Fund............................................................................... Section 1.1(e)
Permitted Liens...............................................................................Section 3.12
Person......................................................................................Section 2.2(a)
Potential Acquirer..........................................................................Section 5.4(b)
Proxy Statement.........................................................................Section 1.9(a)(ii)
Purchaser........................................................................................ Preamble
Purchaser Common Stock........................................................................ Section 2.1
Purchaser Material Adverse Effect..............................................................Section 4.1
Real Property..........................................................................Section 3.13(a)(ii)
Representatives.............................................................................Section 5.2(a)
Schedule 14D-1............................................................................. Section 1.1(d)
Schedule 14D-9............................................................................. Section 1.2(b)
SEC........................................................................................ Section 1.1(d)
Shares........................................................................................... Recitals
Significant Contracts.........................................................................Section 3.10
Subsidiary..................................................................................Section 3.1(a)
Superior Proposal...........................................................................Section 5.4(f)
Surviving Corporation......................................................................... Section 1.4
Tax Return.................................................................................Section 3.11(h)
Taxes......................................................................................Section 3.11(h)
Tender Agreements................................................................................ Recitals
Transactions............................................................................... Section 1.2(a)
Voting Debt.................................................................................Section 3.2(a)
Year 2000 Compliant........................................................................Section 3.18(b)
1998 Financial Statements......................................................................Section 3.5
1998 Form 10-K.................................................................................Section 3.5
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of October 6, 1999 (this
"Agreement"), by and among Xxxxxxx Corporation, a New York corporation
("Parent"), PSC Acquisition Corp., a Maine corporation and an indirect
wholly-owned subsidiary of Parent ("Purchaser"), and Penobscot Shoe Company,
a Maine corporation (the "Company").
R E C I T A L S :
WHEREAS, Parent and Purchaser have proposed acquiring all the
outstanding common stock, par value $1.00 per share, of the Company, (the
"Shares" or "Company Common Stock") at a price of $11.75 per Share in cash;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
several of the stockholders (the "Majority Stockholders") holding in the
aggregate approximately 53.33% of the outstanding shares of Company Common Stock
concurrently herewith entering into Tender Agreements (the "Tender Agreements"),
dated as of the date hereof, with Parent and Purchaser, pursuant to which, among
other things, they are agreeing to tender all of their Shares in the Offer, all
upon the terms and subject to the conditions set forth in the Tender Agreements;
and
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and Purchaser upon the terms and subject to the conditions set forth herein;
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 THE OFFER.
(a) Provided this Agreement shall not have been terminated in
accordance with Section 7.1, as promptly as practicable (but in no event later
than five (5) business days after the public announcement of the execution of
this Agreement), Purchaser shall, and Parent shall cause Purchaser to, commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), an offer (the "Offer") to purchase for cash any
and all shares of the issued and outstanding Company Common Stock at a price of
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$11.75 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer being referred to herein as the "Offer
Price"), subject to the conditions set forth herein and in Annex A attached
hereto. The Company shall not tender Shares held by it or by any of its
Subsidiaries pursuant to the Offer and the Purchaser shall not be obligated to
purchase any such Shares. The obligations of Purchaser to consummate the Offer
and to accept for payment and to pay for any Shares validly tendered on or prior
to the expiration of the Offer and not withdrawn shall be subject only to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
not less than eighty percent (80%) of the total issued and outstanding shares of
Company Common Stock on the date hereof (the "Minimum Condition") (which on this
date constitutes 1,110,633 Shares), and the other conditions set forth in Annex
A attached hereto. Except as expressly provided in Sections 1.1(b) and (c), the
Purchaser expressly reserves the right to waive any such condition, to increase
the price payable in the Offer and to make any other changes in the terms and
conditions of the Offer.
(b) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") containing the terms set forth in this Agreement, the
Minimum Condition and the other conditions set forth in Annex A attached hereto.
Unless previously approved by the Company in writing, no change may be made by
Purchaser that (i) decreases the Offer Price, (ii) changes the form of
consideration to be paid in the Offer, (iii) reduces the maximum number of
Shares to be purchased in the Offer, (iv) imposes conditions to the Offer in
addition to those set forth in Annex A, (v) amends the conditions set forth in
Annex A to broaden the scope of such conditions, (vi) extends the Offer except
as provided in Section 1.1(c), or (vii) amends or waives the Minimum Condition.
(c) Subject to the terms and conditions hereof, the initial
expiration date of the Offer shall be twenty (20) business days after the
commencement of the Offer (as extended in accordance herewith, the "Expiration
Date"), subject to extension as provided in this Section 1.1(c). Notwithstanding
anything herein to the contrary, Purchaser shall be entitled (i) to extend the
Offer (and defer the Expiration Date) for a period ending no later than ninety
(90) days after the commencement of the Offer in one or more periods of not more
than ten (10) business days each, if at any scheduled Expiration Date, any
condition to the Offer is not satisfied or waived by Purchaser; (ii) to extend
the Offer (and defer the Expiration Date) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer; and (iii) to extend
the Offer (and defer the Expiration Date) further for an additional period
ending no more than one hundred fifty (150) days (in one or more periods of not
more than ten (10) business days each) following an extension pursuant to clause
(i) of this sentence, if at the Expiration Date, as deferred pursuant to clause
(i) of this sentence, the condition to the Offer set forth in paragraph (b)(i)
of Annex A has not been satisfied or waived or the condition to the Offer set
forth in paragraph (b)(v) of Annex A has not been satisfied or waived; and (iv)
at the Expiration Date, if all conditions to the Offer have been satisfied or
waived by Purchaser, and for so long as less than ninety percent (90%) of the
outstanding shares of Company Common Stock have been validly tendered and not
properly withdrawn pursuant to the Offer, Purchaser may, in its sole discretion
and without the consent of the Company, extend the Offer (and defer the
Expiration Date) for up to an additional ten (10) business days in the aggregate
(in periods of no more than five (5) business days each). Subject to the terms
and conditions of this Agreement, if any one or more of the conditions to the
Offer set forth on Annex A (other than the Minimum Condition) are not satisfied
or waived by Parent and Purchaser at the time of any scheduled Expiration Date,
then, provided, that such conditions are and continue to be reasonably capable
of being satisfied by December 31, 1999, Purchaser shall extend the Offer in
such intervals of no less than five (5) business days each up until December 31,
1999. Any extension of the Offer in accordance herewith shall defer the
Expiration Date until the latest date to which the Offer is so extended. Subject
to the terms and conditions of the Offer and this Agreement, Purchaser shall
(and Parent shall cause
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Purchaser to) accept for payment, and pay for, all Shares validly tendered and
not withdrawn pursuant to the Offer, as promptly as practicable after the
expiration of the Offer.
(d) As soon as practicable on the date the Offer is commenced,
Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 shall include, as exhibits, the Offer to Purchase, a form of
related letter of transmittal and summary advertisement (collectively, together
with any amendments and supplements thereto, the "Offer Documents"). Parent and
Purchaser agree that they shall cause the Offer Documents to comply in all
material respects with the Exchange Act and the rules and regulations thereunder
and other applicable laws. Parent and Purchaser further agree that the Offer
Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of 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, except that no representation or warranty is made by
Parent or Purchaser with respect to information supplied by the Company or any
of its stockholders in writing specifically for inclusion or incorporation by
reference in the Offer Documents. The Company agrees that the information
provided by the Company in writing specifically for inclusion or incorporation
by reference in the Offer Documents shall 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 were made, not misleading. Each of Parent and
Purchaser shall take all steps necessary to cause the Offer Documents to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. Each of Parent
and Purchaser, on the one hand, and the Company, on the other hand, shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and Purchaser further shall take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the SEC and the Offer
Documents to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment on the Offer
Documents prior to the filing thereof with the SEC. Parent and Purchaser agree
to provide in writing to the Company and its counsel any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after receipt of such comments.
(e) Simultaneously with the execution of this Agreement,
Parent shall designate a bank or trust company (the "Paying Agent") to make
payments of the funds which holders of shares of Company Common Stock shall be
entitled as payment for their Shares which are tendered and accepted by
Purchaser or to which they otherwise become entitled to in connection with the
Merger as provided herein. Such amount shall hereinafter be referred to as the
"Payment Fund." The expenses of the Paying Agent may be paid from the Payment
Fund only to the extent of any interest that accrues thereon and to the extent
that such interest is insufficient to pay those expenses, the Parent shall pay
such expenses. Simultaneously with the execution and delivery hereof, Parent
shall take all steps necessary to deposit or cause the Purchaser to deposit with
an escrow agent, in escrow for the benefit of the Company's stockholders,
immediately available funds equal to the aggregate Offer Price for all Shares
outstanding as of the date hereof, together with the aggregate amount payable to
the holders of Options pursuant to Section 2.4. The escrow shall be established
pursuant to an Escrow
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Agreement in the form of Exhibit A annexed hereto which shall be entered into by
the escrow agent and the parties hereto at the time that the escrow is
established. The Payment Fund shall not be used for any purpose that is not
provided herein. The Paying Agent may invest, if so directed by Parent or
Purchaser, the Payment Fund in obligations of the United States government or
any agency or instrumentality thereof, or in obligations that are guaranteed or
insured by the United States government or an agency or instrumentality thereof.
Any net profit resulting from, or interest or income produced by, such
investments shall be payable to Parent or Purchaser on demand. In the event at
the end of any calendar month after the Payment Fund is deposited with the
Payment Agent, the Payment Fund shall realize a loss on any such investment,
Parent shall promptly thereafter deposit in such Payment Fund cash in an amount
necessary so that the Payment Fund will be sufficient to satisfy all of the
Purchaser's remaining obligations originally contemplated to be paid out of such
Payment Fund.
SECTION 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that (i) its Board of Directors, at a meeting duly called and
held on October 6, 1999, has, subject to the terms and conditions set forth
herein, (A) approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (collectively, the "Transactions"),
determining that the Merger is advisable and that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders and
such approval constitutes approval of the Offer, this Agreement and the Merger
for purposes of Section 611-A of the Maine Business Corporation Act (the
"MBCA"); and (B) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Purchaser and approve and
adopt this Agreement and the Merger, provided that such recommendation may be
withdrawn, modified or amended as provided in Section 5.4(d) hereof and (ii) the
restrictions on "business combinations" contained in Section 611-A of the MBCA
are inapplicable to the transactions contemplated by this Agreement and the
Tender Agreements. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of its Board of Directors described in clause
(i)(B) of the immediately preceding sentence, unless and until such
recommendation is withdrawn or modified, in a manner adverse to Parent, in
accordance with Section 5.4(d) hereof. The Company has been advised by each of
its directors and executive officers that they intend to tender or cause to be
tendered to the Purchaser pursuant to the Offer all Shares beneficially owned by
them and to vote such Shares in favor of the approval and adoption of this
Agreement and the Transactions.
(b) Concurrently with the filing of the Schedule 14D-1, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall contain the
recommendation referred to in clause (i)(B) of Section 1.2(a) hereof. The
Company shall take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of Shares to the extent required by applicable federal
securities laws. The Company agrees that it shall cause the Schedule 14D-9 to
comply in all material respects with the Exchange Act and the rules and
regulations thereunder and other applicable laws. The Company further agrees
that the Schedule 14D-9, on the date first published, sent or given to the
Company's stockholders, shall 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 were made, not misleading, except that no
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representation or warranty is made by the Company with respect to information
supplied by Parent or Purchaser in writing specifically for inclusion or
incorporation by reference in the Schedule 14D-9. Parent and Purchaser agree
that the information provided by them specifically in writing for inclusion or
incorporation by reference in the Schedule 14D-9 shall 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 were made, not misleading. Each of the
Company, on the one hand, and Parent and Purchaser, on the other hand, shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that it shall have become false or misleading in any material
respect and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment on the Schedule 14D-9 prior to the
filing thereof with the SEC. The Company agrees to provide in writing to Parent
and its counsel any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(c) In connection with the Offer, the Company shall promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish Purchaser with such information and assistance as Purchaser or its
agents may reasonably request in communicating the Offer to the stockholders of
the Company. Except for such steps as are necessary to disseminate the Offer
Documents and to consummate the Merger, and subject to the requirements of
applicable law, each of Parent and Purchaser and their agents shall hold in
confidence until the Effective Time the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, shall use such information only in connection with the Offer and
Merger and, if this Agreement shall be terminated, will deliver, and will use
their reasonable efforts to cause their agents to deliver, to the Company all
copies and any extracts or summaries from such information then in their
possession or control or to destroy the same.
SECTION 1.3 DIRECTORS.
(a) So long as this Agreement is in effect, the Company shall
not cause or permit the size of its Board of Directors to be expanded to more
than five (5) directors. Promptly upon the purchase of and payment for Shares by
Parent or Purchaser pursuant to the Offer, if the Minimum Condition has been
met, Parent shall, upon request, be entitled to designate three (3) directors to
the Company's Board of Directors. The Company shall, upon request of Purchaser
or Parent, secure the resignations of such number of its incumbent directors as
is necessary, consistent with the request of Purchaser or Parent, to enable
Parent's designees to be so elected to the Company's Board of Directors, and
shall take all actions necessary to cause Parent's designees to be so elected or
appointed. At such times, the Company will use its best efforts to cause
individuals designated by Parent to constitute the same percentage as such
individuals represent on the Company's Board of Directors on each committee of
the Board. Notwithstanding the foregoing, until the Effective Time, the Company
shall retain as members of its Board of Directors two (2) directors who are
directors of the Company on the date hereof (the "Continuing Directors");
provided, however, that upon and after satisfaction of the Minimum Condition and
subsequent to the purchase of and payment for Shares pursuant to the Offer,
Parent shall always have its designees represent at least a majority
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of the entire Board of Directors. If a Continuing Director resigns from the
Company's Board of Directors, Parent, Purchaser and the Company shall permit the
remaining Continuing Director to appoint the resigning Director's successor who
shall be deemed to be a Continuing Director. The Company's obligations under
this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. Parent or Purchaser shall supply to the
Company in writing and be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. Upon receipt of such information from Parent or
Purchaser, the Company shall include in the Schedule 14D-9 (as an annex or
otherwise) the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors (the "Appointment
Date"), the unanimous vote of the entire Board of Directors of the Company,
including the Continuing Directors, is required for the Company to: (i) amend or
terminate this Agreement, (ii) extend the time for performance of any of the
obligations or other acts of Parent or Purchaser hereunder except as otherwise
specifically permitted herein, or (iii) waive any condition of the Company's
obligations hereunder or any of the Company's rights or remedies hereunder.
SECTION 1.4 THE MERGER. Subject to the terms and conditions of this
Agreement and the provisions of the MBCA, at the Effective Time, the Company and
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Maine, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger.
Pursuant to the Merger, (x) the Articles of Incorporation of Purchaser, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation, and (y) the By-Laws of Purchaser, as
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation and such By-Laws. The Merger shall have the effects set forth
in the MBCA. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company and the Purchaser shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.5 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, Parent, Purchaser and the Company shall cause Articles
of Merger (the "Articles of Merger") be executed and filed on the date of the
Closing (or on such other date as Parent and the Company may agree) with the
Secretary of State of the State of Maine (the "Maine Secretary") as provided in
Section 903 of the MBCA (or, if permitted, Section 904 of the MBCA). The Merger
shall become effective on the date and at the time on which the Articles of
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Merger have been duly filed with the Maine Secretary or on such other date and
at such other time as the parties hereto may agree and as may be set forth in
the Articles of Merger (such time being the "Effective Time").
SECTION 1.6 CLOSING. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m., Eastern Standard Time, on a date to be specified by
the parties, which shall be as soon as practicable, but in no event later than
the third (3rd) business day after satisfaction or waiver of all the conditions
set forth in Article VI hereof (the "Closing Date"), at the offices of Xxxxx,
Oviatt, Gilman, Xxxxxxx & Xxxxxx LLP, Rochester, New York, unless another date
or place is agreed to in writing by the parties hereto.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and Chief Executive Officer of Purchaser and the officers of the
Company (other than the Chief Executive Officer) immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors, Chief
Executive Officer and other officers, respectively, of the Surviving Corporation
until their successors shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
SECTION 1.8 STOCKHOLDERS' MEETING. Notwithstanding Section 1.9 hereof:
(a) Following consummation of the Offer, if required by
applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable law and its
Articles of Incorporation and By-Laws:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders as soon as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement and use
its reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement and, after consultation with Parent,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "Proxy Statement") to be mailed to its stockholders
and (y) to obtain the necessary approvals of the Merger and this Agreement by
its stockholders; and
(iii) subject to Section 5.4(d), include in the Proxy
Statement the recommendation of the Board that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
Parent shall vote, or cause to be voted, all the Shares then owned by it,
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of this Agreement.
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SECTION 1.9 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the
foregoing, in the event that Parent or Purchaser shall acquire at least ninety
percent (90%) of the outstanding shares of Company Common Stock pursuant to the
Offer, each of the parties hereto agree to cooperate and to take all reasonable
necessary actions so that the Merger can be approved without a meeting of
stockholders of the Company, in accordance with Section 904 of the MBCA, if
possible.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $.001 per share, of
Purchaser (the "Purchaser Common Stock"):
(a) Each issued and outstanding share of the Purchaser Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $1.00 per share, of the Surviving Corporation.
(b) All shares of Company Common Stock that are owned by
Parent, Purchaser or by the Company as treasury stock immediately prior to the
Effective Time shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in connection therewith.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Shares to be cancelled in
accordance with Section 2.1(b) hereof, any shares of Demanding Common Stock and
any shares of Dissenting Common Stock) shall be converted into the right to
receive the Offer Price 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 hereof.
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 accordance with
Section 2.2 hereof, without interest, or (i) in the case of Demanding Common
Stock, the right, if any, to receive payment from Purchaser for the "fair value"
of such shares as determined in accordance with Section 910 of the MBCA or (ii)
in the case of Dissenting Common Stock, the right, if any, to receive payment
from the Surviving Corporation for the "fair value" of such shares as determined
in accordance with Section 909 of MBCA.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail 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(c) hereto into the
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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
Surviving Corporation may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration; provided, however, that such letter of transmittal shall
be substantially in the form and substance of a letter of transmittal and
instructions approved by the Company prior to the Effective Time, such approval
not to be unreasonably withheld. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
completed and validly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration (subject to subsection
(e) below) for each share of Company Common Stock formerly represented by such
Certificate 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 otherwise be 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. For purposes of this Agreement, the term "Person" shall
mean an individual, corporation, partnership, limited liability company, joint
venture, association, trust, estate, unincorporated organization or other
entity. Until surrendered as contemplated by this Section 2.2, each Certificate
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) or (A) in the case of Dissenting Common Stock, the right, if any, to
receive payment from the Surviving Corporation for the "fair value" of the
Shares in accordance with Section 909 of the MBCA and (B) in the case of
Demanding Common Stock, the right, if any, to receive payment from Purchaser for
the "fair value" of such Shares determined in accordance with Section 910 of the
MBCA.
(b) At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided for herein or by applicable law. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(c) At any time following one hundred eighty (180) days after
the Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds (including any interest received with
respect thereto) which had been made available to the Paying Agent and which
have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) as general creditors thereof
with respect to the payment of any Merger Consideration that may be payable upon
surrender of any Certificates such stockholder holds, as determined pursuant to
this Agreement, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(d) In the event that any Certificate for Shares shall have
been lost, stolen or destroyed, the Paying Agent shall issue in exchange
therefor the Merger Consideration upon the making of an affidavit of that fact
by the holder thereof; provided, however, that Parent or the Paying Agent may,
in its discretion, require the delivery of a suitable bond or indemnity.
(e) Parent, Purchaser, the Surviving Corporation and the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of Shares pursuant to the Offer or Merger such
amounts as Parent, Purchaser, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law, it being acknowledged that Parent, Purchaser,
the Surviving Corporation or the Paying Agent shall not deduct or withhold from
the consideration otherwise payable to any such holder of Shares pursuant to the
Offer or the Merger any amount with respect to which such holder has timely
delivered to Parent, Purchaser, the Surviving Corporation or the Paying Agent,
as the case may be, a properly executed Form W-9 in accordance with applicable
law. Any amounts so withheld shall be delivered to the applicable taxing
authority for the account of such holder of shares of Company Common Stock from
whom the amount was withheld. To the extent amounts are so withheld by Parent,
Purchaser, the Surviving Corporation or the Paying Agent, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the deduction and withholding was made.
SECTION 2.3 DEMANDING SHARES / DISSENTING SHARES. Notwithstanding any
provision of this Agreement to the contrary, if and to the extent required by
the MBCA, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Company Common Stock who have properly exercised demand payment rights
with respect thereto (the "Demanding Common Stock") in accordance with Section
910 of the MCBA or appraisal rights with respect thereto (the "Dissenting Common
Stock") in accordance with Section 909 of the MBCA, shall not be exchangeable
for the right to receive the Merger Consideration, and holders of such shares of
Demanding Common Stock or Dissenting Common Stock shall be entitled to receive
payment of the fair value of such shares of Demanding Common Stock or Dissenting
Common Stock in accordance with the provisions of Section 910 or Section 909,
respectively, of the MBCA unless and until such holders fail to perfect or
effectively withdraw or otherwise lose their rights to appraisal and payment
under the MBCA. If, after the Effective Time, any such holder fails to perfect
or effectively withdraws or loses such right, such shares of Demanding Common
Stock or Dissenting Common Stock shall thereupon be treated as if they had been
converted into and to have become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without any interest thereon.
Notwithstanding anything to the contrary contained in this Section 2.3, if (i)
the Merger is rescinded or abandoned or (ii) the directors or stockholders of
the Company revoke the authority to effect the Merger, then the right of any
stockholder to be paid the fair value of such stockholder's Dissenting Common
Stock pursuant to Section 909 of the MBCA shall cease. The Company shall give
Parent prompt notice of any demands received by the Company for appraisals of
shares of Dissenting Common Stock (and shall also give Parent prompt notice of
any withdrawals of such demands) and Parent shall have the right to participate
in and direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisals or offer to settle or settle
any such demands.
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SECTION 2.4 TERMINATION OF COMPANY OPTIONS AND OPTION PLAN
(a) The Company shall take all actions necessary to provide
that, effective as of the date hereof, no further options to purchase Shares
("Options") may be granted under the Company's 1991 Stock Option Plan (the
"Option Plan").
(b) The Company represents and warrants that, under the terms
of the outstanding Options, all such Options shall, as of the Effective Time, be
automatically cancelled and terminated and of no further force or effect,
provided the holders of such Options receive from the Company an amount equal to
the product of (i) the excess, if any, of the Offer Price over the exercise
price of each such cancelled and terminated Option and (ii) the number of Shares
subject thereto (such payment, if any, to be net of applicable withholding
taxes) (the "Option Price"). Prior to the Effective Time, holders of Options
outstanding on the date hereof (including those which are unvested and shall
accelerate and vest on the date of the closing of the Offer) may exercise their
Options and tender the Shares issued in connection therewith to Purchaser
pursuant to the Offer. Further, prior to the consummation of the Offer, holders
of Options outstanding on the date hereof may transfer their Options to
Purchaser and execute such documentation as Purchaser may require. In
consideration for the transfer of such Options, the Purchaser shall pay to the
holders of such transferred Options as of the consummation of the Offer an
amount equal to the Option Price for the transferred Options. The Company
represents and warrants and covenants to take such actions as may be necessary
so that as of the Effective Time, all rights and obligations of the Company and
the holder of any Option under any provision of the Option Plan (or any other
plan, program or arrangement with respect to equity securities of the Company),
any agreement entered into thereunder or any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company shall be cancelled. The Company shall promptly
deliver to Parent prior to the closing of the Offer true and complete copies of
all documentation (all of which shall be reasonably satisfactory to Parent)
ensuring that the foregoing is effected.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that the
statements contained in this Article III are correct and complete, except as set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule" or
"Schedule"). The Disclosure Schedule is arranged in numbered and lettered
sections corresponding to the numbered and lettered sections contained in this
Article III. Notwithstanding anything to the contrary contained in this
Agreement, any information disclosed in one section of the Disclosure Schedule
shall, should the existence of the information be relevant to any other section
of the Disclosure Schedule, be deemed to be disclosed with respect to such
section of the Disclosure Schedule.
SECTION 3.1 ORGANIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maine and has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be in good standing or to have such power or authority
would not have a Company Material Adverse Effect. The Company has no
Subsidiaries and does not hold any equity or other ownership interest, or any
interest convertible into or exercisable for any equity or similar interest in,
any corporation, partnership or joint venture or other business association or
entity. As used in this Agreement, the word "Subsidiary" means, with respect to
any Person any other Person of which (i) the first Person or any of its other
Subsidiaries is a general partner (excluding partnerships in which the first
Person or any of its other Subsidiaries do not have at least fifty percent (50%)
of the voting interest) or (ii) at least fifty percent (50%) of the securities
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or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such other Person is directly or indirectly owned or controlled by
the first Person and/or by any one or more of its Subsidiaries. As used in this
Agreement, the term "Company Material Adverse Effect" means any event, change or
effect (i) that is, or is reasonably expected to be, materially adverse to the
business, operations, properties, condition (financial or otherwise), assets,
liabilities (contingent or otherwise) or results of operations of the Company,
either individually or in the aggregate with similar events, changes or effects
or (ii) which impairs the ability of the Company to consummate the transactions
contemplated hereby; provided, however, that there shall be excluded from
determination of any Company Material Adverse Effect under (i) any event, change
or effect to the extent that it results from or arises from or relates to (x)
changes in the industry in which the Company operates (including legal and
regulatory changes): (y) the execution of this Agreement and the announcement of
this Agreement and the transactions contemplated hereby, including, but not
limited to, (A) any stockholder litigation brought or threatened against the
Company or any member of the Board of Directors of the Company in respect of
this Agreement, the Offer or the Merger, or (B) any reduction or termination of
orders received by the Company employees, distributors or resellers or (C) the
cessation of employment by Company employees; and (z) any change in the market
price of the Company Common Stock.
(b) The Company is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not in the aggregate have a
Company Material Adverse Effect.
(c) The Company has heretofore delivered to Parent a complete
and correct copy of each of its Articles of Incorporation and By-Laws, as
currently in effect. In all material respects, the minute books of the Company
contain accurate records of all meetings and accurately reflect all other
actions taken by the stockholders, the Boards of Directors and all committees of
the Boards of Directors of the Company. Except as set forth on Schedule 3.1(b)
attached hereto, complete and accurate copies of all such minute books and of
the stock register of the Company have been made available by the Company to the
Parent.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
2,000,000 shares of Company Common Stock. As of the date hereof, (i) 1,388,291
shares of Company Common Stock are issued and outstanding, (ii) 75,000 shares of
Company Common Stock are reserved for issuance of Options awarded under the
Option Plan, of which 16,000 shares are reserved for outstanding options that
are exercisable or will become exercisable prior to the Effective Time and (iii)
144,751.5 shares of Company Common Stock are held in the Company's treasury. All
the outstanding shares of the Company Common Stock are, and all Shares which may
be issued pursuant to the exercise of outstanding Options when issued in
accordance with the respective terms thereof shall be, duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights. The Company
does not have authorized or outstanding any bonds, debentures, notes or other
indebtedness that have voting rights (or are convertible or exchangeable into or
exercisable for securities having such rights) ("Voting Debt") on any matter
pertaining to the Company.
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(b) Except (i) as set forth above, (ii) for the Transactions
contemplated by this Agreement, and (iii) as set forth in Schedule 3.2(a), (A)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (B) there are no existing options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company, obligating the Company to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (C) there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any Shares, or capital stock of the Company or any affiliate
of the Company or to provide funds to, or make any investment in (in the form of
a loan, capital contribution or otherwise), any other Person.
(c) Schedule 3.2(c) annexed hereto sets forth the following
information: (i) all outstanding Options, (ii) the holder of each of the
Options, (iii) the Option Plan, (iv) the number of Options held by each such
holder, (v) the exercise price of each such Option, (vi) the date of grant of
such Option, (vii) the expiration date of such Option, (viii) whether such
Option has vested as of the date hereof, and (ix) whether such Option is a
non-qualified stock option or an "incentive stock option" within the meaning of
Section 422(b) of the Code.
(d) There are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of the
capital stock or equity interests of or in the Company. The Company is not
required to redeem, repurchase or otherwise acquire shares of capital stock or
other equity interests of or in the Company, as a result of the transactions
contemplated by this Agreement.
SECTION 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has full corporate power and authority to execute and deliver this
Agreement and, to consummate the transactions contemplated hereby, subject to
obtaining the approval of holders of fifty-five percent (55%) of the outstanding
Shares prior to the consummation of the Merger. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of its
stockholders as contemplated by Section 1.8 hereof in the case of the Merger.
This Agreement has been duly executed and delivered by the Company and, assuming
due and valid authorization, execution and delivery hereof by the other parties
hereto, is a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Schedule 3.4 attached hereto, and except for such filings as may be required
under the Exchange Act and with the American Stock Exchange and the filing of
the Articles of Merger, neither the execution,
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delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof shall (i) conflict with or result in
any breach of any provision of the Articles of Incorporation or By-Laws of the
Company, (ii) require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic or foreign (a "Governmental Entity"), (iii) result
in a material 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,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
similar instrument or obligation to which the Company is a party or by which it
or any of its properties or assets may be bound, (iv) violate any order, writ,
injunction or decree currently in effect and binding upon or applicable to the
Company, or contravene any statute, rule or regulation of any state or of the
United States or political subdivision thereof or therein or any foreign
government applicable to the Company or any of its properties or assets, (v)
result in the creation or imposition of any lien, claim, security interest or
other encumbrance on any of the assets of the Company, or (vi) result in the
creation or imposition of any lien, claim, security interest or other
encumbrance on any Company Common Stock, excluding from the foregoing clauses
(ii), (iii), (iv) or (v) where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings, or the existence
of such violations, breaches or defaults, would not, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it under the Exchange Act since November 11, 1997
through the date hereof (as such documents have been amended since the time of
their filing, collectively, the "Company SEC Documents"). As of their respective
dates and, if amended, as of the date of the last such amendment, the Company
SEC Documents, including, without limitation, any financial statements or
schedules included therein, 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. The financial statements of the Company
(the "1998 Financial Statements") included in the Company's Annual Report on
Form 10-K for the fiscal year ended November 27, 1998 (including the related
notes thereto) (the "1998 Form 10-K") and in the quarterly report on Form 10-Q
for the fiscal quarters occurring since the 1998 Form 10-K, have been prepared
from, and are in accordance with, the books and records of the Company comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and subject, in the case of
unaudited interim financial statements, to normal year-end adjustments and to
the absence of complete notes) and fairly present in all material respects the
financial position and the results of operations and cash flows of the Company
as at the dates thereof or for the periods presented therein. Except as
disclosed in the Company SEC Documents, the books and records of the Company
have been, and are being, maintained, in all material respects, in accordance
with GAAP and any other applicable legal and accounting requirements (subject to
normal year-end audit adjustments and the absence of notes).
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SECTION 3.6 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed or
provided for in the Company SEC Documents filed prior to the date hereof or on
Schedule 3.6 annexed hereto, (b) for liabilities and obligations incurred in the
Ordinary Course of Business consistent with past practices since November 27,
1998, and (c) for liabilities and obligations incurred in connection with the
consummation of the transactions contemplated hereby, the Company has not
incurred any liabilities or obligations of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability or obligation. "Ordinary Course of
Business" means the ordinary and usual course of business of the Company
consistent with the Company's past custom and practice, including with respect
to quantity and frequency.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company SEC Documents filed to the prior date hereof or on Schedule 3.7 annexed
hereto, since November 27, 1998, the Company has conducted its business in the
Ordinary Course of Business and there has not been (a) any change in the
financial condition, business or results of operations of the Company or the
amount, character or ownership interests of the Company's assets that resulted
in or would be reasonably expected to result in a Company Material Adverse
Effect; (b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the
outstanding capital stock of the Company; (c) any material change by the Company
in accounting principles or methods, except insofar as may have been required by
GAAP; (d) any split, combination or reclassification of shares of the Company's
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution of any outstanding
capital stock or other equity interest of the Company; (e) any entry into any
written employment agreement with, or any increase in the rate or terms of
compensation payable or to become payable by the Company to any directors,
officers or key employees; (f) any increase in the rate or terms (including,
without limitation, any acceleration of the right to receive payment) of any
bonus, insurance, pension or other employee benefit plan, payment or arrangement
made to, for or with any such directors, officers or key employees, except for
increases occurring in the Ordinary Course of Business; (g) any amendment or
restatement to the Articles of Incorporation or By-Laws of the Company; (h) any
damage or destruction or loss of property (whether or not covered by insurance)
that individually or in the aggregate would result in Company Material Adverse
Effect; or (i) any sale, lease, transfer or assignment of any assets of the
Company other than in the Ordinary Course of Business, provided that no such
sale, lease, transfer of assignment has involved any assets (other than
inventory sold in the Ordinary Course of Business) which are material or which
in the aggregate are material.
SECTION 3.8 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 3.8(a) annexed hereto contains a true and
complete list of each deferred compensation, bonus, profit sharing, stock
option, pension, incentive compensation, and equity compensation plan, welfare
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), "pension" plan,
fund or program (within the meaning of Section 3(2) of ERISA), each employment,
consulting, change in control, termination or severance agreement or policy, and
each fringe benefit, insurance, welfare, post-retirement, health, life, tuition
refund, scholarship, relocation, disability,
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accident, sick, vacation, commission, payroll practices, retention,
non-competition or any other employee benefit plan, fund, program agreement or
arrangement (whether written or unwritten, insured or self-insured)), in each
case, that is or was sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA or
Section 414(b), (c), (m) or (o) of the Code, or to which the Company or an ERISA
Affiliate is a party, for the benefit of any employee, director or stockholder
of the Company (whether current, former or retired) or their beneficiaries or to
which the Company or any ERISA Affiliate has or could reasonably be expected to
have any liability (the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has made
available to Purchaser and Parent true and complete copies of the Benefit Plan
documents, including amendments, and summary plan descriptions (or if the
Benefit Plan is not a written Benefit Plan, a description thereof), any related
trust, instruments, insurance vehicles or other instruments establishing a
funding vehicle, the three (3) most recent Form 5500 reports, financial
statements or summaries required under ERISA or the Code, the most recent
determination letter received from the Internal Revenue Service (the "IRS") with
respect to each Benefit Plan intended to qualify under Section 401 of the Code
and any communication received by or furnished to the Company or any ERISA
Affiliate from the IRS or any other governmental entity.
(c) No liability under Title IV or Section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a risk to the Company or any
ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation (the "PBGC") (which
premiums have been paid when due).
(d) No Benefit Plan is a "multiemployer pension plan," as
defined in Section 3(37) or 4001(a)(3) of ERISA, or Section 414(f) of the Code
(a "Multiemployer Plan") nor is any Benefit Plan a plan described in Section
4063(a) of ERISA.
(e) Each Benefit Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a determination letter from
the Internal Revenue Service to the effect that it is so qualified and, to the
Knowledge (as defined herein) of the Company, nothing has occurred or is
reasonably expected to occur through the Effective Time that caused or could
cause the loss of such qualification or exemption or the imposition of any
penalty or tax liability. "Knowledge" means actual knowledge after reasonable
inquiry provided that Knowledge of Persons that are not natural persons shall
mean only actual personal knowledge of such Persons' executive officers after
reasonable inquiry.
(f) No Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, or (ii) death benefits under any "pension plan".
(g) There are no pending or, to the Knowledge of the Company,
threatened or anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered
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under any such Benefit Plan, or otherwise involving any such Benefit Plan (other
than routine claims for benefits).
(h) With respect to each of the Benefit Plans on Schedule
3.8(a): (i) all payments required by any Benefit Plan, any collective bargaining
agreement or other agreement, or by-law (including, without limitation, all
contributions, insurance premiums, or inter-company charges) with respect to all
periods through the date of the Effective Time shall have been made prior to the
Effective Time or provided for by the Company as applicable, by full accruals
(as if all targets required by such Benefit Plan had been or will be met at
maximum levels) on its financial statements; (ii) no "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and Section 412 of the
Code) has been or could be reasonably expected to be incurred, whether or not
waived, and no excise or other taxes have been or could be reasonably expected
to be incurred or are due and owing with respect to the Benefit Plan because of
any failure to comply with the minimum funding standards of ERISA and the Code;
(iii) the Benefit Plan complies and has been maintained and operated in all
material respects in accordance with its terms and applicable law, including,
without limitation, ERISA and the Code; (iv) no "prohibited transaction", within
the meaning of Section 4975 of the Code and Section 406 of ERISA that has
resulted or could reasonably be expected to result in liability to the Company,
has occurred or is reasonably expected to occur with respect to the Benefit
Plan; (v) no Benefit Plan is or is reasonably expected to be under audit or, to
the Knowledge of the Company, investigation by the IRS, U.S. Department of
Labor, or any other government authority and no such completed audit, if any,
has resulted in the imposition of any Tax or penalty that has not been paid;
(vi) with respect to each Benefit Plan that is funded mostly or partially
through an insurance policy, the Company has no liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Effective Time; and (vii) there has not been an adverse change in the
financial condition of any such Benefit Plans covered under Title IV of ERISA
since the date of the latest actuarial report prepared for such plans (copies of
which have been provided to Parent and Purchaser) which would have caused a
material change in the funded status of such plans from the status as of such
date.
(i) Except as disclosed on Schedule 3.8(i) annexed hereto, the
consummation of the transactions contemplated by this Agreement will not give
rise to any liability for severance pay, unemployment compensation, termination
pay, or withdrawal liability, or accelerate the time of payment or vesting or
increase the amount of compensation or benefits due to any employee or director
of the Company (whether current, former, or retired) or their beneficiaries
solely by reason of such transactions or by reason of a termination of
employment following such transactions. Except as previously disclosed in
writing by the Company to Parent, no amounts payable under any Benefit Plan will
fail to be deductible for federal income tax purposes by virtue of Section 280G
or 162(m) of the Code. Neither the Company nor any officer or employee thereof,
has made any promise or commitment, whether legally binding or not, to create
any additional plan, agreement, or arrangement, or to modify or change any
existing Benefit Plan. No event, condition or circumstance exists that could
reasonably be expected to result in an increase of the benefits provided under
any Benefit Plan or the expense of maintaining any Benefit Plan from the level
of benefits or expense incurred for the most recent fiscal year ended before the
Effective Time. No event, condition, or circumstance exists that would prevent
the amendment or termination of any Benefit Plan in accordance with its terms
and applicable law. Neither the Company nor any ERISA Affiliate has any unfunded
liabilities
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pursuant to any Benefit Plan that is intended to be an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA and that is not intended to be
qualified under Section 401(a) of the Code.
SECTION 3.9 LITIGATION. Except as disclosed in the Company SEC
Documents filed with the SEC prior to the date hereof, there is no suit, action
or proceeding pending or, to the Knowledge of the Company, threatened against
the Company or any of its assets or its officers or directors in their
capacities as such, which individually or in the aggregate with all other such
suits, actions or proceedings is reasonably likely to have a Company Material
Adverse Effect.
SECTION 3.10 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS.
(a) Except as disclosed in the Company SEC Documents filed
with the SEC prior to the date hereof, the Company has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with any Governmental Entity that are required in
order to permit it to carry on its business as it is presently conducted, other
than those the absence of which will not have a Company Material Adverse Effect;
all such permits, licenses, certificates of authority, orders and approvals are
now in full force and effect, and, to the Knowledge of Company, no suspension or
cancellation of any of them is threatened, in each case except as would not have
a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement, and the
consummation by the Company of the Transactions will not, constitute or result
in (i) a breach or violation of, or a default under, the Articles of
Incorporation or By-Laws of the Company, (ii) a breach or violation of, or a
default under, any Benefit Plan or any grant or award made under any of the
foregoing, (iii) a breach or violation of, or a default under, the acceleration
of or the creation of a lien, pledge, security interest or other encumbrance on
assets (with or without the giving of notice or the lapse of time) pursuant to
any provision of any agreement, lease, contract, note, mortgage, indenture,
arrangement or obligation of the Company or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which the Company is subject or (iv) any change in the
rights or obligations of any party under any of the contracts described in
clause (ii) or (iv) above, except for such breaches, violations, defaults,
accelerations or changes that would not have a Company Material Adverse Effect.
SECTION 3.11 TAXES.
(a) The Company has (i) duly filed (or there has been filed on
their behalf) with the appropriate governmental authorities (x) all federal
income Tax Returns required to be filed by it on or prior to the date hereof and
(y) all other Tax Returns required to be filed by it on or prior to the date
hereof, other than such other Tax Returns the failure of which to file would not
have a Company Material Adverse Effect, and such Tax Returns are true, correct
and complete in all material respects, and (ii) duly paid in full or made
provision in accordance with GAAP (or there has been paid or provision has been
made on its behalf) for the payment of all Taxes shown to be due on such Tax
Returns.
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(b) No federal, state or local audits, actions, suits,
proceedings, investigations, claims or assessments are presently pending or
proposed in writing with regard to any Taxes or Tax Return of the Company.
(c) There are no outstanding written consents to extend the
statutory period of limitations applicable to the assessment of any federal
income Taxes or other material Taxes or deficiencies against the Company and no
power of attorney granted by the Company with respect to any Taxes is currently
in force.
(d) The Company (i) is not a party to any written or oral
agreement with any third party providing for the allocation or sharing of Taxes
or (ii) cannot have any liability or entitlement under any such agreement to
which it previously was a party.
(e) Complete copies of (i) Tax Returns for the Company and
(ii) state and local income Tax and other Tax Returns of the Company for each of
the years ended 1996, 1997 and 1998 have heretofore been made available to
Parent and Purchaser.
(f) (i) All amounts required to be collected or withheld by
the Company with respect to Taxes have been duly collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly remitted, (ii) there are no Tax rulings, requests for rulings, refund
claims, closing agreements or changes of accounting method relating to the
Company that could materially affect its liability for Taxes of the Company due
for any period after the Effective Time, (iii) the Company has not filed a
consent under Section 341(f) of the Code or any comparable provisions of state
revenue statues, and (iv) the Company will not be required to include in a
taxable period ending after the Effective Time taxable income attributable to a
prior taxable period that was not recognized in that taxable period as a result
of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or local
or foreign tax law;
(g) Since at least October 5, 1993, the Company has not been
treated as a member of a consolidated group for income Tax reporting purposes.
(h) "Taxes" shall mean any and all taxes, charges, fees,
levies, customs, duties, imposts or other assessments, including, without
limitation, income, gross receipts, excise, real or personal property, sales,
withholding, social security, occupation, use, service, service use, license,
net worth, payroll, franchise, transfer and recording taxes, fees and charges,
ad valorem, value added, asset, license, transaction, capital, estimated,
employment, workers compensation, utility, severance, production, unemployment
compensation, premium, windfall profits and gains taxes imposed by the United
States Internal Revenue Service or any taxing authority (domestic or foreign),
including, without limitation, any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (domestic or
foreign) with respect to Taxes.
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SECTION 3.12 PROPERTY. The Company has good and marketable title to, or
a valid leasehold interest in, all properties, assets and rights of any kind
whatsoever (whether real, personal or mixed, and whether tangible or intangible)
(collectively, the "Company Assets") used by it, located on its premises or
shown in the balance sheet of the Company dated November 27, 1998 included in
the Company SEC Documents ("Most Recent Audited Balance Sheet"), in each case
free and clear of any mortgage, security interest, deed of trust, claim, charge,
title defect, lease, adverse interest or other lien, encumbrance or interest
(collectively, "Liens"), except as shown on the Most Recent Audited Balance
Sheet (the "Permitted Liens"). Except as otherwise disclosed by the Company to
Parent and Purchaser in writing on or prior to the date hereof, there are no
pending or, to the Knowledge of the Company, threatened condemnation proceedings
against or affecting any Company Assets and none of such Company Assets is
subject to any commitment or other arrangement for its sale to a third party
outside the Ordinary Course of Business.
SECTION 3.13 ENVIRONMENTAL MATTERS.
(a) To the Company's Knowledge, except as set forth in
Schedule 3.13(a) annexed hereto, the Company SEC Documents filed with the SEC
prior to the date hereof:
(i) the Company has not received any written
communication from any Person (including any Governmental Entity) stating or
alleging that the Company is a potentially responsible party or is otherwise
liable under any applicable Environmental Law with respect to any actual or
alleged environmental contamination which remains unresolved or outstanding,
other than any liabilities that, individually or in the aggregate, would not be
reasonably expected to have a Company Material Adverse Effect; and the Company
has not received any request for information from any Governmental Entity or any
other Person with respect to any actual or alleged environmental contamination
or non-compliance with Environmental Laws other than with respect to matters
that, individually or in the aggregate, would not be reasonably expected to have
a Company Material Adverse Effect;
(ii) all current and past operations of the Company,
including any operations at or from any property that is currently or was
formerly owned, leased or operated by the Company ("Real Property") comply with
and have at all times complied with all applicable Environmental Laws in effect
as of the date hereof, except where the failure to be in compliance would not
have a Company Material Adverse Effect;
(iii) excluding any nonfriable asbestos, the Real
Property contains no Hazardous Substances on, at or under it, nor have any
Hazardous Substances migrated from the Real Property upon or beneath other
properties in concentrations which would presently violate any applicable
Environmental Law in effect as of the date hereof or would be reasonably likely
to result in the imposition of Environmental Liabilities on the Company, or the
Real Property under any applicable Environmental Law in effect as of the date
hereof, including any liability or obligation for the investigation, corrective
action, remediation or monitoring of Hazardous Substances on, under, at or from
the Real Property, except with respect to violations or Environmental
Liabilities that would not have a Company Material Adverse Effect;
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(iv) the Company has been and is in full compliance
with the terms and conditions of all Environmental Laws (including compliance
with all Environmental Permits which are required under applicable Environmental
Laws), except where the failure to be in compliance would not, individually or
in the aggregate, have a Company Material Adverse Effect; and
(v) no Hazardous Substance has been disposed of,
transferred, released or transported by the Company or any of its Subsidiaries
from any of the Real Property during the time such Real Property was owned or
operated by the Company, other than as would not have a Company Material Adverse
Effect and allowed under applicable Environmental Law at the time the disposal,
transfer, release or transportation occurred and other than disposal at
commercial or municipal disposal sites that are not presently listed on the
CERCLA National Priorities List or any equivalent state list.
(b) (i) For purposes of this Section 3.13, "Environmental
Laws" means all applicable foreign, state, federal and local laws and the
applicable common law, regulations and rules, ordinances, codes, judgments,
decrees and orders relating to health, safety, or the pollution, preservation or
protection of the environment, including the release of Hazardous Substances
into the environment.
(ii) For the purposes of this Section 3.13,
"Environmental Permits" means the permits, licenses, authorizations and
approvals required or issued under any Environmental Law which are necessary for
the conduct of the Company's businesses and for the operations on, in or at, the
assets of the Company and the Real Property;
(iii) For the purposes of this Section 3.13,
"Environmental Liabilities" means any claims, judgments, damages (including
punitive damages), losses, penalties, fines, liabilities, encumbrances, Liens,
violations, costs and expenses (including attorneys' and consultants' fees) of
investigation, remediation, monitoring or defense of any matter, which (A) are
incurred as a result of (1) the existence of Hazardous Substances in, on, over,
under, at or emanating from any Real Property, (2) the offsite transportation,
treatment, storage or disposal of Hazardous Substances generated by the Company,
(3) the violation of or non-compliance with any Environmental Laws or (B) arise
under the Environmental Laws; and
(iv) For the purposes of this Section 3.13,
"Hazardous Substances" means any petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead-based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, pesticides, and any chemicals, materials
or substances regulated under any Environmental Law, or defined as or included
in the definition of "hazardous substances", "extremely hazardous substances",
"hazardous materials", "hazardous constituents", "toxic substances",
"pollutants", "contaminants", or any similar denomination intended to classify
or regulate such chemicals, materials or substances by reason of their toxicity,
carcinogenicity, ignitability, corrosivity or reactivity or other
characteristics under the Environmental Laws.
SECTION 3.14 INTELLECTUAL PROPERTY. The Company owns all rights in, or
possesses adequate licenses or other valid rights to use, all Intellectual
Property that is used in the conduct of its business in the manner in which it
is presently being conducted. The Company has not
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received any written notice that its rights in its Intellectual Property have
been declared unenforceable or otherwise invalid by any court or Governmental
Entity. To the Company's Knowledge, there is no existing infringement, misuse,
or misappropriation of any Intellectual Property by others that is material to
the business of the Company or which is reasonably likely to impose material
liability on the Company. The Company has not received any written notice
alleging that the operation of its business infringes in any material respect
upon the rights of others in any Intellectual Property. For purposes of this
Agreement, "Intellectual Property" shall mean: trademarks, service marks, brand
names, certification marks, trade dress, assumed names, trade names and goodwill
associated with the foregoing and registrations or applications for registration
relating thereto; patents, applications for patents (including, but not limited
to, divisions, continuations, continuations-in-part and renewal applications),
and any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not, know-how; and all rights to the
foregoing.
SECTION 3.15 MATERIAL CONTRACTS. The Company has filed as an exhibit to
its Annual Report on Form 10-K or another Company SEC Document all contracts to
which the Company is a party or by which any of their respective properties or
assets may be bound that are or would be required to be filed in an exhibit to
an Annual Report on Form 10-K filed by it with the SEC as of the date of this
Agreement (collectively, the "Material Contracts"). Except for the Material
Contracts, the Company is not a party to any other contract, agreement or
written understanding that is material to the Company or its business,
operations, assets, financial performance, financial conditions or prospects.
Each of the Material Contracts is valid and enforceable against the Company
and/or the Company Assets, as applicable, in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general
applicability, now or hereafter in effect, affecting creditors' rights, and the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. Neither the Company, nor,
to the Knowledge of the Company's executive officers, any other party, is in
breach of or in default under any Material Contract, and no event has occurred
that, with the lapse of time or the giving of notice or both, would constitute a
default thereunder by the Company or, to the Knowledge of the Company's
executive officers, any other Party, except for any such unenforceability,
default or event which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect. No party to any Material
Contract has given notice to the Company of, or made a claim against the Company
with respect to, any breach or default thereunder, in any such case in which
such breach or default, individually or in the aggregate, is reasonably likely
to have a Company Material Adverse Effect.
SECTION 3.16 LABOR MATTERS. There are no controversies pending or, to
the Knowledge of the Company, threatened between the Company and any of its
employees, which controversies are reasonably likely to have a Company Material
Adverse Effect. The Company is not involved in or threatened with any material
labor dispute, grievance or litigation or investigation by a Governmental Entity
relating to wages, labor, safety or discrimination or other matters involving
any person employed by the Company, including, without limitation, charges of
unfair labor practices or discrimination complaints except for any such dispute,
grievance, litigation or investigation that would not be reasonably likely to
have a Company Material Adverse Effect.
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The Company has not engaged in any unfair labor practices within the meaning of
the National Labor Relations Act or similar such legislation of foreign
jurisdictions in a manner that would be reasonably likely to have a Company
Material Adverse Effect. The Company is not presently a party to, or bound by,
any collective bargaining agreement or union contract with respect to any
persons employed by the Company, and no collective bargaining agreement is being
negotiated by the Company. The Company does not have any Knowledge of any
current or pending strikes, slowdowns, work stoppages or lockouts, or threats
thereof, by or with respect to any employees of the Company, and there have been
no such strikes, slowdowns, work stoppages or lockouts within the past three (3)
years. The Company is and has operated its business in compliance in all
material respects with all laws, regulations and orders relating to employment
and employment practices, including, but not limited to, the Occupational Safety
and Health Act, the Immigration Reform and Control Act and the Worker Adjustment
and Retraining Notification Act and laws relating to wages, workers'
compensation, employment discrimination, equal employment opportunity,
affirmative action, employee privacy, wrongful or unlawful termination and
unemployment insurance or similar such legislation of foreign jurisdictions,
except where the failure to be in compliance would not have a Company Material
Adverse Effect.
SECTION 3.17 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon the Company which
materially prohibits or impairs any business or operations of the Company.
SECTION 3.18 YEAR 2000 COMPLIANCE.
(a) To the Knowledge of the Company and except as set forth in
the Company SEC Documents filed as of the date hereof, the computer systems of
the Company which are material to the conduct of the business of the Company
will not cause a Company Material Adverse Effect as a result of not being Year
2000 Compliant. The computer systems of the Company have the ability to
interface properly and will continue to interface properly with internal and
external applications and systems of third parties with which the Company
exchange data electronically whether or not they are Year 2000 Compliant. The
Company has provided Parent and Purchaser with access to true, complete and
accurate descriptions in reasonable detail of remedial or other work performed
to date in order to ensure Year 2000 Compliance by the Company and a description
in reasonable detail of the balance of the work to be performed to ensure Year
2000 Compliance by the Company. In addition, the Company has provided Parent and
Purchaser with access to true, complete and accurate copies of materials
provided to it by third party vendors with respect to the Year 2000 Compliance
of such parties with respect to the operations of the Company.
(b) The term "Year 2000 Compliant" as used herein means that
the computer systems (i) are capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date related data for
dates earlier and later than January 1, 2000, including calculating, comparing,
sorting, storing, tagging and sequencing, without resulting in or causing
logical or mathematical errors or inconsistencies in any user-interface
functionalities or otherwise, including data input and retrieval, data storage,
data fields, calculations, reports, processing or any other input or output;
(ii) have the ability to provide date recognition for any data element without
limitation (including date-related data represented without a century
designation, date-related data whose year is represented by only two digits and
date fields
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assigned special values); (iii) have the ability to function accurately into and
beyond the year 2000; (iv) have the ability to interpret data, dates and time
correctly into and beyond the year 2000; (v) have the ability to maintain
existing information without corrupting such data into and beyond the year 2000;
(vi) have the ability to process correctly after January 1, 2000 data containing
dates before that date; and (vii) have the ability to recognize all leap year
dates, including February 29, 2000.
SECTION 3.19 VOTE REQUIRED. The affirmative vote of the holders of
fifty five percent (55%) of all outstanding shares of Company Common Stock is
required to approve this Agreement and the Merger, and such vote is the only
vote of the holders of any series or class of common stock required to approve
and adopt the plan of merger in this Agreement and to approve the Merger.
SECTION 3.20 BROKERS. The Company shall not be obligated to pay any
brokerage or finder's fee to any agent, broker, finder, investment banker or
financial advisor or other firm or Person or any other commission or similar fee
in connection with the transactions contemplated by this Agreement, except to
Advest, Inc. in accordance with Schedule 3.20 annexed hereto and subject to
Section 5.9.
SECTION 3.21 OPINION OF FINANCIAL ADVISOR. The Company's Board of
Directors has obtained an opinion from Advest, Inc., financial advisor to the
Board, that as of the date of such opinion, the consideration to be received by
the holders of the Company Common Stock (other than Parent and its affiliates)
in the Offer and the Merger, taken together, is fair, from a financial point of
view, to such stockholders.
SECTION 3.22 INFORMATION IN PROXY STATEMENT; SCHEDULE 14D-1. None of
the information supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement (if any) or the Schedule 14D-1 shall, at the
date mailed to stockholders and at the time of the meeting of stockholders (if
any) to be held in connection with the Merger, 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 3.23 TAKEOVER STATUTES. The Company's Board has taken all
appropriate and necessary action to approve the transactions contemplated by
this Agreement such that Section 611-A of the MBCA will not apply to the Offer,
the Merger, this Agreement, the Tender Agreements or any other transactions
contemplated hereby or thereby; to the Company's Knowledge, except for Section
910 of the MBCA, no other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation under the laws
of the state of Maine is applicable to the Company, the Shares, the Offer, the
Merger, this Agreement, the Tender Agreements or the transactions contemplated
hereby or thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to the
Company as follows:
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SECTION 4.1 ORGANIZATION. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power or authority would not have
a Purchaser Material Adverse Effect. As used in this Agreement, "Purchaser
Material Adverse Effect" means any event, change or effect that is or reasonably
expected to be materially adverse to the assets, liabilities (contingent or
otherwise) or condition (financial or otherwise) of Parent or Purchaser and
their respective Subsidiaries, taken as a whole, or which impairs the ability of
Parent or Purchaser to perform their respective obligations hereunder, except
that there shall be excluded from any determination of such definition any
event, change or effect any stockholder litigation brought or threatened against
Parent or Purchaser or any of their respective officers or directors as a result
of this Agreement and the transactions contemplated hereunder. Parent and
Purchaser are duly qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, in the aggregate, have a Purchaser Material Adverse
Effect.
SECTION 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of Parent and Purchaser has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Parent and Purchaser of this
Agreement, and the consummation by them of the transactions contemplated hereby,
have been duly authorized by the Boards of Directors of Parent and Purchaser and
no other corporate action on the part of Parent and Purchaser is necessary to
authorize the execution and delivery by Parent and Purchaser of this Agreement
and the consummation by them of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Purchaser, as the
case may be, and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
Purchaser, as the case may be, enforceable against them in accordance with its
respective terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings
as may be required under the Exchange Act or with the American Stock Exchange
and the filing of the Articles of Merger, neither the execution, delivery or
performance of this Agreement by Parent and Purchaser nor the consummation by
Parent and Purchaser of the transactions contemplated hereby nor compliance by
Parent and Purchaser with any of the provisions hereof shall (i) conflict with
or result in any breach of any provision of the respective Certificate of
Incorporation or By-Laws or similar organizational documents of Parent or
Purchaser, (ii) require on the part of Parent or Purchaser any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
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,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Purchaser is a party or by
which any of them or any of their properties or assets may be bound,
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except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained, or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent or Purchaser or any of their properties
or assets, excluding from the foregoing clauses (ii), (iii) or (iv) where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings, or the existence of such violations, breaches or defaults, would
not individually or in the aggregate, have a Purchaser Material Adverse Effect.
SECTION 4.4 FINANCING. Upon the execution hereof and at the expiration
of the Offer and at the Effective Time, Parent and Purchaser will have available
all the funds necessary for the acquisition of all Shares and to perform their
respective obligations under this Agreement, including the payment in full for
all Shares validly tendered in the Offer or outstanding as of the Effective Time
and will have deposited such funds under the Escrow Agreement.
SECTION 4.5 INFORMATION IN OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE
14D-9. None of the information supplied by Parent or Purchaser for inclusion or
incorporation by reference in the Offer Documents, Proxy Statement or the
Schedule 14D-9 shall, at the respective times that the Offer Documents, Proxy
Statement and Schedule 14D-9 are mailed to stockholders and at the time of the
meeting of stockholders (if any) to be held in connection with the Merger,
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 4.6 PURCHASER'S OPERATIONS. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
SECTION 4.7 BROKERS OR FINDERS. Parent represents, as to itself and
Purchaser, that no agent, broker, investment banker, financial advisor or other
firm or Person is or shall be entitled to any brokers' or finders' fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
SECTION 4.8 OWNERSHIP OF THE COMPANY. As of the date hereof, neither
Parent nor Purchaser, nor any Subsidiary of Parent, is the beneficial owner of
any shares of Company Common Stock.
ARTICLE V
COVENANTS
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY.
(a) The Company covenants and agrees that, except as
contemplated by this Agreement or as consented to in writing by Parent or
Purchaser, the business of the Company shall be conducted only in the Ordinary
Course of Business, subject to the following additional restrictions and
requirements:
(i) the Company shall not, directly or indirectly,
(A) sell, transfer or pledge or agree to sell, transfer or pledge any Company
Common Stock or any capital stock or
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other securities of the Company or capital stock or any other securities
beneficially owned by it, either directly or indirectly; (B) amend or cause to
be amended its Articles of Incorporation or By-Laws; or (C) split, combine or
reclassify the outstanding Company Common Stock;
(ii) the Company shall not: (A) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; (B) issue, sell, 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 other property or
assets, other than shares of Company Common Stock reserved for issuances
pursuant to the exercise of Options outstanding on the date hereof; (C)
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
right to any trademark, service xxxx or trade name owned by it or over which it
has any right whatsoever; (D) transfer, lease, license, sell, mortgage, pledge,
dispose of, purchase, acquire or encumber any (1) real property or (2) any
personal property having an aggregate fair market value of $100,000 in a single
transaction or a series of related transactions, other than purchases of
inventory and sales of products in the Ordinary Course of Business and permitted
capital expenditures; (E) incur or modify any indebtedness or other liability,
provided, however, that the Company may make borrowings under the Company's
existing line of credit solely for working capital purposes, provided the
aggregate borrowings outstanding under such line do not at any time exceed
$2,600,000; (F) authorize or make any capital expenditures in excess of $50,000
individually and $100,000 in the aggregate; or (G) redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(iii) the Company shall not modify, amend or
terminate any of its Material Contracts or Benefit Plans or waive, release or
assign any rights or claims under any Material Contract or settle or compromise
any material litigation;
(iv) the Company shall not permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent;
(v) the Company shall not: (A) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; (B) make any
loans, advances or capital contributions to, or investments in, or acquisitions
of, any other Person; or (C) enter into any commitment with respect to any of
the foregoing (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets);
(vi) the Company shall not change any of the
accounting methods used by it unless required by a change in law or GAAP or take
any action, other than reasonable and usual actions in the Ordinary Course of
Business, with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
(vii) the Company shall not adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company (other than the Merger);
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(viii) make any election or settle or compromise any
material federal, state, local or foreign income tax liability;
(ix) pay, discharge or satisfy any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, of liabilities
reflected or reserved against in the Company's balance sheet dated November 27,
1998 as the same may become due and payable by its terms, or subsequently
incurred in the Ordinary Course of Business;
(x) the Company shall not take, or agree to commit to
take, any action that would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time prior
to, the Effective Time (except for representations made as of a specific date);
(xi) except as required under Section 2.4, the
Company shall not amend or change the period (or permit any acceleration,
amendment or change) of exercisability of Options granted under any Option Plan
or authorize cash payments in exchange for any Options;
(xii) the Company shall not increase the compensation
payable or to become payable to its officers, directors or key employees, except
in the Ordinary Course of Business or pursuant to obligations under written
agreements existing as of the date hereof;
(xiii) except as required by applicable law, the
Company shall not except in the Ordinary Course of Business (i.e. pursuant to
the Severance policy or practice of the Company existing on the date hereof as
disclosed in Schedule 5.1(a)(xiii) annexed hereto), grant any severance or
termination pay to, or enter into or amend any employment or severance agreement
with, any director or officer of the Company or establish, adopt, enter into, or
accelerate, terminate or amend any Benefit Plan;
(xiv) the Company shall use commercially reasonable
efforts to preserve intact the business organizations, goodwill, rights,
licenses, permits and franchises of the Company and maintain its existing
relationships with customers, suppliers and other Persons having business
dealings with it; and
(xv) the Company shall not announce an intention,
enter into any formal or informal agreement or otherwise make a commitment to do
any of the foregoing.
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SECTION 5.2 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, upon
reasonable notice and during normal business hours, the Company shall afford to
the officers, employees, accountants, consultants, counsel, and other
representatives (collectively, "Representatives") of Parent, reasonable access
to all its properties, books, contracts, commitments and records (including tax
returns), and the Company shall furnish promptly to Parent, at the sole expense
of Parent (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws and (ii) all other information concerning its
business, properties and personnel as Parent may reasonably request.
(b) Between the date hereof and the Effective Time, the
Company shall furnish to Parent (i) such financial statements as it regularly
and customarily provides to its Board of Directors on a monthly basis,
concurrent with the provision of such statements to the Board of Directors, (ii)
within ten (10) business days following preparation thereof (and in any event
within twenty (20) business days after the end of each fiscal quarter) an
unaudited balance sheet as of the end of such quarter and the related statements
of earnings, stockholders' equity and cash flows for the quarter then ended,
with condensed notes to such financial statements, and (iii) within ten (10)
business days following preparation thereof (and in any event within ninety (90)
calendar days after the end of each fiscal year) an audited balance sheet as of
the end of such year and the related statements of earnings, stockholders'
equity (deficit) and cash flows, all of such financial statements referred to in
clauses (i), (ii) and (iii) to be prepared in accordance with generally accepted
accounting principles in conformity with the practices consistently applied by
the Company with respect to such financial statements.
(c) Parent shall hold, and shall cause its Representative to
hold, any such documents or information which are nonpublic in confidence in
accordance with the provisions of the Confidentiality Agreement, dated September
21, 1999, between the Company and Parent (the "Confidentiality Agreement").
(d) No investigation by Parent, Purchaser or any of their
respective Representatives shall affect any representation or warranty of
Company in this Agreement or of any party to the Tender Agreements or any
condition to the obligations of Parent or Purchaser hereunder.
SECTION 5.3 CONSENTS AND APPROVALS. Each of the Company, Parent and
Purchaser shall use reasonable efforts to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby and shall promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them in connection with this Agreement and the transactions contemplated
hereby. Each of the Company, Parent and Purchaser shall use reasonable efforts
to promptly obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Purchaser or the Company in connection with the
Merger or the taking of any action contemplated or by this Agreement. In
addition, no party hereto shall take any action after the date hereof that would
reasonably be expected to materially delay the obtaining of, or result in not
obtaining, any permission, approval or consent from any Governmental Entity or
other Person necessary to be obtained prior to Closing.
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SECTION 5.4 NO SOLICITATION.
(a) The Company shall not, and shall use its best efforts to
cause its officers, directors, employees and investment bankers, attorneys or
other agents retained by or acting on behalf of the Company not to, (i)
initiate, solicit or encourage (including by way of furnishing non-public
information), directly or indirectly, any inquiries or the making of any
proposal or offer that constitutes or is reasonably likely to lead to any
Acquisition Proposal, (ii) except as permitted by Section 5(b) below, engage in
negotiations or discussions with, or furnish any information or data to any
third party relating to an Acquisition Proposal, or (iii) enter into any
agreement with respect to any Acquisition Proposal or approve any Acquisition
Proposal. The Company will also promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return or destroy all non-public information furnished
to such Person by or on behalf of the Company. The Company shall, and shall
cause its directors, officers, employees, financial advisors and other agents or
representatives to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted heretofore with
respect to any Acquisition Proposal.
(b) Notwithstanding Section 5.4(a), the Company and its Board
of Directors and its Representatives (i) may participate in discussions or
negotiations (including, as a part thereof, making any counterproposal) with or
furnish information to any third party (a "Potential Acquirer") making an
unsolicited Acquisition Proposal (which occurred without a breach of Section
5.4(a)) if the Board determines in good faith, upon the advice of its
independent legal counsel, that the failure to participate in such discussions
or negotiations or to furnish such information would be inconsistent with the
Board's fiduciary duties under applicable law, and (ii) shall be permitted to
take and disclose to the Company's stockholders a position with respect to any
tender or exchange offer by a Potential Acquirer, or amend or withdraw such
position, pursuant to Rules 14d-9 and 14e-2 of the Exchange Act, provided that
the Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender or exchange offer unless the Board of
Directors of the Company determines in its good faith judgment, upon the advice
of its independent outside legal counsel, that failing to take such action would
be inconsistent with the Board's fiduciary duties under applicable law.
(c) In the event that the Company shall receive any
Acquisition Proposal or the Company has received any request for nonpublic
information relating to the Company or for access to the properties, books or
records of the Company, by any Person that the Company has Knowledge is
considering making, or has made, an Acquisition Proposal, then it shall promptly
inform Parent in writing as to that fact and shall furnish to Parent the
identity of the Potential Acquirer and, if any Acquisition Proposal has been
made, the terms of such Acquisition Proposal (including a copy of any writing
containing such terms submitted by the Potential Acquirer). The Company agrees
not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.
Notwithstanding the foregoing, the Company shall not engage in negotiations
with, or disclose any nonpublic information to, any such Person unless it
receives from such Person an executed confidentiality agreement with terms no
less favorable to the Company than the Confidentiality Agreement entered into
with Parent and Purchaser. The Company will promptly provide to Parent any
non-
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public information concerning the Company provided to any other person which was
not previously provided to Parent.
(d) The Board of Directors of the Company shall not (i) withdraw or
modify or propose to withdraw or modify, in any manner adverse to Parent or
Purchaser, the approval or recommendation of such Board of Directors of this
Agreement, the Offer or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, the
Company's Board of Directors may withdraw or modify or propose to withdraw or
modify its recommendation of this Agreement, the Offer or the Merger, recommend
or propose to recommend an Acquisition Proposal or terminate this Agreement
pursuant to Section 7.1(e) and thereafter enter into an agreement in connection
with such Acquisition Proposal if, in each case, the Board determines in good
faith, upon the advice of its independent legal counsel, that in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law it is necessary for the Board to withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger, approve or recommend
such Acquisition Proposal or terminate this Agreement and enter into another
agreement as described above. The Company shall provide at least five (5)
business days advance notice to Parent to the effect that it is taking such
action.
(e) For purposes of this Agreement, "Acquisition Proposal"
shall mean any bona fide offer or proposal, whether in writing or otherwise,
made by a third party or group of third parties to acquire beneficial ownership
(as defined under Rule 13(d) of the Exchange Act) of all or a material portion
of the assets of, or any equity interest in, the Company pursuant to a merger,
consolidation or other business combination, recapitalization, sale of shares of
capital stock, sale of assets, tender offer or exchange offer or similar
transaction involving the Company (other than the transactions contemplated by
this Agreement).
SECTION 5.5 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release reasonably acceptable
to Parent and the Company. Thereafter, until the earlier of the Appointment Date
or the date on which this Agreement is terminated in accordance with its terms,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release (or make any written public
statement or verbal statement on a conference call with analysts) with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without notifying in advance the other party, except as may be required by law
or by any listing agreement with a national securities exchange.
SECTION 5.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence of which would cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Appointment Date, (ii) any material failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant or agreement
to be complied with or satisfied by it hereunder, and (iii) the occurrence or
failure to occur of an event or condition that would cause any condition to the
consummation of the Offer or the Merger not to be satisfied. The parties agree
and acknowledge that the delivery of any notice pursuant to this Section 5.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
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(a) From and for a period five (5) years after the Effective
Time, Parent shall cause the Surviving Corporation to indemnify, defend and hold
harmless (and shall also cause the Surviving Corporation to advance expenses as
incurred to the fullest extent permitted under applicable law, to the Company's
Articles of Incorporation and By-Laws and provided that the person to whom
expenses are advanced provides to the Surviving Corporation an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification) any person who is now, or has been at any time
prior to the Effective Time, an officer or director of the Company (the
"Indemnified Party") against all losses, claims, damages, liabilities, costs and
expenses (including attorneys' fees and expenses), judgments, fines, losses, and
amounts paid in settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a "Claim") to the extent that any
such Claim is based on, or arises out of, (i) the fact that such person is or
was a director or officer of the Company or is or was serving at the request of
the Company as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement, or any of the
transactions contemplated hereby or thereby, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or occurring prior
to or at the Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the extent provided in the
Company's Articles of Incorporation or By-Laws in effect at the date hereof,
provided that such indemnification obligations shall be subject to all the
procedures and limitations imposed from time to time by applicable law.
(b) From and for a period of five (5) years after the
Effective Time, Parent will maintain or shall cause the Surviving Corporation to
maintain in effect policies of directors' and officers' liability insurance with
reputable and financially sound carriers covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "Insured Parties ") containing
terms and conditions which are no less advantageous to the Insured Parties than
those that are contained in the Company's directors' and officers' policy
currently in effect; provided, however, that neither Parent nor the Surviving
Corporation shall be required to expend on an annual basis in excess of one
hundred fifty percent (150%) of the annual premium currently paid by the Company
for such coverage (the "Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall, or shall cause the Surviving Corporation to,
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium; provided further,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available run-off insurance policies with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
Section 5.7(b), does not exceed the Maximum Premium.
SECTION 5.8 FURTHER ASSURANCES. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its respective
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. If at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall use their respective reasonable efforts to
take or cause to be taken all such necessary action, including, without
limitation, the execution and delivery of such further instruments and documents
as may be reasonably requested by the other party for such purposes or otherwise
to consummate and make effective the transactions contemplated hereby. Subject
to the terms and conditions of this Agreement, Parent and Purchaser agree to use
reasonable efforts to cause the Effective Time to occur as soon as practicable
following consummation of the Offer, subject to compliance with applicable law.
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SECTION 5.9 FEES AND EXPENSES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. The Company agrees that all
reasonable and documented legal, accounting, advisory, investment banking,
brokerage and agency fees and expenses that have been or will be incurred by it
in connection with this Agreement and the transaction contemplated hereby will
be paid in full upon or immediately prior to the consummation of the Offer and
Merger.
SECTION 5.10 EMPLOYEE MATTERS.
Purchaser shall cause the Surviving Corporation to treat
service with the Company prior to the Effective Time by each employee of the
Company in the same manner as service with the Company is treated for
eligibility and vesting purposes (and excluding benefit accrual purposes,
including, without limitation, benefit service under any defined benefit pension
plan) under any benefit plan of Company in which any such employee is eligible
to participate following the Effective Time and which Purchaser elects, in its
sole discretion, to continue or as Purchaser otherwise deems appropriate for any
new benefits established by the Surviving Corporation for the Company's
employees who become employed by the Surviving Corporation; provided, however
that nothing in this Section 5.10 shall obligate Purchaser or the Surviving
Corporation to (i) make any particular benefit plan or benefit available to any
such employee, (ii) continue any particular benefit plan or benefit or (iii)
refrain from terminating or amending any particular benefit plan or benefit.
SECTION 5.11 TAKEOVER STATUTE. If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby or by the Tender
Agreements, the Company and the members of the Board of Directors of the Company
shall grant such approvals and take such lawful actions as are reasonably
necessary so that the transactions contemplated hereby or thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby and the Company, Parent and Purchaser
shall, without limiting the generality of any of the foregoing, satisfy the
respective obligations imposed on them by virtue of Section 910 of the MBCA.
SECTION 5.12 SECTION 338 ELECTION. No election shall be made (or deemed
made) under Section 338(g) or Section 338(h)(10) of the Code with respect to the
Merger.
ARTICLE VI
CONDITIONS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations 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, in whole or in part, by any party
solely with respect to its own obligations hereunder to the extent permitted by
applicable law:
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(a) this Agreement shall have been approved and adopted by the
vote of the holders of fifty-five percent (55%) of the Company's Common Stock,
if required by applicable law and the Articles of Incorporation and By-Laws, in
order to consummate the Merger;
(b) no statute, rule, order, decree or regulation shall have
been enacted, promulgated or enforced by any foreign or domestic Governmental
Entity of competent jurisdiction which prohibits the consummation of the Merger;
(c) all foreign or domestic governmental consents, orders and
approvals required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained or complied with, as applicable,
and shall be in effect at the Effective Time, except for such consents the
failure of which to obtain would not have a Company Material Adverse Effect;
(d) there shall be no order or injunction of a foreign or
United States federal or state court or other Governmental Entity of competent
jurisdiction in effect precluding, restraining, enjoining or prohibiting
consummation of the Merger;
(e) Parent, Purchaser or their affiliates or respective
assigns shall have accepted for payment and paid for shares of Company Common
Stock pursuant to the Offer except that Parent and Purchaser shall not be
entitled to rely on this condition if Purchaser shall have failed to purchase
Shares pursuant to the Offer in breach of its obligations under this Agreement;
and
(f) the Proxy Statement, if required to be prepared and
disseminated to the Company's stockholders, shall have been cleared by the SEC
and shall not be the subject of any stop order.
SECTION 6.2 CONDITIONS TO OBLIGATION OF COMPANY TO EFFECT MERGER. The
obligation of the Company to consummate the Merger is subject to Parent and
Purchaser having performed and complied in all material respects with all
agreements and obligations required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, unless the Company had
actual knowledge of such non-performance or non-compliance at the time of
acceptance of Shares for payment pursuant to the Offer.
SECTION 6.3 CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT
MERGER. The obligation of Parent and Purchaser to consummate the Merger is
subject to the Company having performed and complied in all material respects
with all agreements and obligations required by this Agreement to be performed
or complied with by it on or prior to the Effective Time, unless Parent or
Purchaser had actual knowledge of such non-performance or non-compliance at the
time of acceptance of Shares for payment pursuant to the Offer.
ARTICLE VII
TERMINATION
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SECTION 7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) by the mutual written consent of Parent, Purchaser and the
Company, by action of their respective Boards of Directors;
(b) by either of the Board of Directors of the Company, on the
one hand, or the Board of Directors of Parent, on the other, if any Governmental
Entity or court of competent jurisdiction shall have issued an order, decree,
injunction or ruling or taken any other action (which order, decree, injunction,
ruling or other action the parties hereto shall use their respective reasonable
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, injunction, ruling or other action shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement shall have used all reasonable best efforts to challenge such order,
decree, injunction or ruling;
(c) by the Company if (i) there shall have been a breach of
any representations or warranties on the part of Parent or Purchaser set forth
in this Agreement or if any representations or warranties of Parent or Purchaser
shall have become untrue that is not curable, or, if curable, is not cured
within ten (10) calendar days after written notice of such breach is given by
the Company to Parent and Purchaser, provided that the Company has not breached
any of its obligations hereunder in any material respect; (ii) Parent, Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five (5) business days following the date of the initial public announcement
of the Offer; (iii) there shall have been a breach by Parent or Purchaser of any
of their respective covenants or agreements hereunder having a Parent Material
Adverse Effect, which has not cured such breach within five (5) business days
after notice by the Company thereof; provided, however, that the Company shall
not be in breach of any of its obligations hereunder in any material respect;
(d) by Parent and Purchaser if (i) there shall have been a
breach of any representations or warranties on the part of the Company set forth
in this Agreement or if any representations or warranties of the Company shall
have become untrue that is not curable or, if curable, is not cured within ten
(10) days after written notice of such breach is given by Parent to the Company;
or (ii) there shall have been a breach by the Company of one or more of its
covenants or agreements hereunder having a Company Material Adverse Effect or
materially adversely delaying the ability of Purchaser to consummate the Offer
or of Parent, Purchaser or the Company to consummate the Merger, and the Company
has not cured such breach within five (5) business days after notice by Parent
or Purchaser thereof; provided that neither Parent nor Purchaser shall be in
breach of any of their respective obligations hereunder in any material respect;
(e) by Parent and Purchaser or the Company if (i) the
Company's Board of Directors shall withdraw, modify or change its recommendation
of the Offer or the Merger in a manner adverse to Parent or Purchaser or shall
have resolved to do any of the foregoing; (ii) Parent or Purchaser requests in
writing that the Company's Board of Directors reconfirm its recommendation of
this Agreement, the Offer and the Merger to the stockholders of the Company and
the Company's Board fails to do so within five (5) business days after its
receipt of Parent's
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requests; (iii) the Company's Board of Directors shall have recommended an
Acquisition Proposal to the Company's stockholders; or (iv) a tender or exchange
offer for twenty percent (20%) or more of the outstanding shares of Company
Common Stock is commenced (other than by Parent or an affiliate of Parent) and
the Company's Board of Directors recommends that the Company's stockholders
tender their shares in such tender or exchange offer;
(f) by the Company, if on any Expiration Date on which no
further rights to extend the Offer are available to, or have been exercised by
Purchaser, the Minimum Condition has not been met, or Purchaser shall have
failed to pay for Shares pursuant to the Offer to the extent required by Section
1.1(a); provided, however, that the right to terminate this Agreement pursuant
to this subsection (f) shall not be available to the Company if it has breached
in any material respect its obligations under this Agreement that in any manner
shall have proximately contributed in any material respect to the failure
referenced in this subsection (f); or
(g) by Parent or Purchaser, if on any Expiration Date on which
no further rights to extend the Offer are available to, or have been exercised
by Purchaser, all conditions to Purchaser's obligation to accept for payment and
pay for shares pursuant to the Offer shall have been satisfied or waived other
than the Minimum Condition and Purchaser terminates the Offer in accordance with
the provisions of Annex A attached hereto without purchasing Shares pursuant to
the Offer; provided, however, that the right to terminate this Agreement
pursuant to this subsection (g) shall not be available to Parent and Purchaser
if either of them has breached in any material respect its obligations under
this Agreement in any manner that shall have proximately contributed in any
material respect to the termination of the Offer.
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 to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (other than this
Section 7.2 and Sections 5.2(c) and 7.3) shall forthwith become null and void,
and there shall be no liability on the part of the Parent or the Company or any
of their respective Representatives, except nothing in this Section 7.2 shall
relieve any party of liability for fraud or for willful breach of this
Agreement.
SECTION 7.3 PAYMENT OF TERMINATION FEE. In the event this Agreement is
terminated by the Company, Parent or Purchaser pursuant to Section 7.1(e), the
Company shall simultaneously with or prior to such termination, pay Parent a
termination fee in the amount of $1,500,000 (the "Fee") by wire transfer of
immediately available funds to an account designated by Parent. The Company
acknowledges that the agreements contained in this Section 7.3 are an integral
part of the transactions contemplated by this Agreement, and that, without this
agreement, Parent and Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay any amount due pursuant to and
in accordance with this Section 7.3, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against the Company for
the Fee set forth in this Section 7.3, the Company shall also pay to Parent its
reasonable and documented out-of-pocket costs, fees and expenses (including
reasonable and documented attorneys' fees) incurred in connection with such
litigation. The provisions of this Section 7.3 shall not derogate from any
rights or remedies which Parent or Purchaser may possess under this Agreement or
under applicable law, as the case may be, provided that the Fee shall be
liquidated damages and the sole and exclusive remedy of Parent in the event that
this Agreement is terminated under circumstances which entitle Parent to payment
of such Fee.
ARTICLE VIII
MISCELLANEOUS
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SECTION 8.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto (which in the case of the
Company shall require approval of its Board of Directors and include approvals
as contemplated in Section 1.3(b)), at any time prior to the Closing Date with
respect to any of the terms contained herein; provided, however, that after the
approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
SECTION 8.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time, termination of this Agreement, or, in the case of the Company,
shall survive the acceptance for payment of, and payment for, the shares of
Company Common Stock pursuant to the Offer. This Section 8.2 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time or the purchase of shares of Company Common Stock by
Purchaser pursuant to the Offer.
SECTION 8.3 NOTICES. All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, (ii) upon receipt if sent by reputable overnight courier
service or (iii) when successfully transmitted by telecopier without
interruption (with a confirming copy of such transmission sent within one
business day by reputable overnight courier service) to the party for whom
intended, provided that any notice received by telecopy or otherwise at the
addressee's location on any business day after 5:00 p.m. (addressee's local
time) shall be deemed to have been received at 9:00 a.m. (addressee's local
time) on the next business day. Any party to this Agreement may notify any other
party of any changes to the address or any of the other details specified in
this paragraph, provided that such notification shall only be effective on the
date specified in such notice or five (5) business days after the notice is
given, whichever is later. All notices required to be given under this Agreement
shall be sent to the party using the addresses or telecopy numbers specified
below:
(a) if to Parent or Purchaser, to:
Xxxxxxx Corporation
PSC Aquisition Corp.
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
with a copy to:
Xxxxx, Oviatt, Gilman, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxxxxx Xxxxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
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Facsimile No.: (000) 000-0000
(b) if to the Company, to:
Penobscot Shoe Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx,
Chairman of the Board of Directors
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
with copies to:
Xxxxxx, Hall & Xxxxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, III, Esq. P.C.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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and
Xxxxxx & Xxxxxxxx, LLC
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
SECTION 8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement, the Disclosure Schedule, the Tender Agreements and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitutes the entire agreement and supersedes all
prior agreements; understandings, representations and warranties, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 1.3, 2.1, 2.2, 2.3, 2.4, 5.7 and 5.9, are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder. References herein to this Agreement shall for all purposes
be deemed to include references to the Disclosure Schedule.
SECTION 8.6 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
authority to be invalid, void, unenforceable or against its regulatory policy,
the application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction, and 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,
provided that the commercial objective of this Agreement is not frustrated
thereby.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the MBCA, where applicable, and otherwise with the
laws of the State of New York without giving effect to the principles of
conflicts of law thereof or of any other jurisdiction.
SECTION 8.8 JURISDICTION.
(a) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought in the courts of the State of New York or of the United States
of America for the Western District of New York, to the extent the proceeding
involves an interpretation or enforcement of the MBCA, the state or federal
courts located in the State of Maine and, by execution and delivery of this
Agreement, the Company, Parent and Purchaser each hereby accepts for itself and
in respect of its property,
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generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. The Company, Parent and Purchaser
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company, Parent or Purchaser at
their respective addresses referred to in Section 8.3 hereof.
(b) The Company hereby designates CT Corporation as its agent
for service of process in the State of New York solely with respect to any
dispute or controversy arising out of this Agreement only, and service upon the
Company for such purposes shall be deemed to be effective upon service of CT
Corporation as aforesaid. The Company further covenants and agrees to execute,
upon Parent's request, such documents and agreements as are reasonably necessary
to confirm such designation.
(c) Parent and the Purchaser hereby designate CT Corporation
as their respective agent for service of process in the State of Maine solely
with respect to any dispute or controversy arising out of this Agreement and
relating to an interpretation of or involving enforcement of the MBCA, and
service upon Parent or the Purchaser for such purposes shall be deemed to be
effective upon service of CT Corporation as aforesaid.
(d) The Company, Parent and Purchaser each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) that the proceeding in any such court is brought in an inconvenient forum,
(d) that the venue of such proceeding is improper or (e) that this Agreement, or
the subject matter hereof, may not be enforced in or by such court. Nothing
herein shall affect the right of any party hereto to serve process in any other
manner permitted by law.
SECTION 8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all its rights, interests and obligations hereunder to Parent
or to any direct or indirect wholly owned Subsidiary of Parent; provided that,
in the case of any such assignment by Purchaser, Purchaser shall remain liable
for all of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
SECTION 8.10 WAIVER. Any waiver of compliance with any obligation,
covenant, agreement, provision or condition of this Agreement or consent
pursuant to this Agreement shall not be effective unless evidenced by an
instrument in writing executed by the party to be
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charged. Any waiver of compliance with any such obligation, covenant, agreement,
provision or condition of this Agreement shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other non-compliance.
SECTION 8.11 HEADINGS. The table of contents and the descriptive
headings used herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. "Include," "includes," and "including" shall be deemed to be followed
by "without limitation" whether or not they are in fact followed by such words
or words of like import.
SECTION 8.12 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. Accordingly,
it is agreed that the parties hereto (a) shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to compel specific
performance of this Agreement in any proceeding instituted in any court of
competent jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity, and (b) will waive, in any proceeding for
specific performance, the defense of adequacy of a remedy at law. Each of the
parties further agrees to waive any requirement for the securing or posting of
any bond or other security in connection with any proceeding for specific
performance.
SECTION 8.13 OBLIGATIONS OF PARENT AND THE COMPANY OF PARENT AND THE
COMPANY. Whenever this Agreement requires a Subsidiary of Parent to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent to cause such Subsidiary to take such action. Whenever this Agreement
requires the Company to take or refrain from taking any action, such requirement
shall be deemed to include an undertaking on the part of the Company to cause
such Subsidiary to take or refrain from taking, as applicable, such action.
SECTION 8.14 LIMITATIONS ON WARRANTIES.
(a) Except for the representations and warranties contained in
Article III of this Agreement, the Company makes no other express or implied
representation or warranty to Parent or Purchaser. Parent and Purchaser
acknowledge that, in entering into this Agreement, it has not relied on any
representations or warranties of the Company other than the representations and
warranties of the Company set forth in Article III of this Agreement.
(b) Except for the representations and warranties contained in
Article IV of this Agreement, Parent and Purchaser make no other express or
implied representation or warranty to the Company. The Company acknowledges
that, in entering into this Agreement, it has not relied on any representations
or warranties of Parent and Purchaser other than the representations and
warranties of Parent and Purchaser set forth in Article IV of this Agreement.
SECTION 8.15 SCHEDULES. The Disclosure Schedule shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall not be deemed to be an admission or representation as to the
materiality of the item so disclosed.
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SECTION 8.16 INTERPRETATION. The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the gender and neuter genders of such term. Any agreement, instrument
or statute defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of agreements
and instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
SECTION 8.17 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 8.18 DRAFTING AND NEGOTIATION. The parties have jointly
participated in the drafting and negotiation of this Agreement. In the event of
any ambiguity, this Agreement shall be construed as if drafted jointly and no
presumption shall arise favoring any party by virtue of authorship of any
provision of this Agreement. In any action involving this Agreement, the parties
shall be deemed to have jointly drafted this Agreement.
SECTION 8.19 EXECUTION. This Agreement may be executed by facsimile
signatures and such signature shall be deemed binding for all purposes hereof,
without delivery of an original signature being thereafter required.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement and Plan of Merger to be signed by their respective officers thereunto
duly authorized as of the date first written above.
Penobscot Shoe Company
By: /s/ Xxxxxx Xxxxx
---- -------------------------------
Name: Xxxxxx Xxxxx
Title: Chairman of the Board of Directors
PSC Acquisition Corp.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title President
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Xxxxxxx Corporation
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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List of Attachments
Exhibit A -- Escrow Agreement
Annex A -- Conditions to the Offer
Company's Disclosure Statement
51
Exhibit A
ESCROW AGREEMENT
This ESCROW AGREEMENT made as of the 6th day of October, 1999 by and
among XXXXXXX CORPORATION, a New York corporation, with principal offices at 00
Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Parent"), PSC ACQUISITION CORP., a
Delaware corporation and wholly-owned subsidiary of Parent, with principal
offices at 00 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Purchaser"), PENOBSCOT
SHOE COMPANY, a Maine corporation, with principal offices at 000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxxxx 00000 ("Company"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York corporation, with offices at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 ("Escrow Agent").
R E C I T A L S :
A. Parent, Purchaser and Company have entered into an Agreement and
Plan of Merger dated this date (the "Merger Agreement") whereby Purchaser has
agreed to commence an offer (the "Offer") to purchase for cash any and all
shares of the issued and outstanding Company common stock, par value $1.00 per
share (the "Shares"), at a price of $11.75 per Share, net to the seller in cash
(such price, or such higher price per Share as Purchaser may indicate in the
Offer being referred to herein as the "Offer Price"), subject to the conditions
set forth in the Merger Agreement.
B. Parent and Purchaser have agreed to deposit with the Escrow Agent,
in escrow, an amount equal to the product of the Offer Price ($11.75) and the
number of Shares outstanding (1,388,291) or $16,312,419 which, together with
such sums as Parent and Purchaser may subsequently deposit to reflect any
increase in the Offer Price, shall be referred to as the "Escrow Fund".
C. The Escrow Agent is willing to accept the Escrow Fund on the terms
hereinafter set forth.
52
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. ESCROW FUND. Parent and Purchaser hereby deposit the Escrow Fund
with Escrow Agent, in escrow, and Escrow Agent hereby accepts the Escrow Fund,
acknowledges receipt of $16,312,419.00 and agrees to hold and disburse the same
in accordance with the terms of this Escrow Agreement.
2. INITIAL RELEASE OF ESCROW FUND.
(a) Parent, Purchaser and Company agree that when the Minimum
Condition of the Offer and the other conditions to the Offer set forth in Annex
A of the Merger Agreement have been fulfilled and/or waived by Purchaser, they
shall jointly execute and deliver to the Escrow Agent a written authorization
and direction ("Instruction") that the Escrow Agent transfer from the Escrow
Fund to the Account hereinafter designated the amount indicated by them, being
the product of the Offer Price and the number of Shares which have been validly
tendered, not withdrawn and accepted by Parent and Purchaser as provided in the
Offer.
(b) Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
sum set forth in the Instruction.
(c) The Account to which funds shall be transferred by the
Escrow Agent under this Section 2 is as follows:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ABA#: 000-000-000
AC#: 56100123
Boston EquiServe Reorg Operating Account
Attention: Xxxx Xxxxxxxx, Ext. 3757
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Company, Purchaser and Parent understand and agree that under
Uniform Commercial Code Article 4A, all banks executing the above wire
instructions are entitled to rely on the account number and bank routing/transit
number provided by Company, Purchaser and Parent, and have no duty to discover
errors or discrepancies between names and such account numbers. Company,
Purchaser and Parent represent and warrant that they have used extraordinary
care to verify that the numbers set forth above are correct. The Escrow Agent's
acceptance of such wire transfer instructions shall be binding on all parties
and the Escrow Agent will not be liable for any cost, expense or loss arising
out of such transactions.
3. FURTHER RELEASE OF ESCROW FUND.
(a) Company agrees that, upon request of Parent and Purchaser,
whenever Purchaser accepts additional Shares tendered pursuant to the Offer
beyond those required to meet the Minimum Condition under the Merger Agreement,
Company will join with Parent and Purchaser in providing joint Instruction to
the Escrow Agent to transfer additional amounts from the Escrow Fund to the
Account, such amounts to be equal to the product of the Offer Price and the
number of additional tendered Shares accepted by Purchaser.
(b) The Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
additional amounts set forth in the Instruction.
4. RELEASE OF ESCROW FUNDS UPON MERGER. Company, Parent and Purchaser
agree that upon merger of Company and Purchaser, with Purchaser or Company as
survivor, and whether a short-form merger under Section 904 of the Maine
Business Corporation Act ("MBCA") or a merger approved at a meeting of
stockholders of the Company, Company and Purchaser shall promptly present to
Escrow Agent their joint Instruction (or the surviving corporation under the
merger shall give its Instruction) to transmit by wire transfer from the
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Escrow Fund to the Account a specified amount. Company and Purchaser agree the
amount shall be equal to the product of the Offer Price and the remaining issued
and outstanding Shares of the Company which were not previously accepted by
Purchaser, less any Demanding Shares or Dissenting Shares (as defined in the
Merger Agreement). The Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
amount set forth in such Instruction. It is agreed by the Parent, Purchaser and
Company that any amounts to be paid to holders of Demanding Common Stock or
Dissenting Common Stock shall be paid from the Escrow Fund, including such
additional funds as shall be required to be deposited by Parent and Purchaser to
satisfy the applicable provisions of Sections 910 and 909 of the MCBA. However,
Instruction to the Escrow Agent for disbursement of any such amounts shall be
signed only by Parent and shall certify that the amount is for payment of
Demanding Common Stock or Dissenting Common Stock. Parent shall send a copy of
the Instruction to the Company at the same time it sends the Instruction to the
Escrow Agent. The Escrow Agent agrees, upon receipt of such Instruction from
Parent, promptly to transmit by wire transfer from the Escrow Fund to the
Account the amount set forth in such Instruction.
5. RELEASE OF ESCROW FUNDS UPON TERMINATION OF TENDER OFFER OR MERGER
AGREEMENT. In the event that (1) Parent or Purchaser terminates the Offer or (2)
Company terminates the Merger Agreement, Parent shall give written notice to the
Escrow Agent to pay over to Purchaser all funds, together with earnings thereon,
then remaining in the Escrow Account ("Release Notice"). Upon receipt of the
Release Notice, Escrow Agent shall pay over such amounts according to the
instructions set forth in the Release Notice. Parent shall send to the Company a
copy of any Release Notice at the same time it is given to the Escrow Agent.
6. INVESTMENT OF ESCROW FUND. Escrow Agent may invest the Escrow Funds
if so directed by Parent in obligations of the United States government or any
agency or
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instrumentality thereof, or in obligations that are guaranteed or insured by the
United States government or any agency or instrumentality thereof. Any net
profit resulting from, or interest or income produced by such investments shall
be payable to Parent or Purchaser on written Instruction given by Parent.
Escrow Agent shall send to Parent a monthly statement showing the
investments in which the Escrow Fund is invested ("Escrow Fund Investments"),
the purchase price of investments purchased during the statement period and the
market value of Escrow Fund Investments as of the end of the statement period.
Parent shall review such statements and determine whether the market value of
Escrow Fund Investments is sufficient to enable the Escrow Fund to satisfy all
remaining obligations originally contemplated to be paid out of the Escrow Fund.
In the event that the Escrow Fund shall not be sufficient to satisfy all
remaining obligations originally contemplated to be paid out of the Escrow Fund,
Parent shall promptly thereafter deposit in such Escrow Fund cash in an amount
sufficient to enable such Escrow Fund to satisfy all remaining obligations
originally contemplated to be paid out of such Escrow Fund.
7. FEE OF ESCROW AGENT. For its services hereunder, Escrow Agent shall
receive the fees set forth on the fee schedule attached hereto as Exhibit A.
Parent and Purchaser shall be solely responsible for payment of Escrow Agent's
fee hereunder and Escrow Agent shall have no claim whatsoever on the Escrow
Fund. Parent may, in its sole discretion, authorize Escrow Agent's fees to be
paid from any interest or other earnings on the Escrow Fund, but not from any
amounts deposited by Parent or Purchaser to the Escrow Fund.
8. LIABILITY OF ESCROW AGENT.
(a) Escrow Agent may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statements or assertion contained in
such writing or instrument, and may assume that any
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person purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent shall not be liable in any manner for the sufficiency or correctness as to
form, manner of execution, or validity of any written instructions delivered to
it; nor as to the identity, authority, or rights of any person executing the
same and shall otherwise not be liable for any mistakes of fact or error of
judgment, or for any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence. The Escrow Agent shall be fully protected in
acting without inquiry in accordance with such written instruction, including by
way of example, and not as a limitation, without inquiry as to purposes for
which amounts disbursed from the Escrow Fund are expended, or whether the party
giving the written instruction has given a copy or other notice of such
instruction to any other party. The Escrow Agent shall not be liable for any
loss or diminution in value of the Escrow Fund as a result of the investment of
the Escrow Fund, nor shall it be responsible if the Escrow Fund is not
sufficient to make intended payments. The Escrow Agent shall have no duty to
calculate or verify any amounts required to be transferred to the Account or
otherwise disbursed from the Escrow Fund.
(b) It is agreed that the duties of Escrow Agent are purely
ministerial in nature and shall be expressly limited to the safekeeping of the
Escrow Fund and for the disposition of same in accordance with this Escrow
Agreement and any costs, expenses or fees incurred by the Escrow Agent in the
performance of these duties (except as described in the next sentence or in
Section 9) shall be borne by Parent and Purchaser. Each of Company, Parent and
Purchaser hereby agrees to indemnify, defend and hold Escrow Agent harmless from
and against any and all claims, liabilities, damages, costs, penalties, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature (including, without limitation, attorneys'
fees, paralegals' fees and costs incurred in all trial and appellate
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proceedings or otherwise if no litigation is instituted) which it may incur or
with which it may be threatened directly or indirectly arising from or in any
way connected with this Escrow Agreement, whether or not such claims,
liabilities, damages, costs, penalties, losses, actions, suits or proceedings
arise from or are in any way connected with any negligence of Escrow Agent.
Notwithstanding anything in this subparagraph (b) to the contrary, in no event
shall Escrow Agent be absolved from any liability arising from Escrow Agent's
gross negligence or willful misconduct.
9. DISPUTES.
(a) In the event Escrow Agent is joined as a party to a
lawsuit relating to the Escrow Fund or this Agreement, Escrow Agent shall, at
its option, either: (i) tender the Escrow Fund to the appropriate court; or (ii)
disburse the Escrow Fund in accordance with the court's ultimate disposition of
the case, and Company, Parent and Purchaser hereby, jointly and severally, agree
to indemnify, defend and hold Escrow Agent harmless from and against all costs,
expenses, damages or losses in connection therewith, including, but not limited
to, attorneys' and paralegals' fees and court costs at all trial and appellate
levels.
(b) In the event Escrow Agent, pursuant to Section 9(a) or
10(d), tenders the Escrow Fund to the appropriate court and files an action of
interpleader or other appropriate action naming the other parties hereto and any
affected third parties of whom Escrow Agent has received actual notice, Escrow
Agent shall be released and relieved from any and all further obligation and
liability hereunder or in connection herewith and Company, Parent and Purchaser
hereby, jointly and severally, agree to indemnify, defend and hold Escrow Agent
harmless from and against all costs, expenses, damages or losses arising in
connection therewith, including, but not limited to, all costs and expenses
incurred by Escrow Agent in connection with the filing of
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such action, including, but not limited to, attorneys' and paralegals' fees and
court costs at all trial and appellate levels.
10. REMOVAL AND RESIGNATION OF ESCROW AGENT.
(a) Company, Parent and Purchaser may, upon written notice to
Escrow Agent, remove the Escrow Agent, in which event removal shall take effect
no earlier than twenty (20) days after notice to Escrow Agent of such removal,
during which period, Company, Parent and Purchaser shall agree on a successor
escrow agent to assume the duties of the Escrow Agent hereunder.
(b) Escrow Agent may resign as Escrow Agent at any time upon
giving notice to the other parties of its desire to so resign; provided,
however, that resignation of Escrow Agent shall take effect no earlier than ten
(10) days after the giving of notice of resignation, during which period,
Company, Parent and Purchaser shall agree on a successor escrow agent to assume
the duties of the Escrow Agent hereunder.
(c) Upon termination of the duties of Escrow Agent as set
forth above, Escrow Agent shall deliver the Escrow Fund to the newly appointed
escrow agent designated by the other parties, and, except for rights of Escrow
Agent specified in this Escrow Agreement, Escrow Agent shall not otherwise have
the right to withhold the Escrow Funds from said newly appointed escrow agent.
(d) In the event the other parties fail to agree to a
successor escrow agent within the period described hereinabove, Escrow Agent
shall have the right to deposit the Escrow Fund into the appropriate court and
request judicial determination of the rights among the other parties by
interpleader or other appropriate action and, the other parties hereby, jointly
and severally, agree to indemnify, defend and hold Escrow Agent harmless from
and against any
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costs, expenses, damages or losses in connection therewith, including, but not
limited to, reasonable attorneys' and paralegals' fees and court costs at all
trial and appellate levels.
(e) Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Escrow Agreement unless in writing and signed
by all other parties and Escrow Agent. In no event shall any modification of
this Escrow Agreement, which shall affect the rights or duties of Escrow Agent,
be binding on Escrow Agent unless it shall have given its prior written consent.
11. NOTICE. Parent, Purchaser and Company agree to send to each other
any communications sent to Escrow Agent. Whenever any notice is required or
permitted under this Agreement, the notice will be in writing and will be deemed
effective and given when received on personal delivery or on receipt of the
United States mail, registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at other addresses as are
specified by written notice delivered in accordance with this Agreement:
If to Parent or Purchaser: Xxxxxxx Corporation
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, President
and with a copy to: Xxxxx, Oviatt, Gilman, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Xx., Esq.
If to Company: Penobscot Shoe Company
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxx 00000
Attn: Chairman
and with copies to: Xxxxxx, Xxxx & Xxxxxxx LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx III, P.C.
and
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Xxxxxx & Xxxxxxxx, LLC
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx
Attn: Xxxxxx X. Xxxxxx, Esq.
If to Escrow Agent: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attn: Xxxxxxx X. Xxxxxxx
12. CHOICE OF LAW AND VENUE. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of New York. In the event
any action, suit or proceeding is instituted as a result of any matter or thing
affecting this Escrow Agreement, the parties hereto hereby designate Monroe
County, New York as the proper jurisdiction and the venue in which same is to be
instituted.
13. CUMULATIVE RIGHTS. No right, power or remedy conferred upon Escrow
Agent by this Escrow Agreement is exclusive of any other right, power or remedy.
All such rights, powers and/or remedies shall be cumulative and concurrent and
shall be in addition to any other right, power or remedy Escrow Agent may have
under the Escrow Agreement or now or hereafter existing at law, in equity or by
statute, and the exercise of one right, power or remedy by Escrow Agent shall
not be construed or considered as a waiver of any other right, power or remedy.
14. BINDING AGREEMENT. This Escrow Agreement shall be binding upon the
Escrow Agent, the other parties and their respective successors and assigns.
This Escrow Agreement may be executed in counterparts, all of which counterparts
shall be deemed to be a single document. Signature pages received by facsimile
transmission shall be deemed to be an original document.
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15. SURVIVAL. The provisions of this Agreement regarding
indemnification of the Escrow Agent by the Parent, Purchaser and/or Company
shall survive the termination of this Agreement.
16. ENTIRE AGREEMENT. The Escrow Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all other written or oral agreements, documents,
memoranda, understandings or otherwise between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed by their duly authorized officers the day and year first above set
forth.
XXXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
PSC ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
PENOBSCOT SHOE COMPANY
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Chairman of the Board
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Trust Officer
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer (subject to the
provisions of the Agreement), Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer and not accept for payment any tendered
shares if:
(a) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer not less than eighty
percent (80%) of the total issued and outstanding shares of
Company Common Stock on the date hereof (the "Minimum
Condition") (which constitutes 1,110,633 Shares as of the date
hereof);
(b) at any time on or after the date of the Agreement and prior to
the acceptance for payment of Shares, any of the following
events shall occur and be continuing:
(i) there shall have been instituted or be pending any
action or proceeding before any court or Governmental
Entity, (A) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly
restrain or prohibit or make more costly the making
of the Offer, the acceptance for payment of, or
payment for, any Shares by the Parent, the Purchaser
or any other affiliate of the Parent, or the
consummation of any other aspect of the Transactions,
or seeking to obtain damages in connection with any
aspect of the Transactions; (B) seeking to prohibit
or limit materially the ownership or operation by the
Company, the Parent or any of their Subsidiaries of
all or any material portion of the business or assets
of the Company, the Parent or any of their
Subsidiaries, or to compel the Company, the Parent or
any of their Subsidiaries to dispose of or hold
separate all or any material portion of the business
or assets of the Company, the Parent or any of their
Subsidiaries, as a result of the Transactions; (C)
seeking to impose or confirm limitations on the
ability of the Parent, the Purchaser or any other
affiliate of the Parent to exercise effectively full
rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by
the Purchaser pursuant to the Offer on all matters
properly presented to the Company's stockholders,
including, without limitation, the approval and
adoption of this Agreement and the transactions
contemplated hereby; (D) seeking to require
divestiture by the Parent, the Purchaser or any other
affiliate of the Parent of any Shares; or (E) which
otherwise would constitute a Company Material
Adverse Effect;
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(ii) the representations and warranties of the Company set
forth in the Agreement or in the Tender Agreements
shall not be true and correct in any respect, as of
the date of consummation of the Offer as though made
on or as of such date, except (i) for changes
specifically permitted by the Agreement or (ii) (A)
those representations and warranties that address
matters only as of a particular date which are true
and correct as of such date or (B) where the failure
of such representations and warranties to be true and
correct, do not, individually or in the aggregate,
have a Company Material Adverse Effect;
(iii) there shall have occurred, since June 30, 1999, any
change, condition, event or development that,
individually or in the aggregate with any other
change, condition or development since such date,
has, or could be reasonably expected to have, a
Company Material Adverse Effect or any legal or
regulatory changes that is or is reasonably expected
to be materially adverse to the business operations,
properties, condition (financial or otherwise),
assets, liabilities (contingent or otherwise) or
results of operation or prospects of the Company
either individually or in the aggregate;
(iv) the Company shall have breached or failed in any
material respect to perform or comply with any
material obligation, agreement or covenant required
by the Agreement to be performed or complied with by
it (including, without limitation, if any Person
shall have entered into any definitive agreement or
any agreement in principle with the Company relating
to an Acquisition Proposal (other than Parent,
Purchaser or any affiliate thereof);
(v) there shall have occurred (A) any general suspension
of trading in, or limitation on prices for,
securities on the American Stock Exchange, which
suspension or limitation shall have continued for a
period in excess of twenty-four (24) hours, (B) a
declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States
or any limitation (whether or not mandatory) by
Federal, state or foreign authorities on the
extension of credit by lending institutions, which
moratorium, suspension, or limitation in Parent's
reasonable judgment is reasonably likely to
materially affect the ability of Parent to pay for
the Shares, (C) a commencement of a war or armed
hostilities or other national or international
calamity directly or indirectly involving the United
States and reasonably likely to have a Company
Material Adverse Effect or materially and adversely
affect the consummation of the Offer, or (D) in the
case of clauses (A), (B) and (C) above existing at
the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(vii) the Board of Directors of the Company (or a special
committee thereof) shall have withdrawn or amended,
or modified in a manner adverse to Parent and
Purchaser its recommendation of the Offer or the
Merger, or shall have endorsed, approved or
recommended any Acquisition Proposal
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other than the Transactions or failed to reconfirm
its recommendation of this Agreement and the
Transactions contemplated hereunder within five (5)
days after being requested to do so by Parent and
Purchaser;
(viii) any Person, other than Parent, Purchaser or their
affiliates or any group of which any of them is a
member, acquires beneficial ownership of twenty
percent (20%)or more of the shares of Common Stock or
rights to acquire twenty percent (20%) or more of the
outstanding shares of Common Stock;
(ix) the Agreement shall have been terminated in
accordance with its terms; or
(x) the Parent, Purchaser and the Company shall have agreed in writing that the
Purchaser shall terminate the Offer .
The foregoing conditions are for the sole benefit of Purchaser and
Parent and, subject to the Agreement, may be asserted by either of them or may
be waived by Parent or Purchaser, in whole or in part at any time and from time
to time in the sole discretion of Parent or Purchaser. The failure by the Parent
or the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right; the waiver of any such right with respect
to particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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