1
Exhibit 2
Execution Copy
--------------
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
DEFIANCE, INC.
DN ACQUISITION CORPORATION
NEW HAMPSHIRE OAK, INC.
Dated as of January 7, 1999
================================================================================
Agreement and Plan of Merger
2
TABLE OF CONTENTS
Page
1. THE OFFER..................................................................1
1.1 The Offer...........................................................1
1.2 Company Action......................................................2
1.3 Board of Directors..................................................3
2. THE MERGER.................................................................4
2.1 Merger...........................................................4
2.2 Effect of Merger.................................................4
2.3 Conversion of Shares; Merger Consideration.......................4
2.4 Stock Options....................................................5
2.5 Consummation of the Merger.......................................5
2.6 Dissenters' Rights...............................................5
2.7 Payment for Shares and Options...................................6
2.8 Closing of the Company's Transfer Books..........................7
3. REPRESENTATIONS AND WARRANTIES.............................................8
3.1 Representations and Warranties of Parent
and the Purchaser.............................................8
3.2 Representations and Warranties of the Company...................10
4. COVENANTS.................................................................20
4.1 Acquisition Transactions........................................20
4.2 Interim Operations..............................................22
4.3 Access and Information..........................................24
4.4 Certain Filings, Consents and Arrangements......................25
4.5 Reasonable Best Efforts.........................................25
4.6 Public Statements...............................................25
4.7 Stockholder Approval............................................26
4.8 Stockholder Litigation..........................................27
4.9 Indemnification, Exculpation and Insurance......................27
4.10 Borrowings under the Loan Agreement.............................28
5. CONDITIONS................................................................28
5.1 Conditions to the Obligations of Parent, the Purchaser
and the Company..............................................28
5.2 Conditions to the Obligations of Parent
and the Purchaser............................................29
6. MISCELLANEOUS.............................................................30
6.1 Termination.....................................................30
Agreement and Plan of Merger
3
6.2 Non-Survival of Representations and Warranties..................32
6.3 Amendment and Waiver............................................32
6.4 Entire Agreement................................................32
6.5 Definition......................................................32
6.6 Applicable Law..................................................33
6.7 Headings........................................................33
6.8 Notices.........................................................33
6.9 Counterparts....................................................34
6.10 Severability....................................................34
6.11 Parties in Interest; Assignment.................................34
6.12 Fees and Expenses...............................................35
6.13 Specific Performance............................................36
Agreement and Plan of Merger
ii
4
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER dated as of January 7, 1999 by and among
New Hampshire Oak, Inc., a Delaware corporation ("Parent"), DN Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (the
"Purchaser"), and Defiance, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, the
Purchaser and the Company each has determined that it is fair to, and in the
best interests of, their respective stockholders for Parent to acquire the
Company pursuant to a merger (the "Merger") in which the Purchaser shall be
merged with and into the Company pursuant to this Agreement;
WHEREAS, as a condition of the willingness of the Parent to enter
into this Agreement, the Persons (as defined in Section 6.5) set forth on
Exhibit A, as the holders of shares of the Company's Common Stock, par value
$.05 per share (the "Common Stock"), have entered into the Stockholders
Agreement, dated as of the date hereof (the "Stockholders Agreement"), with the
Parent, which provides, among other things, that, subject to the terms and
conditions thereof, each Person will tender such Person's shares of Common Stock
in the Offer (as defined below) and vote such shares of Common Stock in favor of
the Merger and the approval and adoption of this Agreement;
WHEREAS, in furtherance thereof, the Parent proposes that the
Purchaser make an offer to purchase for cash all of the issued and outstanding
shares of Common Stock of the Company at a price of $9.50 per share net to the
seller; and
WHEREAS, the Boards of Directors of the Parent, the Purchaser and the
Company have approved the Merger following the expiration of such offer, upon
the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties agree as follows:
1. THE OFFER
---------
1.1 THE OFFER. (a) As promptly as practicable, but in no event later
than five (5) business days after the public announcement of the execution of
this Agreement, the Purchaser shall, and the Parent shall cause the Purchaser
to, commence a tender offer (the "Offer") to purchase for cash all of the issued
and outstanding shares of Common Stock (the shares of Common Stock hereinafter
referred to as the "Shares") at a price of not less
Agreement and Plan of Merger
5
than $9.50 per Share net to the seller in cash. The obligations of the Purchaser
and the Parent to consummate the Offer and to accept for payment and purchase
the Shares tendered shall be subject only to the conditions set forth in Annex A
hereto. The Purchaser shall not without the Company's prior written consent
reduce the price per Share or the number of Shares sought to be purchased or
modify the form of consideration to be received by holders of the Shares in the
Offer, decrease, increase or waive the condition (the "Minimum Condition") set
forth in clause (i) of the first sentence of Annex A hereto, impose additional
conditions to the Offer or amend any term of the Offer in a manner materially
adverse to the holders of the Shares. Subject only to the conditions of the
Offer set forth in Annex A, the Purchaser shall, and the Parent shall cause the
Purchaser to, pay for all of the Shares validly tendered and not withdrawn
pursuant to the Offer as soon as legally permissible.
(b) As soon as practicable on the date the Offer is commenced, the
Parent and the Purchaser will file with the Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 (together with all
supplements or amendments thereto, and including all exhibits, the "Offer
Documents"). The Parent and the Purchaser shall give the Company and its counsel
a reasonable opportunity to review the Offer Documents prior to the filing of
the Offer Documents with the Commission or to the dissemination of the Offer
Documents to the stockholders of the Company. The Parent and the Purchaser will
furnish the Company and its counsel in writing with any comments that the
Parent, the Purchaser or their counsel may receive from the Commission or its
staff with respect to the Offer Documents, promptly after receipt of such
comments.
1.2 COMPANY ACTION. (a) In connection with the Offer, the Company
shall cause its transfer agent to furnish the Purchaser with mailing labels,
security position listings and any available listings or computer files
containing the names and addresses of record holders of the Shares as of a
recent date, and shall furnish to the Purchaser such information and assistance
as the Parent or the Purchaser may reasonably request in communicating the
Offer to the Company's stockholders. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in such labels, listings and filings, will
use such information only in connection with the Offer and, if this Agreement is
terminated, will, upon the request of the Company deliver or cause to be
delivered to the Company all copies of such information then in its possession
or in the possession of its agents or representatives.
(b) The Company hereby consents to the Offer and represents that the
Board of Directors of the Company (at a meeting duly called and held at which a
quorum was present) as part of its approval of this Agreement has unanimously
(i) approved the Offer, the Merger, the Stockholders Agreement, the amendment to
the Certificate of
2
Agreement and Plan of Merger
6
Incorporation of the Company contemplated by Section 2.2 of this Agreement and
the transactions contemplated by this Agreement, (ii) determined that each of
the Offer and the Merger is advisable and is fair to and in the best interests
of the stockholders of the Company and (iii) resolved to recommend acceptance of
the Offer and approval and adoption of this Agreement by the stockholders of
the Company (to the extent such approval and adoption is required by applicable
law). Promptly after the commencement of the Offer, the Company shall file a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, and including all exhibits, the
"Schedule 14D-9") with respect to the Offer, which shall contain the
recommendations of the Board of Directors in favor of the Offer, the Merger and
the Agreement, except to the extent that the Board of Directors of the Company
shall have withdrawn or modified its approval of the Offer, the Merger and this
Agreement in accordance with Section 4.1(b).
1.3 BOARD OF DIRECTORS. (a) Promptly upon the purchase by the
Purchaser of more than 50% of the outstanding Shares on a fully-diluted basis
pursuant to the Offer and from time to time thereafter, the Company shall use
its best efforts to allow the Purchaser to designate up to the minimum number of
directors necessary in order for the result (expressed as a fraction) derived by
dividing the number of directors so designated by the total number of directors
to be at least equal to the result (expressed as a fraction) derived by dividing
the Shares then held by the Purchaser by the total number of Shares then
outstanding; PROVIDED, HOWEVER, that until the Effective Time (as defined in
Section 2.5 hereof) the Board of Directors will have at least two (2)
Independent Directors (as defined in Section 1.3(c) hereof). Upon request by the
Purchaser, the Company shall use its best efforts promptly, at the Company's
election, either to increase the size of the Board or to secure the resignation
of such number of directors as is necessary to enable the Purchaser's designees
to be elected to the Board, and to cause the Purchaser's designees to be so
elected.
(b) The Company's obligations with respect to the election of the
Purchaser's designees to the Board of Directors of the Company shall be subject
to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1. The Parent and the
Purchaser will supply to the Company in writing and shall be solely responsible
for any information with respect to any of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
3
Agreement and Plan of Merger
7
(c) Following the election or appointment of the Purchaser's
designees pursuant to this Section 1.3 and prior to the Effective Time, any
amendment to this Agreement or of the Certificate of Incorporation or By-Laws of
the Company, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of the Parent or the Purchaser and any waiver of any of the Company's
rights under this Agreement will require the concurrence of a majority of the
directors of the Company then in office who are neither designated by the
Purchaser nor otherwise affiliated with the Parent or the Purchaser nor
employees of the Company or any of its subsidiaries (the "Independent
Directors").
2. THE MERGER
----------
2.1 MERGER. Upon the terms and subject to the conditions of this
Agreement, and in accordance with the applicable provisions of the Delaware
General Corporation Law ("DGCL"), as promptly as practicable following the
consummation of the Offer, the Purchaser shall be merged with and into the
Company. The Company shall be the surviving corporation in the Merger (sometimes
referred to as the "Surviving Corporation") and shall continue its existence
under the laws of the State of Delaware. At the Effective Time (as defined in
Section 2.5), the separate existence of the Purchaser shall cease. The name of
the Surviving Corporation shall be "Defiance, Inc."
2.2 EFFECT OF MERGER. The Certificate of Incorporation and Bylaws of
the Company shall be amended by virtue of the Merger to read in their entirety
as set forth in Exhibits B and C, respectively. The directors of the Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, and the officers set forth on Schedule 2.2 hereto shall be the
officers of the Surviving Corporation, in each case until their respective
successors are duly elected and qualified. The Merger shall have the effects set
forth in Section 259 of the DGCL.
2.3 CONVERSION OF SHARES; Merger Consideration. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
thereof: (a) each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to clause (b) below
and any Dissenting Shares (as defined in Section 2.6)) shall be converted into
the right to receive in cash an amount per Share equal to the Merger
Consideration (as defined below), subject to any required withholding of taxes
and without interest; (b) each Share owned by Parent, the Purchaser or any other
direct or indirect subsidiary of Parent, or held in the treasury of the Company,
immediately prior to the Effective Time, shall be canceled and extinguished, and
no payment will be made with respect to those Shares; and (c) all shares of
common stock of the Purchaser, par value $.01 per share, then issued and
outstanding shall be converted into an equal
4
Agreement and Plan of Merger
8
number of shares of common stock of the Surviving Corporation. "Merger
Consideration" means $9.50 per Share or, if a greater price shall have been paid
in the Offer, such greater price.
2.4 STOCK OPTIONS. Immediately prior to the Effective Time, each then
outstanding option to purchase Shares (collectively, the "Options"), whether or
not then exercisable, shall be canceled by the Company in exchange for a right
to receive a payment in cash in accordance with Section 2.7(b) (the "Option
Consideration") equal to the product of (i) the number of Shares previously
subject to the Option and (ii) the excess, if any, of the Merger Consideration
over the exercise price for each Share under such Option. As of the Effective
Time, each holder of an Option will be entitled to receive only an amount equal
to the Option Consideration. All amounts payable under this Section 2.4 shall be
subject to any required withholding of taxes and shall be paid without interest.
Effective as of the Effective Time and subject to payment of the Option
Consideration, the Company shall cause each stock option or other equity based
plan maintained with respect to any Shares (or rights in respect thereof) to be
terminated. The Company shall use its best efforts to cause each holder of an
Option, whether or not then exercisable, to execute an agreement consenting to
the cancellation immediately prior to the Effective Time of such holder's
Options in exchange for such holder's right to receive the Option Consideration.
2.5 CONSUMMATION OF THE MERGER. Upon the terms and subject to the
conditions of this Agreement, the Company shall execute in the manner required
by the DGCL, and deliver to the Secretary of State of the State of Delaware, a
duly executed certificate of merger as required by the DGCL, and the parties
shall take all such other and further actions as may be required by law to make
the Merger effective. Prior to the filing referred to in this Section 2.5, a
closing will be held at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, xx the third business day following the satisfaction of the
condition set forth in Section 5.1(c) hereof (or, in the event the Purchaser
shall acquire at least 90% of the outstanding Shares in the Offer, on the tenth
business day following the completion of the Offer) (or such other time as the
Purchaser and the Company may agree, immediately after the conditions set forth
in Article V have been satisfied or waived) for the purpose of confirming all of
the foregoing. The time the Merger becomes effective in accordance with
applicable law is referred to as the "Effective Time".
2.6 DISSENTERS' RIGHTS. Notwithstanding any provision of this
Agreement to the contrary, any shares of capital stock of the Company
outstanding immediately prior to the Effective Time held by a holder who has
demanded and perfected the right, if any, for appraisal of those shares in
accordance with the provisions of Section 262 of the DGCL and as of the
Effective Time has not withdrawn or lost such right to such appraisal
5
Agreement and Plan of Merger
9
("Dissenting Shares") shall not be converted into or represent a right to
receive the consideration set forth in Section 2.3, but the holder shall only be
entitled to such rights as are granted by the DGCL. If a holder of shares of
capital stock of the Company who demands appraisal of those shares under the
DGCL shall effectively withdraw or lose (through failure to perfect or
otherwise) the right to appraisal, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, those shares shall be converted
into and represent only the right to receive the consideration as provided in
Section 2.3, without interest, upon the surrender of the certificate or
certificates representing those shares. The Company shall give the Parent (i)
prompt notice of any written demands for appraisal of any shares of capital
stock of the Company, attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL received by the Company relating to
stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of the Company, offer to settle or settle any such demands or
approve any withdrawal of any such demands.
2.7 PAYMENT FOR SHARES AND OPTIONS. (a) SHARES. Prior to the
Effective Time, the Purchaser shall designate American Stock Transfer & Trust
Company to act as Paying Agent with respect to the Merger (the "Paying Agent").
Each holder (other than Parent, the Purchaser or any subsidiary of Parent) of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding Shares will be entitled to receive, upon
surrender to the Paying Agent of the Certificates for cancellation, cash in an
amount equal to the product of the number of Shares previously represented by
the Certificates multiplied by the Merger Consideration, subject to any required
withholding of taxes. At or prior to the Effective Time, the Purchaser shall
make available to the Paying Agent sufficient funds to make all payments
pursuant to the preceding sentence. No interest shall accrue or be paid on the
cash payable upon the surrender of the Certificates. If payment is to be made to
a person other than the person in whose name the Certificates surrendered are
registered, it shall be a condition of payment that the Certificates so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting the payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificates surrendered or establish to the satisfaction of the
Surviving Corporation that the tax has been paid or is not applicable. Following
the Effective Time, until surrendered to the Paying Agent in accordance with the
provisions of this Section 2.7(a), each Certificate shall represent for all
purposes only the right to receive upon surrender thereof the Merger
Consideration multiplied by the number of Shares evidenced by the Certificate,
without any interest, subject to any required withholding taxes. Any funds
delivered or made available to the Paying Agent pursuant to this Section 2.7(a)
and not exchanged for
6
Agreement and Plan of Merger
10
Certificates within six (6) months after the Effective Time will be returned by
the Paying Agent to the Surviving Corporation, which thereafter will act as
Paying Agent, subject to the rights of holders of unsurrendered Certificates
under this Section 2.7(a), and any former stockholders of the Company who have
not previously exchanged their Certificates will thereafter be entitled to look
only to the Surviving Corporation for payment of their claim for the
consideration set forth in Section 2.3, without any interest, but will have no
greater rights against the Surviving Corporation than may be accorded to general
creditors thereof under applicable law. Notwithstanding the foregoing, neither
the Paying Agent nor any party hereto shall be liable to a holder of Shares for
any cash or interest delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws. If any Certificates shall not have
been surrendered prior to three (3) years after the Effective Time (or
immediately prior to such earlier date on which any payment in respect hereof
would otherwise escheat to or become the property of any governmental unit or
agency), the payment in respect of such Certificates shall, to the extent
permitted by applicable laws, become the property of the Surviving Corporation,
free and clear of all claims of interest of any person previously entitled
thereto. As soon as practicable after the Effective Time (but not later than
five (5) business days after the Effective Time), the Surviving Corporation will
cause the Paying Agent to mail to each record holder of Certificates a form of
letter of transmittal (which will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon proper delivery
of the Certificates to the Paying Agent) and instructions for use in effecting
the surrender of the Certificates for payment.
(b) OPTIONS. Each holder of an Option, whether or not then
exercisable, will be entitled to receive cash in an amount equal to the Option
Consideration in respect of such Options (determined in accordance with Section
2.4 hereof), subject to any required withholding taxes and without interest. As
soon as practicable after the Effective Time, and in any event no more than
fifteen (15) calendar days following the Effective Time, the Surviving
Corporation shall instruct the Paying Agent to pay, and the Paying Agent shall
so pay, all amounts due as Option Consideration to holders of Options as
required by this Agreement.
2.8 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
Shares converted into the right to receive the Merger Consideration pursuant to
the terms hereof, Dissenting Shares or Shares to be canceled pursuant to Section
2.3 hereof shall thereafter be made. If, after the Effective Time, Certificates
for such Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for cash or merely canceled, as the case may be, pursuant
to and in accordance with Sections 2.3, 2.6 and 2.7 hereof, subject to
applicable law in the case of Dissenting Shares.
7
Agreement and Plan of Merger
11
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. The
Parent and the Purchaser represent and warrant to the Company that:
(a) CORPORATE ORGANIZATION. Each of the Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power to
carry on its business as it is now being conducted. Parent owns all of the
issued and outstanding capital stock of the Purchaser and all such stock
has been validly issued and is fully paid and nonassessable and is owned
by the Parent free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Each of Parent and the Purchaser is qualified to
do business and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on Parent. "Material Adverse Effect" means, with respect to any
person or entity, a material adverse effect on the business, assets,
liabilities, operations or condition (financial or otherwise) of such
person or entity and its subsidiaries, taken as a whole. True, accurate
and complete copies of the Parent's and the Purchaser's Certificates of
Incorporation and Bylaws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been made available to
the Company.
(b) AUTHORITY. Each of Parent and the Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
carry out their respective obligations pursuant hereto. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
or other action on the part of each of Parent and the Purchaser. This
Agreement has been duly executed by Parent and the Purchaser and, assuming
due authorization, execution and delivery by the Company, constitutes a
valid and binding obligation of each of them, enforceable against each of
them in accordance with its terms. No other corporate actions or
proceedings on the part of Parent or the Purchaser are necessary to
authorize this Agreement, the consummation, by either of them, of the
transactions contemplated hereby or the discharge, by either of them, of
their respective obligations pursuant hereto.
(c) CONSENTS; NO VIOLATION. None of the execution and delivery of
this Agreement by Parent or the Purchaser, the consummation by each of
them of the transactions contemplated by this Agreement or the discharge,
by either of them, of
8
Agreement and Plan of Merger
12
its respective obligations hereunder will (i) conflict with, or result in
any breach or violation of, any provision of the Parent's or the
Purchaser's Certificate of Incorporation or By-laws; (ii) constitute, with
or without notice, the passage of time or both, a breach, violation or
default, create a lien, or give rise to any right of termination,
modification, cancellation, prepayment, acceleration or loss of any
material benefit, under any law, order, judgment, writ, injunction,
decree, statute, rule or regulation, governmental permit or license
(collectively "Laws"), or any mortgage, indenture, lease, license,
agreement or other instrument of Parent, the Purchaser or any of their
respective subsidiaries, or to which Parent, the Purchaser or any of their
respective subsidiaries or any of their respective properties is subject,
except for breaches, violations, defaults, liens, or rights of
termination, modification, cancellation, prepayment or acceleration which
would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on Parent or materially adversely affect
the ability of Parent or the Purchaser to consummate the transactions
contemplated hereby; or (iii) require any consent, approval or
authorization of, notification to, or filing with, any court, governmental
agency or regulatory or administrative authority, foreign or domestic
(each, a "Governmental Entity") or any other third party, on the part of
Parent or the Purchaser, other than (w) the filing of a certificate of
merger with respect to the Merger in accordance with the DGCL, (x) any
applicable filings under federal or state securities, "Blue Sky" or state
anti-takeover laws (including, without limitation, any filings required
under Section 1707.041 of the Ohio Revised Code), (y) filings required
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and (z) consents, approvals, authorizations,
notifications or filings the failure of which to be obtained or made would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on Parent or materially adversely affect the
ability of Parent or the Purchaser to consummate the transactions
contemplated hereby.
(d) OFFER DOCUMENTS; SCHEDULE 14D-9. None of the Offer Documents
will, on the date filed with the Commission or on the date first
published, sent or given to the Company's stockholders, 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;
PROVIDED, HOWEVER, that the foregoing shall not apply to the extent that
any such untrue statement of a material fact or omission to state a
material fact was made by the Parent or the Purchaser in reliance upon and
in conformity with written information furnished to the Parent or the
Purchaser by the Company specifically for use in the Offer Documents. The
Offer Documents will comply in all material respects, both as to form and
otherwise, with the requirements of the Exchange Act and the rules and
regulations thereunder. None of the information supplied or to be
9
Agreement and Plan of Merger
13
supplied in writing by the Parent or the Purchaser specifically for
inclusion in the Schedule 14D-9 will, at the time the Schedule 14D-9 is
filed with the Commission 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.
(e) FINANCING. Parent and the Purchaser, collectively, at the
expiration of the Offer and the Effective Time will have sufficient funds
available to pay the aggregate Merger Consideration and Option
Consideration contemplated by this Agreement and to pay all of its fees
and expenses related to the transactions contemplated hereby.
(f) BENEFICIAL OWNERSHIP. None of Parent, the Purchaser, or any of
their affiliates "beneficially own" (as such term is defined in the
Stockholders Agreement) any equity securities of the Company other than
equity securities of the Company beneficially owned by Parent or the
Purchaser as a result of the Stockholders Agreement.
(g) CHANGE OF CONTROL. Parent and the Purchaser are familiar with and
have reviewed both the Company's Change of Control Policy set forth on the
Disclosure Schedule and the agreements set forth on the Disclosure
Schedule which the Company has made with employees regarding change of
control.
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and the Purchaser that:
(a) CORPORATE ORGANIZATION. Each of the Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power to own, lease and operate its
properties and assets and to carry on its businesses as they are now being
conducted. The Company has delivered to Parent copies of the Certificates
of Incorporation and By-laws, as amended to this date, of the Company and
each of its subsidiaries, which Certificates and By-laws are in full force
and effect.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, and 2,000,000 shares of
Preferred Stock, par value $.05 per share (the "Preferred Shares"). As of
the date hereof, (i) 6,003,749 Shares are issued and outstanding (other
than Shares held in the treasury of the Company as treasury stock), all of
which are validly issued, fully paid and nonassessable and not subject to
preemptive rights except as described on the Disclosure Schedule delivered
by the Company to Parent on or prior to the date hereof (the "Disclosure
Schedule"); (ii) 1,021,800 Shares are held in the treasury of the Company
10
Agreement and Plan of Merger
14
as treasury stock; (iii) there are outstanding Options to purchase an
aggregate of 440,814 Shares; (iv) there are no outstanding Preferred
Shares; and (v) there are no Shares or Preferred Shares owned by any
subsidiary of the Company. There are no stock appreciation rights
outstanding. The Disclosure Schedule sets forth a list, complete and
correct as of the date hereof, of the holders of all Options and the
number of Shares issuable upon the exercise of each such Option and the
exercise prices thereof. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. Except as set forth in this
Section 3.2(b), no shares of capital stock or other voting securities are
issued, reserved for issuance or outstanding, nor are there any
outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to
the issued or unissued capital stock or other securities of the Company or
any of its subsidiaries obligating the Company or any of its subsidiaries
to issue, deliver, sell or purchase, or cause to be issued, delivered,
sold or purchased, any securities of the Company or any of its
subsidiaries. Except as set forth on the Disclosure Schedule, there are no
voting trusts or other agreements or understandings to which the Company
or any of its subsidiaries is a party with respect to the voting of
capital stock of the Company or any of its subsidiaries.
(c) SUBSIDIARIES. The Disclosure Schedule sets forth a list, true and
complete as of the date hereof, of all of the subsidiaries of the Company.
All of the outstanding shares of capital stock of each subsidiary of the
Company have been validly issued and are fully paid and nonassessable and
are owned by the Company or by a subsidiary of the Company, free and clear
of any Liens. Except for the capital stock of its subsidiaries or as set
forth on the Disclosure Schedule, as of the date hereof, the Company does
not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, limited liability company, partnership, joint
venture or other entity.
(d) AUTHORITY. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to carry out its
obligations pursuant hereto. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the
Company, subject only, to the extent required by law, to approval by the
stockholders of the Company as provided in Section 4.7. This Agreement has
been duly executed and delivered by, and, assuming due authorization,
execution and delivery by Parent and the Purchaser, constitutes a valid
and binding obligation of, the Company. Except as set forth on the
Disclosure Schedule and for the approval by the stockholders of the
Company as provided in Section 4.7, no other
11
Agreement and Plan of Merger
15
corporate actions or proceedings on the part of the Company or its
stockholders are necessary to authorize this Agreement, the Offer, the
Merger or the consummation of the transactions contemplated hereby or its
discharge of its obligations pursuant hereto.
(e) CONSENTS; NO VIOLATION. None of the execution and delivery of
this Agreement by the Company, the consummation of the transactions
contemplated hereby or the discharge of its obligations hereunder will,
except as set forth on the Disclosure Schedule, (i) conflict with, or
result in a breach or a violation of, any provision of the Certificate of
Incorporation or By-laws of the Company or any of its subsidiaries; (ii)
constitute, with or without notice, the passage of time or both, a breach,
violation or default, create a Lien, or give rise to any right of
termination, modification, cancellation, prepayment, acceleration or loss
of any material benefit, under any Laws or any mortgage, indenture, lease,
license, agreement or other instrument of the Company or any of its
subsidiaries, or to which the Company or any of its subsidiaries or any of
their respective properties is subject, except for breaches, violations,
defaults, liens, or rights of termination, modification, cancellation,
prepayment or acceleration which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on
the Company or materially adversely affect the ability of the Company to
consummate the transactions contemplated hereby; or (iii) require any
consent, approval or authorization of, notification to, or filing with,
any Governmental Entity or from any other third party, on the part of the
Company or any of its subsidiaries other than (v) required consents
identified on the Disclosure Schedule, (w) the filing of a certificate of
merger with respect to the Merger in accordance with the DGCL, (x) filings
required under the HSR Act, (y) any applicable filings under federal and
state securities laws or state anti-takeover laws, and (z) consents,
approvals, authorizations, notifications or filings the failure of which
to be obtained or made would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on the Company or
materially adversely effect the ability of the Company to consummate the
transactions contemplated hereby.
(f) SEC REPORTS; COMPANY ASSETS AND LIABILITIES. The Company has
filed all forms, reports, statements and schedules with the Commission
required to be filed pursuant to the Exchange Act, or other federal
securities laws, and the rules and regulations promulgated thereunder,
since July 1, 1996 (the "SEC Reports"). As of their respective filing
dates, the SEC Reports complied in all material respects with all
applicable requirements of the Exchange Act and such other federal
securities laws, and the rules and regulations promulgated thereunder, and
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 made therein, in light of the
12
Agreement and Plan of Merger
16
circumstances under which they were made, not misleading. The audited and
unaudited consolidated financial statements of the Company included (or
incorporated by reference) in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as stated in the
financial statements, including the related notes, and except that the
quarterly financial statements do not contain all of the footnote
disclosures required by generally accepted accounting principles) and
fairly present, in all material respects, the financial position of the
Company and its consolidated subsidiaries as of the respective dates
thereof and the results of their operations, stockholders' equity and cash
flows for the periods then ended, subject, in the case of the unaudited
financial statements, to normal year-end adjustments and any other
adjustments described therein. Except for liabilities and obligations
incurred in the ordinary course of business consistent with past practices
since the date of the most recent consolidated balance sheet included in
the SEC Reports, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) other than those reflected in
the SEC Reports and those incurred in connection with the transactions
contemplated hereby.
(g) NO MATERIAL ADVERSE CHANGE. Except as and to the extent disclosed
in the SEC Reports or as set forth in the Disclosure Schedule, since June
30, 1998, there has not been (i) any material adverse change in the
business, operations or condition (financial or other) of the Company and
its subsidiaries taken as a whole, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) any
split, combination or reclassification of any of the Company's capital
stock or any issuance or the authorization of the issuance of any
securities in respect of or in substitution for shares of its capital
stock, (iv) any granting by the Company (x) to any executive officer or
other key employee of the Company of any increase in compensation, except
for normal increases in the ordinary course of business consistent with
past practice or as required under employment agreements in effect as of
the date of the most recent SEC Reports or set forth in the Disclosure
Schedule or (y) to any such executive officer of any increase in severance
or termination pay, except as was required under any employment, severance
or termination agreements in effect as of the date of the most recent SEC
Reports or set forth in the Disclosure Schedule, (v) any damage,
destruction or loss, whether or not covered by insurance, that could
reasonably be expected to have a Material Adverse Effect or (vi) except as
may have been required by a change in generally accepted accounting
principles or as disclosed in the SEC Reports, any change in accounting
methods, principles or
13
Agreement and Plan of Merger
17
practices by the Company or any of its subsidiaries materially affecting
its assets, liabilities or business.
(h) OFFER DOCUMENTS; SCHEDULE 14D-9. None of the information supplied
in writing by the Company specifically for inclusion in the Offer
Documents will, at the respective times the Offer Documents or any
amendments or supplements thereto are filed with the Commission, 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. The Schedule 14D-9 on the date filed with the Commission will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the foregoing shall not
apply to the extent that any such untrue statement of a material fact or
omission to state a material fact was made by the Company in reliance upon
and in conformity with written information furnished to the Company by the
Parent or the Purchaser specifically for use in the Schedule 14D-9. The
Schedule 14D-9 will comply in all material respects, both as to form and
otherwise, with the requirements of the Exchange Act and the rules and
regulations thereunder.
(i) LITIGATION. Except as disclosed in the SEC Reports or on the
Disclosure Schedule, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries that individually or in the aggregate would
reasonably be expected (i) to have a Material Adverse Effect on the
Company, (ii) as of the date hereof, to impair the ability of the Company
to perform its obligations under this Agreement in any material respect or
(iii) as of the date hereof, to delay in any material respect or prevent
the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or
any of its subsidiaries having, or which would reasonably be expected to
have a Material Adverse Effect on the Company.
(j) FEES. Except as set forth on the Disclosure Schedule, neither the
Company nor any of its subsidiaries has paid or become obligated to pay
any fee or commission to any broker, finder or intermediary or other
similar Person in connection with the transactions contemplated hereby or
in connection with any other offer to acquire the Company's shares or
assets.
(k) CERTIFICATE AND BY-LAWS. Neither the Certificate of Incorporation
nor the By-laws of the Company contains any provision that would require a
vote of the
14
Agreement and Plan of Merger
18
Company's stockholders in excess of a majority of the outstanding shares
of Company Common Stock in order to approve the Merger in accordance with
the terms of this Agreement.
(l) STATE TAKEOVER STATUTES. The Board of Directors of the Company
has approved the terms of this Agreement and the Stockholders Agreement
and the consummation of the Merger and the other transactions contemplated
by this Agreement and the Stockholders Agreement, and such approval is
sufficient to render inapplicable to the Merger and the other transactions
contemplated by this Agreement and the Stockholders Agreement the
provisions of Section 203 of the DGCL. Except as set forth on the
Disclosure Schedule, to the Company's knowledge, no state takeover statute
or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or any of the transactions contemplated by this
Agreement, and no provision of the Certificate of Incorporation, By-laws
or other governing instruments of the Company or any of its subsidiaries
would, directly or indirectly, restrict or impair the ability of Parent to
vote, or otherwise to exercise the rights of a stockholder with respect
to, shares of the capital stock of Company and its subsidiaries that may
be acquired or controlled by Parent.
(m) EMPLOYEE BENEFIT PLANS: EMPLOYEE AGREEMENTS. The Disclosure
Schedule sets forth a true and complete list of each employee benefit plan
within the meaning set forth in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and each bonus,
incentive, deferred compensation, severance, termination, retention,
change of control, stock option or other equity-based performance or other
compensation plan, program, arrangement, policy or understanding, whether
written or unwritten, that is or has been maintained or established by the
Company or any other Person that, together with the Company, is treated as
a single employer under Section 414 of the Internal Revenue Code of 1986,
as amended (the "Code") (each a "Commonly Controlled Entity"), or to which
the Company or any Commonly Controlled Entity contributes or is obligated
or required to contribute or with regard to which the Company or any of
its Commonly Controlled Entities has knowledge of any event, transaction
or condition that would reasonably be expected to result in any material
liability at the Effective Time (collectively, the "Plans"). Each
employment agreement to which the Company or any of its subsidiaries is a
party, and each employee benefit plan adopted by the Company or any of its
subsidiaries, which in either case becomes effective or grants rights to
any person upon a "change of control" of the Company is set forth in the
Disclosure Schedule. True and complete copies of each such Plan and the
most recent annual report on Form 5500 for each such Plan have been
delivered to the Purchaser.
15
Agreement and Plan of Merger
19
Each Plan intended to be qualified under Section 401(a) of the Code
and the trust forming a part thereof has received a favorable
determination letter from the Internal Revenue Service (the "IRS") as to
its qualification under the Code and to the effect that each such trust is
exempt from taxation under Section 501(a) of the Code and the Company
knows of no event that has occurred since the date of such determination
that would reasonably be expected to adversely affect such qualification
or tax-exempt status.
Except as set forth in the Disclosure Schedule, no material liability
has been or, to the knowledge of the Company, is expected to be incurred
by the Company or any Commonly Controlled Entity (either directly or
indirectly, including as a result of an indemnification obligation or any
joint and several liability obligations) as the result of a violation of
Title I of ERISA or an "accumulated funding deficiency" as defined in
Section 412 of the Code or Section 302 of ERISA or under or pursuant to
Title IV of ERISA or the penalty or excise tax provisions of Chapter 43 of
Subtitle D of the Code relating to employee benefit plans, and the Company
knows of no event, transaction or condition that has occurred or exists
with respect to the Company's employee benefit plans that would reasonably
be expected to result in any such material liability to the Purchaser, the
Surviving Corporation or any Commonly Controlled Entity or any employee
benefit plan of the Surviving Corporation or any Commonly Controlled
Entity.
Except as otherwise set forth in the Disclosure Schedules, no benefit
that is payable, or which may become payable as a result of the
transactions contemplated hereunder, to any employee pursuant to any Plan
shall constitute an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code) which is subject to the imposition of an excise
tax under Section 4999 of the Code or which would not be deductible by
reason of Section 280G of the Code.
(n) COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed in the SEC
Reports, the Company and each of its subsidiaries has in effect all
Federal, state and local governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has
occurred no default under any such Permit, except for the lack of Permits
and for defaults under Permits which lack of, or default under,
individually or in the aggregate would not have a Material Adverse Effect
on the Company. Except as disclosed in the SEC Reports, the Company and
its subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity,
except for possible noncompliance which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
16
Agreement and Plan of Merger
20
(o) CONTRACTS; DEBT INSTRUMENTS. (i) Neither the Company nor any of
its subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time, the giving of notice
or both would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any
of its properties or assets is bound, except for violations or defaults
that individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Company.
(ii) The Company has made available to Parent (x) true and correct
copies of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate
principal amount in excess of $100,000 is outstanding or may be incurred
and (y) accurate information regarding the respective principal amounts
currently outstanding thereunder. For purposes of this Agreement,
"indebtedness" shall mean, with respect to any Person, without
duplication, (A) all obligations of such Person for borrowed money, or
with respect to deposits or advances of any kind to such Person, (B) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (C) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased
by such Person, (D) all obligations of such Person (excluding obligations
of such Person pursuant to written purchase orders in the ordinary course
of business and in customary amounts consistent with past practices), (E)
all capitalized lease obligations of such Person, (F) all obligations of
others secured by any Lien on property or assets owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(G) all obligations of such Person under interest rate or currency hedging
transactions (valued at the termination value thereof), (H) all letters of
credit issued for the account of such Person and (I) all guarantees and
arrangements having the economic effect of a guarantee of such Person of
any indebtedness of any other Person.
(p) TAXES AND TAX RETURNS. Except as set forth in the SEC Reports or
on the Disclosure Schedule: (i) all material tax returns, declarations,
reports, estimates, information returns and statements required to be
filed with respect to Taxes (as defined herein) under Federal, state,
local or foreign laws ("Returns") by or with respect to the Company or any
subsidiary of the Company have been timely filed (taking into account any
extensions of time for filing such Returns); (ii) at the time filed, such
Returns were (and, as to Returns not filed as of the date hereof, will be)
true, correct and complete in all material respects; (iii) each of the
Company and each subsidiary of the Company has timely paid or made
provision in accordance with
17
Agreement and Plan of Merger
21
generally accepted accounting principles (or there has been paid or
provision has been made on its behalf) for all material Taxes for all
periods or portions thereof through the date hereof; (iv) there are no
material liens for Taxes upon the assets of the Company or any subsidiary
of the Company which are not provided for in the most recent financial
statements included in the SEC Reports, except liens for Taxes not yet
due; (v) there are no material outstanding deficiencies for any Taxes
proposed, asserted or assessed against the Company or any subsidiary of
the Company which are not provided for in the most recent financial
statements included in the SEC Reports; (vi) there are no material
Federal, state, local or foreign audits or other administrative
proceedings or judicial proceedings presently pending with regard to any
Taxes or Returns required to be filed by or with respect to the Company or
any of its subsidiaries; (vii) the Company has filed a consolidated Return
for Federal income tax purposes on behalf of itself and all of its
domestic subsidiaries as the common parent corporation of an "affiliated
group" (within the meaning of Section 1504(a) of the Code) of which such
subsidiaries are "includible corporations" in such affiliated group within
the meaning of Section 1504(b) of the Code; (viii) the Internal Revenue
Service has completed examinations of the Federal income tax returns filed
by or with respect to the Company (or the statute of limitations for the
assessment of Federal income taxes for such period has expired) for all
periods through and including the Company's taxable year ended June 30,
1994; (ix) none of the Company or any of its subsidiaries has been a
member of an "affiliated group" (as defined above), or any similar
affiliated, combined or consolidated group for state, local or foreign tax
purposes (other than a group the common parent of which is the Company),
or has any liability for the Taxes of any person (other than the Company
or its current subsidiaries) under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law or as a transferee,
successor, by contract or otherwise; (x) except as set forth in the
Disclosure Schedule, neither the Company nor any of its subsidiaries is a
party to any material tax sharing, tax indemnity or other agreement or
arrangement with respect to Taxes with any entity not included in the
Company's most recent financial statements included in the SEC Reports;
(xi) neither the Company nor any of its subsidiaries has agreed or is
required to make any adjustment under Section 481 of the Code; (xii) the
Company has not been (and will not be) a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the five (5) year period ending at the Effective Time and (xiii)
none of the Company or any of its subsidiaries has filed a consent under
Section 341(f) of the Code. For purposes of this Agreement, "Taxes" means
all income, gross income, gross receipts, premium, sales, use, transfer,
franchise, profits, withholding, payroll, employment, excise, severance,
property and windfall profits taxes, and all other taxes, assessments or
similar charges of any kind whatsoever thereon or applicable thereto,
together with any interest and any penalties, additions to tax or
additional amounts, in each case imposed by any taxing authority (domestic
18
Agreement and Plan of Merger
22
or foreign) upon the Company or any subsidiary of the Company, including,
without limitation, all amounts imposed as a result of being a member of
any affiliated or combined group.
(q) LABOR MATTERS. Except as set forth on the Disclosure Schedule,
neither the Company nor any of its subsidiaries is the subject of any
suit, action or proceeding which is pending or, to the knowledge of the
Company, threatened, asserting that the Company or any of its subsidiaries
has committed an unfair labor practice (within the meaning of the National
Labor Relations Act or applicable state statutes) or seeking to compel the
Company or any of its subsidiaries to bargain with any labor organization
as to wages and conditions of employment, in any such case, that would
reasonably be expected to have a Material Adverse Effect on the Company.
Except as set forth on the Disclosure Schedule, no strike or other labor
dispute involving the Company or any of its subsidiaries is pending or, to
the knowledge of the Company, threatened, and, to the knowledge of the
Company, there is no activity involving any employees of the company or
any of its subsidiaries seeking to certify a collective bargaining unit or
engaging in any other organizational activity, except for any such dispute
or activity which would not reasonably be expected to have a Material
Adverse Effect on the Company.
(r) ENVIRONMENTAL MATTERS. (i) Except as set forth on the Disclosure
Schedule or in the SEC Reports, the Company's and each of its
subsidiaries' operation and use of its respective assets, including its
owned and leased real property, are in compliance in all respects with all
applicable Laws relating to the protection of human health or the
environment ("Environmental Laws"), except to the extent that any such
noncompliance would not have a Material Adverse Effect on the Company. The
Company and each of its subsidiaries has obtained all environmental,
health and safety permits necessary for the operation of its respective
business as presently conducted, and all such permits are in full force
and effect and the Company and each of its subsidiaries is in compliance
in all respects with the terms and conditions of each such permit, except,
in each case, to the extent that any failure to obtain a permit or any
such noncompliance would not have a Material Adverse Effect on the
Company. Except as set forth on the Disclosure Schedule, neither the
Company nor any of its subsidiaries has received any notice of, nor is
there, any administrative or judicial investigation, proceeding or action
with respect to any material violation, alleged or proven, of
Environmental Laws by the Company or any its subsidiaries or otherwise
involving their respective owned or leased real property.
(ii) Except as set forth on the Disclosure Schedule, neither the
Company nor any of its subsidiaries has taken or failed to take any action
that has resulted in or will result in any liability or obligation of the
Company relating to (x) the environmental
19
Agreement and Plan of Merger
23
conditions on, under, or about the assets of the Company or any of its
subsidiaries or any of their respective owned or leased real property, or
any properties owned, leased, operated or used by the Company or any of
its subsidiaries or any predecessor of the Company or any of its
subsidiaries at the present time or in the past, including, without
limitation, the air, soil and groundwater conditions at such properties or
(y) the past or present use, management, handling, transport, treatment,
generation, storage, disposal or release of any Hazardous Substances (as
defined below), except in the case of clauses (x) and (y) above, to the
extent such liability or obligation would not have a Material Adverse
Effect on the Company.
(iii) As used herein, the term "Hazardous Substance" means
asbestos-containing material and any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or
any comparable state statute or any regulation promulgated under any of
such federal or state statutes.
(s) OPINION OF THE COMPANY'S FINANCIAL ADVISOR. The Board of
Directors of the Company has received a written opinion from McDonald
Investments, Inc. to the effect that, as of the date of this Agreement,
the consideration to be received in the Offer and the Merger by the
holders of Shares (other than Parent and its affiliates) is fair from a
financial point of view to such holders of Shares.
4. COVENANTS
---------
4.1 ACQUISITION TRANSACTIONS. (a) After the date hereof and prior to
the Effective Time or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing, the Company shall not, shall not permit any of its
subsidiaries to, and shall not authorize or permit any officer, director or
employee or any investment banker, attorney, accountant or other advisor or
representative of the Company or any of its subsidiaries to, directly or
indirectly, except as otherwise expressly permitted in this Section 4.1(a) or
in Section 4.1(b), (i) initiate, solicit, negotiate, encourage, or provide
confidential information to facilitate any proposal or offer to acquire all or
any substantial part of the business and properties of the Company and its
subsidiaries, taken as a whole, or beneficial ownership (as determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the capital
stock of the Company, whether by merger, purchase of assets, tender offer or
otherwise, whether for cash, securities or any other consideration or
combination thereof (such transactions being referred to herein as "Acquisition
Transactions"), (ii) enter into any agreement with respect to any Acquisition
Transaction or give any approval of the type referred to in Section 4.1(b) with
respect to
20
Agreement and Plan of Merger
24
any Acquisition Transaction or (iii) participate in any discussions regarding,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to any
Acquisition Transaction. Notwithstanding the immediately preceding sentence, the
Company and its subsidiaries may, prior to the Company Stockholder Approval (as
defined in Section 4.7), in response to any unsolicited proposal for an
Acquisition Transaction, furnish information concerning its business, properties
or assets to the corporation, partnership, person or other entity or group (a
"Potential Acquiror") making such proposal for an Acquisition Transaction and
participate in negotiations with the Potential Acquiror if (x) the Company's
Board of Directors, after consultation with one or more of its independent
financial advisors, is of the reasonable belief that such Potential Acquiror has
the financial wherewithal to consummate such an Acquisition Transaction, (y) the
Company's Board of Directors reasonably determines, after receiving advice from
the Company's financial advisor, that such Potential Acquiror has submitted a
proposal for an Acquisition Transaction that involves consideration to the
Company's stockholders and other terms that taken as a whole are superior to the
Merger and (z) based upon advice of counsel to such effect, the Company's Board
of Directors determines in good faith that it is necessary to so furnish
information and negotiate in order to comply with its fiduciary duty to
stockholders of the Company. In the event the Company shall determine to provide
any information as described above or shall receive any offer of the type
referred to in this Section 4.1 or shall receive or become aware of any other
proposal to acquire a substantial part of the business and properties of the
Company and its subsidiaries, taken as a whole, or to acquire a substantial
amount of capital stock of the Company, it shall promptly inform Parent orally
as to the fact that information is to be provided and shall furnish to Parent
the identity of the recipient of such information and/or the proponent of any
such offer or proposal and a description of the material terms thereof. The
Company will keep Parent fully informed of the status and material details of
any proposed Acquisition Transaction or other transaction (including any
material amendments or material proposed amendments of any such proposed
Acquisition Transaction or other transaction).
(b) Neither the Board of Directors of the Company nor any committee
thereof (x) shall withdraw or modify or propose to withdraw or modify, in any
manner adverse to Parent, the approval or recommendation of such Board of
Directors or such committee of this Agreement, the Offer or the Merger or (y)
approve or recommend, or propose to approve or recommend, any proposal for an
Acquisition Transaction except, in each case, in connection with a Superior
Proposal. As used herein, the term "Superior Proposal" means a bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the Shares then outstanding or all or
substantially all of the assets of the Company, PROVIDED (i) such proposed
transaction satisfies the tests set forth in clauses (x), (y) and (z) of the
second sentence of Section 4.1(a) and (ii) the Board of Directors determines, in
its good faith reasonable judgment,
21
Agreement and Plan of Merger
25
that such proposed transaction is reasonably likely to be consummated without
undue delay.
(c) Nothing contained in this Section 4.1 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act, provided that
neither the Company nor its Board of Directors shall, except at permitted by
this Section 4.1, approve or recommend acceptance of a proposal for an
Acquisition Transaction.
4.2 INTERIM OPERATIONS. (a) During the period from the date of this
Agreement to the Effective Time, except as contemplated by this Agreement, as
set forth on the Disclosure Schedule, as expressly permitted by Section 4.1 or
as otherwise approved in writing by the Purchaser, the Company shall not and
shall cause its subsidiaries not to:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or
any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(ii) grant, issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible
securities, except upon exercise of any Option;
(iii) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, limited liability
company, partnership, joint venture, association or other business
organization or division thereof or (y) any assets or services of any
kind other than (A) pursuant to written purchase orders issued in the
ordinary course of business and in customary amounts consistent with
past practices or (B) acquisitions of assets or services in the
ordinary course of business and in customary amounts consistent with
past practices that, individually, do not exceed $25,000;
22
Agreement and Plan of Merger
26
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, other than in the ordinary course of business consistent with
past practice, that are material to the Company and its subsidiaries
taken as a whole;
(vi) incur any indebtedness, except for borrowings for working
capital purposes not in excess of recent past practice and current
lending arrangements;
(vii) make or agree to make any new capital expenditure or
capital expenditures which in the aggregate are in excess of
$100,000;
(viii) pay (or commit to pay) any bonus or other incentive
compensation to any officer, director, partner or other employee or
grant (or commit to grant) to any officer, director, partner or
employee any other increase in compensation, except, in the case of
employees who are not executive officers or directors, normal salary
increases consistent with recent practice;
(ix) (i) enter into, adopt or amend (or commit to enter into,
adopt or amend) any employment, retention, change in control,
collective bargaining, deferred compensation, severance, retirement,
bonus, profit-sharing, stock option or other equity, pension or
welfare plan or agreement maintained for the benefit of any officer,
director, partner or employee, except as required by law, or (ii)
except as required by agreements set forth on the Disclosure
Schedule, grant or pay (or commit to grant or pay) any severance or
termination compensation or benefits to any officer, director,
partner or employee;
(x) make any tax election inconsistent with past practices or
settle or compromise any material income tax liability;
(xi) except in the ordinary course of business or except as
would not reasonably be expected to have a Material Adverse Effect on
the Company, modify, amend or terminate any material contract or
agreement to which the Company or any subsidiary is a party or waive,
release or assign any material rights or claims thereunder;
(xii) make any material change to its accounting methods,
principles or practices, except as may be required by generally
accepted accounting principles; or
(xiii) authorize, or commit or agree to take, any of the
foregoing actions.
23
Agreement and Plan of Merger
27
(b) OTHER ACTIONS. Except as expressly permitted by Section 4.1, the
Company shall not, and shall not permit any of its subsidiaries to, take
any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of the Company set forth in
this Agreement that are qualified as to materiality becoming untrue, (ii)
any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions to
the Merger set forth in Article 5 not being satisfied.
(c) ADVICE OF CHANGES. The Company shall promptly advise Parent and
Parent shall promptly advise the Company orally and in writing of (i) any
representation or warranty made by it (or, in the case of Parent, made by
it or the Purchaser) contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it (or, in the
case of Parent, a failure by it or the Purchaser) to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or (iii) any change
or event having, or which, insofar as can reasonably be foreseen, would
have, a Material Adverse Effect on such party or on the truth of their
respective representations and warranties or the ability of the conditions
set forth in Article VI to be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
4.3 ACCESS AND INFORMATION. Throughout the period prior to the
Effective Time, so long as this Agreement remains in effect, the Company shall
afford to Parent, the Purchaser and their representatives such access, during
normal business hours, to the Company's and its subsidiaries' books, records
(including, without limitation, tax returns and work papers of the Company's
independent auditors), plant and personnel, and to such other information, as
Parent shall reasonably request. Parent and the Purchaser will treat, and will
cause their respective accountants, counsel and other representatives to treat,
as strictly confidential all non-public documents and non-public information
concerning the Company furnished to Parent or the Purchaser in connection with
the transactions contemplated by this Agreement, subject to the requirements of
law and the provisions of this Agreement. If the transactions contemplated by
this Agreement are not consummated, such confidence shall be maintained except
to the extent such information can be shown to have been (i) in the public
domain through no fault of Parent or the Purchaser or (ii) later lawfully
acquired by Parent or the Purchaser from other sources without any breach of
duty to the Company by Parent, the Purchaser or, to the knowledge of Parent or
the Purchaser, any third party. If requested by the Company, Parent and the
Purchaser will destroy all copies of written information furnished by the
Company to Parent or the Purchaser or its agents, representatives or advisors.
24
Agreement and Plan of Merger
28
4.4 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Parent, the Purchaser
and the Company shall use their reasonable best efforts to make promptly any
required submissions under the HSR Act, the Exchange Act and Section 1707.041 of
the Ohio Revised Code with respect to the Offer, the Merger and the transactions
contemplated by this Agreement. The Company shall use its reasonable best
efforts to obtain all consents, approvals, permits or authorizations as are
required to be obtained from other parties to loan agreements or other contracts
material to the Company's business in connection with the consummation of the
Merger, including, without limitation, those filings and consents identified on
Schedule 4.4 to the Disclosure Schedule.
4.5 REASONABLE BEST EFFORTS. (a) Subject to the terms and conditions
provided in this Agreement, each of the parties agrees to use its reasonable
best efforts to take promptly, or cause to be taken, all actions and to do
promptly, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable best efforts (i) to obtain all necessary waivers,
consents and approvals, and (ii) to effect all necessary registrations and
filings, subject, however, to Company Stockholder Approval (as defined in
Section 4.6 hereof). In case at any time after the Effective Time any further
action is necessary or desirable to carry out the obligations of the parties
under this Agreement, the proper officers and/or directors of Parent, the
Purchaser and the Company, as the case may be, shall take the necessary action.
(b) In connection with and without limiting the foregoing, the
Company and its Board of Directors shall (i) take all action necessary to ensure
that no state takeover statute or similar statute or regulation, in each case as
the same is in effect on the date hereof, is or becomes applicable to the Offer,
the Merger, this Agreement, the Stockholders Agreement or any of the other
transactions contemplated by this Agreement or the Stockholders Agreement and
(ii) if any such state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger, this Agreement, the Stockholders Agreement
or any other transaction contemplated by this Agreement or the Stockholders
Agreement take all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Stockholders Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger and the other transactions contemplated
by this Agreement and the Stockholders Agreement.
4.6 PUBLIC STATEMENTS. So long as this Agreement remains in effect,
Parent and the Purchaser, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and consent in writing prior to the issuance
of, any press release or other public
25
Agreement and Plan of Merger
29
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.
4.7 STOCKHOLDER APPROVAL. (a) If required by applicable law in order
to consummate the Merger, as soon as practicable following the purchase of the
Shares pursuant to the Offer, the Company shall duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of adopting and approving this Agreement and the
transactions contemplated hereby (the "Company Stockholder Approval"). Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 4.7(a) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any proposed Acquisition Transaction. The
Company will, through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement and the transactions contemplated
hereby, except to the extent that the Board of Directors of the Company shall
have withdrawn or modified its approval or recommendation of this Agreement or
the Merger and terminated this Agreement in accordance with Section 4.1(b). At
such meeting, the Parent and the Purchaser will each vote, or cause to be voted,
all Shares acquired in the Offer or otherwise beneficially owned by it or any of
its subsidiaries on the record date for such meeting, in favor of the approval
and adoption of this Agreement and the transactions contemplated hereby.
(b) The Company shall, if required by law, prepare and file a proxy
statement (the "Proxy Statement") with the Commission in connection with
obtaining the Company Stockholder Approval. Parent and the Purchaser shall
cooperate with the Company in the preparation of the Proxy Statement including,
without limitation, promptly providing information requested by the Company or
required by the Commission to be included in the Proxy Statement and responding
promptly to any inquiries from the Company made in connection with comments on
the Proxy Statement received from the Commission. The Company will use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Commission completes
its review of the Proxy Statement.
(c) The Company agrees that none of the information included or
incorporated by reference in the Proxy Statement or otherwise supplied by the
Company to its stockholders, including any amendments to any of the foregoing,
will be false or misleading with respect to any material fact or will 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; PROVIDED, that the foregoing shall not
26
Agreement and Plan of Merger
30
apply to information supplied by or on behalf of Parent or the Purchaser
specifically for inclusion or incorporation by reference in any such document.
Parent agrees that none of the information supplied by or on behalf of Parent or
the Purchaser specifically for inclusion or incorporation by reference in any
such document will be false or misleading with respect to any material fact or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements in such information, in light of the
circumstances under which they are made, not misleading.
(d) Notwithstanding the foregoing, in the event that the Purchaser
shall acquire at least 90 percent of the outstanding Shares, the parties hereto
agree, at the request of the Parent or the Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective, as soon as
practicable after the expiration of the Offer, without a meeting of stockholders
of the Company in accordance with Section 253 of the DGCL.
4.8 STOCKHOLDER LITIGATION. The Company shall give the Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that the Parent shall have
the right to prevent the Company from entering into any such settlement without
the Parent's consent if the Parent agrees to indemnify each director of the
Company for the amount of his or her individual liability (whether as a director
or in any other capacity), if any, arising from the underlying claim, net of any
insurance proceeds received by such director, that is in excess of the amount
that such director would have been liable for under such settlement (whether as
a director or in another capacity).
4.9 INDEMNIFICATION, EXCULPATION AND INSURANCE. Parent and the
Purchaser agree that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors, officers, employees or
agents of the Company and its subsidiaries or any Person who is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, as
provided in their respective certificates of incorporation, by-laws (or
comparable organizational documents) and indemnification agreements shall
survive the Merger and shall continue in full force and effect in accordance
with their terms. Parent will cause to be maintained for a period of not less
than six (6) years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time ("D&O Insurance") for
all persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium therefor would not be in excess of 250%
of the last annual premium paid prior to the date of this Agreement (the
"Maximum Premium"); PROVIDED, HOWEVER, that if the annual premium therefor would
exceed the
27
Agreement and Plan of Merger
31
Maximum Premium, Parent shall purchase as much coverage as is available for the
Maximum Premium; PROVIDED, further, that Parent may, in lieu of maintaining such
existing D&O Insurance as provided above, cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its subsidiaries or
any policy specifically obtained for this purpose, so long as the terms thereof
are no less advantageous to the intended beneficiaries thereof than the existing
D&O Insurance for a period of not less than six (6) years from the Effective
Time. If the existing D&O Insurance expires, is terminated or canceled during
such six (6) year period, Parent will obtain as much D&O Insurance as can be
obtained for the remainder of such period for an annualized premium equal to the
Maximum Premium, on terms and conditions no less advantageous to the covered
persons than the existing D&O Insurance.
4.10 BORROWINGS UNDER THE LOAN AGREEMENT. The Company shall manage
its obligations under its loan agreement with Comerica Bank to insure that
neither the Company, the Parent nor the Purchaser shall incur any breakage or
similar prepayment costs in the event the Company prepays its outstanding
indebtedness thereunder in the event of a change of control of the Company.
Except as set forth on the Disclosure Schedule, neither the Company, the Parent
nor the Purchaser shall incur any breakage or similar prepayment costs in the
event the Company prepays any outstanding indebtedness for borrowed money in the
event of a change of control of the Company.
5. CONDITIONS
----------
5.1 CONDITIONS TO THE OBLIGATIONS OF PARENT, THE PURCHASER AND THE
COMPANY. The obligations of Parent, the Purchaser and the Company to consummate
the Merger are subject to the satisfaction, at or before the Effective Time, of
each of the following conditions:
(a) The Purchaser shall have purchased all Shares duly tendered and
not withdrawn pursuant to the terms of the Offer and subject to the terms
thereof; PROVIDED that the obligation of the Parent and the Purchaser to
effect the Merger shall not be conditioned on the fulfillment of the
condition set forth in this Section 5.1 (a) if the failure of the
Purchaser to purchase the Shares pursuant to the Offer shall have
constituted a breach of the Offer or of this Agreement.
(b) The consummation of the Merger shall not be precluded by any
order, decree or injunction of a court of competent jurisdiction (each
party agreeing to use its best efforts to have any such order reversed or
injunction lifted), and there shall not have been any action taken or any
Law enacted, promulgated or deemed
28
Agreement and Plan of Merger
32
applicable to the Merger by any Governmental Entity that makes
consummation of the Merger illegal.
(c) If required by the Certificate of Incorporation and By-Laws of
the Company and the DGCL, this Agreement shall have been approved and
adopted by the affirmative vote of the holders of the requisite number of
shares of Common Stock in accordance with the Certificate of Incorporation
and By-Laws of the Company and the DGCL.
(d) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
5.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND THE PURCHASER. The
obligations of Parent and the Purchaser to consummate the Merger are subject to
the satisfaction, at or before the Effective Time, of the following conditions:
(a) The Company shall not have received notice from the holder or
holders of more than 3% of the outstanding Shares, determined on a fully
diluted basis, that such holder or holders have exercised or intend to
exercise its or their appraisal rights under Section 262 of the DGCL.
(b) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (and there shall not be pending by
any other person any suit, action proceeding which has a reasonable
likelihood of success), in each case (i) challenging the acquisition by
Parent or the Purchaser of any shares of capital stock of the Company or
the Surviving Corporation, seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated
by this Agreement or the Stockholders Agreement or seeking to obtain from
the Company, Parent or the Purchaser any damages that are material taken
as a whole or Parent and its subsidiaries taken as a whole, as applicable,
(ii) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, as
applicable, or to compel the Company, Parent or any of their respective
subsidiaries to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, as applicable, as a
result of the Merger or any of the other transactions contemplated by this
Agreement or the Stockholders Agreement, (iii) seeking to impose
limitations on the ability of Parent to acquire or hold, or exercise full
rights of ownership of, any shares of capital stock of the Company or the
Surviving Corporation, including the right to vote the Shares, or common
stock of the Surviving Corporation, on all
29
Agreement and Plan of Merger
33
matters properly presented to the stockholders of the Company or the
Surviving Corporation, respectively, (iv) seeking to prohibit Parent and
its subsidiaries from effectively controlling in any material respect the
business or operations of the Company and its subsidiaries, taken as a
whole, or (v) which otherwise could reasonably be expected to have a
Material Adverse Effect on the Company or Parent. In addition, there shall
not be any statute, rule, regulation, judgment or order enacted, entered,
enforced or promulgated that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (ii) through
(iv) above.
6. MISCELLANEOUS
-------------
6.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether prior to or after approval by the stockholders of the Company:
(a) by the mutual written consent of Parent, the Purchaser and the
Company;
(b) by either the Parent or the Company if, on or before April 7,
1999 and without fault of such terminating party, the Purchaser shall not
have purchased in the Offer such number of the Shares which represent in
excess of 50% of the outstanding Shares on a fully diluted basis, or the
Merger shall not have been consummated on or before July 6, 1999,
PROVIDED, HOWEVER, that the right to terminate this Agreement shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Offer
or the Merger to have occurred on or before the aforesaid date;
(c) by either the Parent or the Company if the Offer shall expire or
terminate in accordance with its terms without any Shares having been
purchased thereunder and, in the case of termination by Parent, the
Purchaser shall not have been required by the terms of the Offer or this
Agreement to purchase any Shares pursuant to the Offer;
(d) by the Company if the Purchaser shall not timely commence the
Offer as provided in Section 1.1(a);
(e) if a Company Stockholder Approval is required by law, by either
the Purchaser or the Company if, upon a vote at a duly held Company
Stockholders Meeting or any adjournment thereof at which such Company
Stockholder Approval shall have been voted upon, such Company Stockholder
Approval shall not have been obtained;
30
Agreement and Plan of Merger
34
(f) unilaterally by the Purchaser or the Company (i) if the other
fails to perform any material covenant or agreement in any material
respect in this Agreement, and does not cure the failure in all material
respects within 30 business days after the terminating party delivers
written notice of the alleged failure or (ii) if any condition to the
obligations of that party is not satisfied (other than by reason of a
breach by that party of its obligations hereunder), and it reasonably
appears that the condition cannot be satisfied prior to July 6, 1999;
(g) by either the Purchaser or the Company if either is prohibited by
an order or injunction (other than an order or injunction on a temporary
or preliminary basis) of a court of competent jurisdiction or other
Governmental Entity from consummating the Offer or the Merger and all
means of appeal and all appeals from such order or injunction have been
finally exhausted;
(h) by the Purchaser if the Board of Directors of the Company shall
have withdrawn or modified, or resolved to withdraw or modify, in any
manner which is adverse to Parent or the Purchaser, its recommendation or
approval of the Offer, the Merger or this Agreement; PROVIDED, HOWEVER,
that a termination pursuant to this Section shall not become effective if,
as a result of the Company's receipt of a proposal for an Acquisition
Transaction from a third party, the Company, in accordance with Section
4.1(b), withdraws or modifies, or resolves to withdraw or modify, in any
manner which is adverse to Parent or the Purchaser, its recommendation or
approval of the Offer, the Merger or this Agreement and if within ten (10)
business days of taking and disclosing to its stockholders the
aforementioned position the Company publicly reconfirms its recommendation
of the transactions contemplated hereby; or
(i) by the Company if (i) the Board of Directors of the Company shall
have determined in good faith, based on the advice of outside counsel,
that it is necessary, in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, to terminate this Agreement
to enter into an agreement with respect to or to consummate a transaction
constituting a Superior Proposal, (ii) the Company shall have given notice
to the Purchaser advising the Purchaser that the Company has received a
Superior Proposal from a third party, specifying the material terms and
conditions (including the identity of the third party), and that the
Company intends to terminate this Agreement in accordance with this
Section 6.1(i), (iii) either (A) the Purchaser shall not have revised its
proposal for an Acquisition Transaction within two (2) business days from
the time on which such notice is deemed to have been given to Parent or
(B) if the Purchaser within such period shall have revised its proposal
for an Acquisition Transaction, the Board of Directors of the Company,
after receiving advice from the Company's financial advisor, shall have
determined in
31
Agreement and Plan of Merger
35
its good faith reasonable judgment that the third party's proposal for an
Acquisition Transaction is superior to Parent's revised proposal for an
Acquisition Transaction, and (iv) the Company, at the time of such
termination, pays the Expenses and the Termination Fee in accordance with
Section 6.12.
In the event of a termination of this Agreement and an abandonment of the
Merger, no party hereto (or any of its directors, officers, representatives or
agents) shall have any further liability or further obligation to any other
party to this Agreement, except with respect to the provisions of this Article 6
and the other provisions that survive the Merger pursuant to Section 6.2 and
except that nothing herein will relieve any party from liability for any willful
breach of its representations, warranties, covenants and agreements set forth in
this Agreement.
6.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise provided in this Section 6.2, none of the representations or
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time or, in the case of the Company, shall
survive the acceptance for payment of, and payment for, any Shares by the
Purchaser pursuant to the Offer.
6.3 AMENDMENT AND WAIVER. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained herein; PROVIDED, HOWEVER, that no such
waiver may materially adversely affect the rights of the stockholders of the
Company. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
6.4 ENTIRE AGREEMENT. This Agreement and the Stockholders Agreement
dated as of the date hereof among Parent and certain stockholders of the Company
contain the entire agreement among Parent, the Purchaser and the Company with
respect to the Merger and the other transactions contemplated hereby and
thereby, and such agreements supersede all prior agreements among the parties
with respect to these matters.
6.5 DEFINITION. As used herein, the term "Person" means any
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
32
Agreement and Plan of Merger
36
6.6 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
6.7 HEADINGS. The descriptive headings contained in this Agreement
are for convenience and reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.8 NOTICES. Each party shall promptly give written notice to the
other party upon becoming aware of the occurrence or, to its knowledge,
impending or threatened occurrence, of any event which would cause or constitute
a breach of any of its representations, warranties or covenants contained or
referenced in this Agreement and will use its best efforts to prevent or
promptly remedy the same. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile, telex or
other standard form of telecommunications, by courier service, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Defiance, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
With a copy to:
Xxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx, Esq.
33
Agreement and Plan of Merger
37
If to Parent or the Purchaser, to it:
c/o The General Chemical Group Inc.
Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Secretary
With a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
or to such other address or facsimile number as any party may have furnished to
the other parties in writing in accordance with this Section 6.8.
6.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
6.10 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6.11 PARTIES IN INTEREST; ASSIGNMENT. This Agreement is binding upon
and is solely for the benefit of the parties hereto and their respective
successors, legal representatives and assigns, except that Section 4.9 is
intended to be for the benefit of the parties referred to therein, and may be
enforced by such parties. The Purchaser shall have the right (a) to assign to
Parent or any direct or indirect wholly-owned subsidiary of Parent any and all
rights and obligations of the Purchaser under this Agreement, including, without
limitation, the right to substitute in its place such a subsidiary as one of the
constituent corporations in the Merger (such subsidiary assuming all of the
obligations of the Purchaser in connection with the Merger) and may require
subsidiaries of the Company to merge with subsidiaries of the Purchaser (or its
assignees) in connection with
34
Agreement and Plan of Merger
38
the Merger and (b) to restructure the transaction to provide for the merger of
the Company with and into the Purchaser or such other entity as provided above;
PROVIDED, HOWEVER, that the Company shall not be deemed to have breached any of
its representations and warranties herein by reason of the Purchaser exercising
its rights hereunder, and by exercising such rights Parent will be deemed to
have waived the receipt of any additional consents of third parties required by
virtue thereof; and PROVIDED FURTHER that no such assignment shall affect any
obligation of Parent or Purchaser hereunder and that it shall remain primarily
liable as to its assigned obligations. If the Purchaser exercises its right to
so restructure the transaction, the Company shall promptly enter into
appropriate agreements to reflect such restructuring.
6.12 FEES AND EXPENSES. (a) Except as provided below in this Section
6.12, all fees and expenses incurred in connection with the Offer, the Merger,
this Agreement, the Stockholders Agreement and the transactions contemplated by
this Agreement and the Stockholders Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent the sum of (x) Parent's Expenses (as defined below) and (y) $1,750,000
(the "Termination Fee") upon demand if the Company terminates this Agreement
pursuant to Section 6.1(i). In addition, the Company shall pay or cause to be
paid, in same day funds to Parent the sum of Parent's Expenses and the
Termination Fee if (i) the Purchaser terminates this Agreement pursuant to
Section 6.1(f) or 6.1(h) at any time after a proposal for an Acquisition
Transaction has been made or (ii) the Company or the Purchaser terminates this
Agreement pursuant to Section 6.1(b), 6.1(c) or 6.1(e) at any time after a
proposal for an Acquisition Transaction has been made and, within twelve (12)
months after any termination referred to in the immediately preceding clauses
(i) or (ii) of this sentence, any Person that made a proposal for an Acquisition
Transaction (or an affiliate thereof) completes a merger, consolidation or other
business combination with the Company or a subsidiary of the Company, or the
purchase from the Company or from a subsidiary of the Company of 30% or more (in
voting power) of the voting securities of the Company or of 30% or more (in
market value) of the assets of the Company and its subsidiaries, on a
consolidated basis; PROVIDED that the Company will not have any obligations
under this Section 6.12(b) if the Purchaser terminates this Agreement pursuant
to Section 6.1(f)(ii) as a result of the failure of a condition to be satisfied
unless the reason for the failure of such condition to be satisfied is
reasonably related to the making of such proposal for an Acquisition Transaction
by the Person that ultimately consummated a transaction with the Company.
"Expenses" shall mean reasonable and reasonably documented out-of-pocket fees
and expenses incurred or paid by or on behalf of Parent in connection with the
Offer and Merger or the
35
Agreement and Plan of Merger
39
consummation of any of the transactions contemplated by this Agreement
(including, without limitation, fees and expenses of counsel, commercial banks,
investment banking firms, accountants, experts and consultants to Parent and any
of its affiliates), PROVIDED that all such Expenses for this purpose shall not
exceed $1,000,000 in the aggregate.
6.13 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
36
Agreement and Plan of Merger
40
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date set forth above.
DEFIANCE, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
NEW HAMPSHIRE OAK, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
DN ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
37
Agreement and Plan of Merger
41
ANNEX A
-------
CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision
of the Offer, the Purchaser shall not be required to accept for payment, or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered shares after the termination or withdrawal of the
Offer), to pay for any Shares tendered pursuant to the Offer, and (subject to
the terms of the Agreement) may amend or terminate the Offer or postpone the
acceptance for payment, the purchase of, and/or (subject to any such applicable
rules and regulations of the Commission) payment for, Shares tendered, (i)
unless there are validly tendered and not properly withdrawn prior to the
expiration of the Offer that number of Shares which represents in excess of 50%
of the outstanding Shares on a fully-diluted basis (such basis assumes all
shares underlying vested and unvested stock options are issued and outstanding),
or (ii) if at any time on or after the date of the Agreement and at or before
the time of payment for any such Shares (whether or not any Shares shall
theretofore have been accepted for payment or paid pursuant to the Offer) any of
the following conditions exists:
(a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order or
preliminary or permanent injunction entered in any action or proceeding
before any federal or state court or governmental, administrative or
regulatory authority or agency, located or having jurisdiction within the
United States or any country or economic region in which either the
Company or Parent, directly or indirectly, has material assets or
operations, or any other action taken, proposed or threatened, or statute,
rule, regulation, legislation, interpretation, judgment or order proposed,
sought, enacted, entered, promulgated, amended or issued that is
applicable to Purchaser, the Company or any subsidiary or affiliate of
Purchaser or the Company or the Offer or the Merger, by any legislative
body, court, government or governmental, administrative or regulatory
authority or agency located or having jurisdiction within the United
States or any country or economic region in which either the Company or
Parent, directly or indirectly, has material assets or operations, which
could reasonably be expected to have the effect of: (i) making illegal, or
otherwise restraining or prohibiting or making materially more costly, the
making of the Offer, the acceptance for payment of, payment for, or
ownership, directly or indirectly, of some of or all the Shares by Parent
or Purchaser, the consummation of any of the transactions contemplated by
the Agreement or materially delaying the Merger; (ii) prohibiting or
materially limiting the ownership or operation by the Company or any of
its subsidiaries, or by Parent, Purchaser or any of Parent's subsidiaries
of all or any material portion of the business or assets of the Company
and its subsidiaries taken as a whole or Parent or any of its
subsidiaries, or compelling Purchaser, Parent or any of Parent's
subsidiaries to dispose
Agreement and Plan of Merger
42
of or hold separate all or any material portion of the business or assets
of the Company and any of its subsidiaries taken as a whole or Parent or
any of its subsidiaries, in each case as a result of the transactions
contemplated by the Offer or the Agreement; (iii) imposing or confirming
material limitations on the ability of Purchaser, Parent or any of
Parent's subsidiaries effectively to acquire or hold or to exercise full
rights of ownership of Shares including, without limitation, the right to
vote any Shares acquired or owned by Parent or Purchaser or any of
Parent's subsidiaries on all matters properly presented to the
shareholders of the Company, including, without limitation, the adoption
and approval of the Agreement and the Merger or the right to vote any
shares of capital stock of any subsidiary directly or indirectly owned by
the Company; (iv) requiring divestiture by Parent or Purchaser, directly
or indirectly, of any Shares; or (v) which could reasonably be expected to
materially adversely affect the business, financial condition or results
of operations of the Company and its subsidiaries taken as a whole or the
value of the Shares or of the Offer to Purchaser or Parent;
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
decline of at least 25% in either the Dow Xxxxx Average of Industrial
Stocks or the Standard & Poor's 500 index from that existing at the close
of business on the date hereof, (iii) any material adverse change or any
condition, event or development involving a prospective material adverse
change in United States or other material international currency exchange
rates or a suspension of, or limitation on, the markets therefor, (iv) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (v) any limitation (whether or not
mandatory) by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, on, or any other event that
materially adversely affects, the extension of credit by banks or other
lending institutions, (vi) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving
the United States which would reasonably be expected to have a Material
Adverse Effect on the Company or materially adversely affect (or
materially delay) the consummation of the Offer or (vii) in the case of
any of the foregoing existing at the time of the execution of the
Agreement, a material acceleration or worsening thereof which acceleration
or worsening is reasonably expected to have a Material Adverse Effect on
the Company or to materially adversely affect the consummation of the
Offer;
(c) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes
of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the
Agreement and Plan of Merger
43
outstanding Shares has been acquired by any corporation (including the
Company or any of its subsidiaries or affiliates), partnership, person or
other entity or group (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent or any of its affiliates, or (ii) (A) the Board of
Directors of the Company or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Agreement and, within ten
business days of taking and disclosing to its stockholders the
aforementioned position, shall not have publicly reconfirmed its
recommendation of the Offer, the Merger or the Agreement, or approved or
recommended any takeover proposal or any other acquisition of Shares other
than the Offer and the Merger, (B) any corporation, partnership, person or
other entity or group shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company or any of its subsidiaries or
(C) the Board of Directors of the Company or any committee thereof shall
have resolved to do any of the foregoing;
(d) any of the representations and warranties of the Company set
forth in the Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in
each case as if such representations and warranties were made at the time
of such determination, except with respect to representations and
warranties made as of an earlier time;
(e) the Company shall have failed to perform any material obligation
or to comply with any material agreement or material covenant of the
Company to be performed or complied with by it under the Agreement;
(f) the Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the
Company; or
(g) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer shall not have expired or been terminated
or any material approval, permit, authorization, consent or waiting period
of any domestic, foreign or supranational governmental, administrative or
regulatory agency (federal, state, local, provincial or otherwise) located
or having jurisdiction within the United States or any country or economic
region in which either the Company or Parent, directly or indirectly, has
material assets or operations, shall not have been obtained and such
failure to obtain could reasonably be expected to have a Material Adverse
Effect on the Company or the value of the Shares or the Offer to the
Purchaser;
Agreement and Plan of Merger
44
which, in the good faith sole judgment of Purchaser makes it inadvisable to
proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion (subject to the terms of the
Agreement). The failure by 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.
Agreement and Plan of Merger
45
Exhibit A
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx XX
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxx
Xxxxxx X. Xxxxx III
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Lock
Xxxxxxxx Xxxxxxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Xxxx Xxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxx
Agreement and Plan of Merger
