1
EXHIBIT 2
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is made and entered into as of
the 5th day of October, 1999, by and among CIC Acquisition Co., a Delaware
corporation ("Parent"), CIC Acquisition Sub, Inc., a South Carolina corporation
("Acquisition Sub"), and Conso International Corporation, a South Carolina
corporation (the "Company").
STATEMENT OF PURPOSE
The parties hereto desire to effect the statutory merger of Acquisition
Sub with and into the Company (the "Merger") on the terms and conditions set
forth herein and in the Plan of Merger attached hereto as Exhibit A (the "Plan
of Merger") pursuant to which, among other things, all of the issued and
outstanding shares of common stock of the Company ("Company Common Stock"),
other than (a) 533,378 shares of Company Common Stock owned by X. Xxxx Xxxxxxx
(the "Retained Shares") and (b) Dissenting Shares (as defined in the Plan of
Merger), will be exchanged for and converted into the right to receive $9.00 per
share in cash in the manner provided herein and in the Plan of Merger. The
purpose of this Agreement is to set forth the terms and conditions upon which
the Merger shall be effected.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto do hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Merger. Subject to all of the terms and conditions of this
Agreement, the parties hereby agree that the Merger shall be effected at the
Effective Time (as hereinafter defined) in accordance with the Plan of Merger
and the South Carolina Business Corporation Act (the "SCBCA"). The "Effective
Time" means the time at which appropriate articles of merger, including the Plan
of Merger, shall have been filed for immediate effectiveness with the Secretary
of State of South Carolina in the manner prescribed by the SCBCA. Upon the
Effective Time, the separate existence of Acquisition Sub shall cease, and the
Company shall continue as the surviving corporation (the "Surviving
Corporation").
Section 1.2 Closing. Subject to the provisions of Article V hereof, the
closing of the transactions contemplated hereby to effect the Merger (the
"Closing") shall be held at the offices of Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx,
L.L.P., 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 or
at such other location as the Company and the Parent may mutually agree,
beginning at 10:00 a.m. on the business day next following the date of the
meeting of the shareholders of the Company described in Section 4.4 hereof (the
date of such meeting is hereinafter referred to as the "Meeting Date"). If all
of the conditions set forth in Sections 5.1 and 5.2 hereof shall have not been
met or waived on the business day next following the Meeting Date, the Closing
shall be held (a) on the first business day thereafter on which all such
conditions shall have been met or waived or (b) on such other date as the
Company and Parent may mutually agree. Each of the parties hereto covenants and
agrees to use its commercially reasonable efforts to cause all of the conditions
to Closing set forth in Sections 5.1 and 5.2 hereof to be satisfied on or before
2
the business day next following the Meeting Date. At the Closing, subject to the
satisfaction or waiver of the conditions therefor, the parties hereto shall
cause the Merger to be effected by filing appropriate articles of merger,
including the Plan of Merger, with the Secretary of State of South Carolina,
whereupon the Closing shall be completed at the Effective Time. For purposes of
this Agreement, a "business day" is any day other than (a) a Saturday or Sunday,
(b) a day on which the office of the Secretary of State of South Carolina is
closed for official business, (c) a day on which the Exchange Agent (as defined
in the Plan of Merger) is closed for business of the type to be conducted by it
pursuant hereto, or (d) a day on which commercial banks located in New York, New
York are closed for commercial banking business.
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in Section 00-00-000 of the SCBCA.
Section 1.4 Exchange Agent; Funding.
(a) Exchange Agent. Parent and the Company covenant and agree to use
their commercially reasonable efforts to designate and engage an Exchange Agent
sufficiently in advance of the Effective Time so that the exchange of cash for
shares of Company Common Stock to be effected pursuant to the Plan of Merger can
be commenced as soon as possible after the Effective Time. Such Exchange Agent
shall be a bank or trust company mutually acceptable to Parent and the Company,
it being agreed that First Union National Bank, the Company's transfer agent, is
mutually acceptable.
(b) Funding. Subject to the terms and conditions of this Agreement,
Parent shall cause (i) there to be available to the Exchange Agent, at or prior
to the Effective Time, for purposes of the conversion and exchange of shares of
Company Common Stock in the Merger, the aggregate amount of cash to be delivered
to the shareholders of the Company pursuant to the Plan of Merger (the "Merger
Consideration") and (ii) Acquisition Sub to take such other actions as shall be
necessary for it to consummate the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and covenants and agrees
with, Parent and Acquisition Sub that:
Section 2.1 Corporate Organization and Capitalization.
(a) Organization and Good Standing. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
South Carolina, with full corporate power and authority to conduct its business
as it is now being conducted and to own, lease and operate its assets.
(b) Charter Documents and Bylaws. The copies of the Company's Articles
of Incorporation and Bylaws heretofore provided to Parent are true and complete
as of the date hereof.
2
3
(c) Foreign Qualification. The Company is duly licensed or qualified as
a foreign corporation to do business in each jurisdiction set forth in Section
2.1(c) of the Company Disclosure Document (as defined below) which constitutes
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified could not be reasonably expected to have a material adverse effect
on the business, assets or condition (financial or otherwise) of the Company
taken as a whole, or on the ability of the Company to effect the Merger and
perform its other obligations hereunder (a "Company Material Adverse Effect").
"Company Disclosure Document" means the document delivered by the Company to the
Purchaser at or prior to the date hereof containing certain disclosures by the
Company pursuant to this Agreement.
Section 2.2 Authority. The Company has full corporate power to enter
into this Agreement, and all other instruments and documents to be executed and
delivered by it in connection herewith, and to carry out its obligations
hereunder and thereunder. Subject only to approval of the Plan of Merger by the
Company's shareholders, the Company's execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on its part, and this
Agreement constitutes, and all agreements and other instruments or documents to
be executed and delivered by it hereunder will constitute, the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms.
Section 2.3 Capitalization. The authorized capital stock of the Company
consists solely of 60,000,000 shares divided into two classes: (a) 50,000,000
shares of Company Common Stock, of which 7,335,925 shares are issued and
outstanding as of the date hereof, and (b) 10,000,000 shares of Preferred Stock,
none of which are issued and outstanding. All of such issued and outstanding
shares of Company Common Stock are validly issued, fully paid and nonassessable
and are not subject to, nor were they issued in violation of, any preemptive
rights. There are no outstanding stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the book
value, income or other attribute of the Company nor are there any outstanding
options, warrants, conversion rights, subscription rights or other obligations
of the Company to issue any of its capital stock in the future or any securities
convertible into, exchangeable or exercisable for, or otherwise evidencing a
right to acquire any shares of the Company other than options to purchase
Company Common Stock pursuant to the Company's 1993 Stock Option Plan, of which
options to purchase an aggregate of 168,575 shares are outstanding on the date
hereof (the "Outstanding Employee Stock Options") and which are set forth in
Section 2.3 of the Company Disclosure Document. All shares issuable upon
exercise of Outstanding Employee Stock Options have been duly authorized and
will be validly issued, full paid and non-assessable and not be subject to any
preemptive rights.
Section 2.4 Subsidiaries. Section 2.4 of the Company Disclosure
Document sets forth the name, jurisdiction of incorporation, total
capitalization and number of shares of outstanding capital stock of each class
owned, directly or indirectly, by the Company of each corporation of which the
Company owns, directly or indirectly, a majority of the outstanding capital
stock (individually, a "Subsidiary" and, collectively, the "Subsidiaries"). All
of the issued and outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable. Except as set forth in Section 2.4
of the Company Disclosure Document, all such
3
4
shares owned, directly or indirectly through another Subsidiary, by the Company
are owned by the Company beneficially and of record, free and clear of all
liens, pledges, encumbrances or restrictions of any kind (other than
restrictions imposed by applicable securities laws or created pursuant to the
Company's existing senior credit facility). Except as set forth in Section 2.4
of the Company Disclosure Document, the Company has no outstanding options,
warrants, stock appreciation rights, phantom stock or stock equivalents or other
rights to purchase or acquire any capital stock of any Subsidiary, there are no
irrevocable proxies with respect to such shares, and there are no contracts,
commitments, understandings, arrangements or restrictions by which any
Subsidiary or the Company is bound to issue additional shares of the capital
stock of a Subsidiary. Except for the Subsidiaries, and as otherwise disclosed
in Section 2.4 of the Company Disclosure Document, the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity interest in any business. Each
Subsidiary is duly organized and validly existing in good standing under the
laws of the jurisdiction of its organization, with full power and authority to
conduct its business as it is now being conducted and to own, lease and operate
its assets. Each Subsidiary is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified could not be reasonably expected to have a Company Material Adverse
Effect.
Section 2.5 No Conflicts. The Company's execution and delivery of this
Agreement and performance of its obligations hereunder, including effecting the
Merger, do not and will not: (a) contravene or conflict with the Company's
Articles of Incorporation or Bylaws; (b) conflict with, violate or result in any
default under any mortgage, indenture, agreement, instrument or other contract
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their property is bound, other than
the agreements relating to indebtedness of the Company and its Subsidiaries
described in Section 2.5 of the Company Disclosure Document; (c) assuming
compliance with the matters referred to in Section 2.6 hereof, violate any
judgment, order, decree, law, statute, regulation or other judicial or
governmental restriction to which the Company or any of its Subsidiaries is
subject; or (d) assuming compliance with the matters referred to in Section 2.6
hereof, require the consent of, or any prior filing with or notice to, any
governmental authority; except for any occurrences or results referred to in
clauses (b), (c) and (d) of this Section 2.5 which could not be reasonably
expected to have a Company Material Adverse Effect.
Section 2.6 Governmental Authorization. The Company's execution and
delivery of this Agreement and performance of its obligations hereunder,
including its effecting the Merger, require no action by or in respect of, or
filing with, any governmental body, agency, official or authority other than (a)
the filing of articles of merger in accordance with the SCBCA, and (b)
compliance with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), except where the failure of any such
action to be taken or filing to be made could not be reasonably expected to have
a Company Material Adverse Effect.
Section 2.7 Commission Filings. The Company has heretofore made
available to Parent true and complete copies of all (a) annual reports on Form
10-K and quarterly reports on Form 10-Q, (b) proxy statements relating to all of
the Company's meetings of shareholders (whether annual
4
5
or special) held or scheduled to be held and (c) each other statement, report,
schedule or document filed by the Company with the Securities and Exchange
Commission (the "Commission"), in each case since June 29, 1996, which are all
reports required to be filed by the Company with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act from such date through the date hereof
(collectively, the "Commission Filings"). The Commission Filings did not (as of
their respective filing dates, effective dates (with respect to registration
statements) or mailing dates (with respect to proxy statements)) and, taken as a
whole (giving effect to the updating or superceding of information in any such
Commission Filings by information in subsequent Commission Filings), do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. Since
the date of the Company's initial public offering, the Company has complied in
all material respects with Commission filing obligations under the Exchange Act.
The Company's consolidated balance sheets and the notes thereto as of July 3,
1999, June 27, 1998 and June 28, 1997, and the Company's consolidated statements
of operations, cash flows, and shareholders' equity for the fiscal years ended
July 3, 1999, June 27, 1998 and June 28, 1997, included in the Commission
Filings fairly present, for the Company and its consolidated Subsidiaries on a
consolidated basis, their financial position as of the dates thereof and the
results of their operations, cash flows, and changes in shareholders' equity for
such periods in accordance with generally accepted accounting principles applied
on a consistent basis (except as stated in such financial statements) and such
financial statements complied as of their respective dates in all material
respects with applicable rules and regulations of the Commission. Each such
Commission Filing complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as applicable. The Company shall hereafter send to Parent, simultaneously with
their being filed with the Commission, any and all annual, quarterly or current
reports required to be filed under Section 13 or 15(d) of the Exchange Act
subsequent to the date hereof, and all such reports will be filed timely and
conform to the disclosure standards set forth above in this Section 2.7.
Section 2.8 Proxy Statement; Schedule 13E-3. Other than the information
in the Definitive Proxy Statement (as defined in Section 4.4) and the Schedule
13E-3 (as defined in Section 4.4) as to Parent and Acquisition Sub provided by
them, the Definitive Proxy Statement and the Schedule 13E-3 will not as of their
dates and as of the Effective Time contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. The information supplied or to be supplied
in writing by or on behalf of the Company for inclusion in the Preliminary Proxy
Statement (as defined in Section 4.4 hereof), the Definitive Proxy Statement and
the Schedule 13E-3 will comply as to form and substance in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty regarding information furnished by
Parent or Acquisition Sub for inclusion in the Preliminary Proxy Statement, or
any amendment or supplement thereto, the Definitive Proxy Statement, or any
amendment or supplement thereto, or the Schedule 13E-3, or any amendment or
supplement thereto.
Section 2.9 Absence of Certain Changes. Except as contemplated hereby
or as set forth in Section 2.9 of the Company Disclosure Document, since July 3,
1999, the Company has conducted its business in all material respects in the
ordinary course consistent with past practices and there
5
6
has not been (i) any material adverse change in the financial condition,
properties, business or results of operation of the Company taken as a whole;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company; or (iii) any
changes by the Company in accounting principles, practices or methods.
Section 2.10 Litigation; No Undisclosed Liabilities.
(a) Litigation. Except as disclosed in the Commission Filings, there
are no claims, actions, suits or other proceedings pending against the Company
or any of its Subsidiaries before any court, agency or other judicial,
administrative or other governmental body or arbitrator, as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, could be reasonably expected to have a Company Material Adverse
Effect.
(b) No Undisclosed Liabilities. Except (i) as disclosed or reflected in
the consolidated audited financial statements of the Company as of and for the
fiscal year ended July 3, 1999 and (ii) for liabilities and obligations (1)
incurred in the ordinary course of business and consistent with past practice or
(2) pursuant to the terms of this Agreement, neither the Company nor any of its
Subsidiaries has incurred any material liabilities that are required by
generally accepted accounting principles to be disclosed on a balance sheet and
none of which are the type arising out of or in connection with any tort, breach
of contract, breach of warranty, infringement claim or warranty.
Section 2.11 Environmental.
(a) Compliance. The Company and its Subsidiaries have materially
complied and are in material compliance with all applicable material
Environmental and Safety Requirements (as hereinafter defined). "Environmental
and Safety Requirements" means all federal, state, local and foreign statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations and all common law in
each case concerning public health and safety, worker health and safety, and
pollution or protection of the environment (including all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release or threatened Release (whether onsite or offsite), control, or cleanup
of any Hazardous Substances). "Release" has the meaning set forth in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"). "Hazardous Substance" shall mean anything that is a
"hazardous substance" pursuant to CERCLA, anything that is "solid waste" or
"hazardous waste" pursuant to the Federal Resource Conservation and Recovery
Act, anything that is a "pollutant" pursuant to the Federal Water Pollution
Control Act, anything that is a "hazardous chemical" pursuant to the Federal
Occupational Safety and Health Act, anything that is a "pesticide" pursuant to
the Federal Insecticide, Fungicide, and Rodenticide Act, any petroleum product
or byproduct, asbestos, polychlorinated biphenyl, noise or radiation. Neither
the Company nor any of its Subsidiaries has received any oral or written notice,
report or information regarding any violations of, or any liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) or corrective,
investigatory or remedial obligations arising under, Environmental and Safety
Requirements that relate to the Company or its Subsidiaries or any of their
current or former properties or facilities that could reasonably be expected to
result in a Company Material Adverse Effect.
6
7
(b) Permits, Licenses, Etc. Each of the Company and its Subsidiaries
has obtained and has materially complied with, and is currently in material
compliance with, all material permits, licenses and other authorizations that
may be required pursuant to any Environmental and Safety Requirements for the
occupancy of its properties or facilities or the operation of its business.
(c) No Releases. Neither the Company nor any of its Subsidiaries has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or Released any substance (including any hazardous
substance) or owned, occupied or operated any facility or property in a manner
that has given or could reasonably be expected to give rise to any material
liabilities (including any material liability for response costs, corrective
action costs, personal injury, natural resource damages, property damage or
attorneys fees or any investigative, corrective or remedial obligations)
pursuant to CERCLA or any other Environmental and Safety Requirements.
Section 2.12 Compliance with Law.
(a) Conduct of Business. The Company and its Subsidiaries have
conducted their business so as to materially comply with, and are in material
compliance with, all material federal, state, local or foreign laws, statutes,
regulations, rules and other requirements of any governmental authority
applicable to the conduct their business or orders promulgated or judgments
entered by any federal, state, local or foreign court or governmental entity or
instrumentality, including all applicable material laws in respect of the
environment, health, or work conditions. The Company has not received any claim
or notice that it is in violation of any of the aforementioned statutes,
regulations, rules or other requirements in such a manner that could be
reasonably expected to result in any material liabilities to the Company or any
of its Subsidiaries.
(b) Licenses. The Company and its Subsidiaries have all permits,
certificates, licenses, franchises, federal, state, local or foreign
governmental approvals and other authorizations required in connection with the
operation of their business, except for those the absence of which could not be
reasonably expected to have a Company Material Adverse Effect.
Section 2.13 Taxes.
(a) Tax Returns. All Tax Returns required to be filed on or prior to
the Effective Time by the Company and its Subsidiaries with all taxing
authorities have been or prior to the Effective Time will have been filed,
except where the failure to do so could not reasonably be expected to have a
Company Material Adverse Effect. All such Tax Returns are or will be correct and
complete in all material respects. The Company and its Subsidiaries have paid or
made provision for all Taxes shown as due on such returns, and for all other
Taxes the nonpayment of which could reasonably be expected to have a Company
Material Adverse Effect.
(b) Withholding. Each of the Company and its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, except where the failure to withhold or pay
any such Taxes could not reasonably be expected to have a Company Material
Adverse Effect.
7
8
(c) Availability of Federal Income Tax Return. The Company has made
available to the Parent complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by any of the Company and its Subsidiaries since December 31, 1993.
(d) No Waiver. Except as set forth in Section 2.13(d) of the Company
Disclosure Document, none of the Company and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(e) Other Matters. None of the Company and its Subsidiaries has filed a
consent under Code ss.341(f) concerning collapsible corporations. None of the
Company and its Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code ss.280G.
None of the Company and its Subsidiaries has been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(1)(A)(ii). None of the Company and
its Subsidiaries is a party to any Tax allocation or sharing agreement. None of
the Company and its Subsidiaries (i) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company) or (ii) has any Liability for the Taxes of any
Person (other than any of the Company and its Subsidiaries) under Treas. Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(f) Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504(a) or any similar group defined under a similar provision of state,
local or foreign law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Section 2.14 Employee Benefits.
(a) Benefit Plan. Section 2.14 of the Company Disclosure Document sets
forth a list of all material bonus, pension, profit sharing, deferred
compensation, retirement, hospitalization,
8
9
medical or dental reimbursement, severance pay, vacation pay, disability, death
benefit, insurance, and other similar plans, programs or arrangements pursuant
to which the Company or its Subsidiaries provides benefits to its employees
(including all "welfare plans" within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("the
Benefit Plans").
(b) No Defined Benefit Plans, Etc. Except as described in Section 2.14
of the Company Disclosure Document, neither the Company nor any of its
Subsidiaries maintains, contributes to, or has any material liability or
potential material liability under (or with respect to) any "defined benefit
plan" (as defined in Section 3(35) of ERISA), or any "multiemployer plan" (as
defined in Section 3(37) of ERISA). Except as described in Section 2.14 of the
Company Disclosure Document, there are no material pending or threatened
actions, suits, investigations or claims with respect to any Benefit Plan other
than routine claims for benefits.
(c) Compliance, Qualification. All of the Benefit Plans and the
administration thereof comply in all material respects with the requirements of
ERISA (if applicable) and all other material laws and regulations applicable
thereto and neither the Company nor any of its Subsidiaries has received any
notice from any governmental authority of any material failure to so comply
which failure has not been cured. Each Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has received a determination from the
Internal Revenue Service that such Plan is so qualified, and nothing has
occurred since the date of such determination that could materially and
adversely affect the qualified status of such Plan.
(d) Other Matters. None of the Company, its Subsidiaries, or any other
"disqualified person" (within the meaning of Section 4975 of the Code) or any
"party in interest" (within the meaning of Section 3(14) of ERISA), has engaged
in any "prohibited transaction" (within the meaning of Section 4975 of the Code
or Section 406 of ERISA) with respect to any of the Benefit Plans that could
subject any of the Benefit Plans, the Company or any of its Subsidiaries, or any
officer, director or employee of any of the foregoing to a material penalty or
tax under Section 502(i) of ERISA of Section 4975 of the Code.
(e) Reports and Returns. All material reports and returns with respect
to the Benefit Plans required to be filed with any governmental authority have
been timely filed.
(f) Certain Documents. With respect to each Benefit Plan, the Company
has delivered or made available to Parent true, complete and correct copies of
(to the extent applicable): (i) all material documents pursuant to which the
Benefit Plan is maintained, funded and administered (including the plan and
trust documents, any amendments thereto, the summary plan descriptions, and any
insurance contracts or service provider agreements); (ii) the three most recent
annual reports (Form 5500 series) filed with the Internal Revenue Service (with
applicable attachments); (iii) the most recent determination letter received
form the Internal Revenue Service; and (iv) all actuarial reports or statements
of funded status for the three most recent plan years.
Section 2.15 Intellectual Property Rights. The Company and each of its
Subsidiaries owns and possesses all right, title and interest in and to, or has
a valid and enforceable license to use, all material Intellectual Property
Rights (as defined below) necessary for the operation of its business as
currently conducted. There are no third party claims contesting the validity,
9
10
enforceability, use or ownership of any of the Intellectual Property Rights
owned or used by the Company or any Subsidiary, or alleging infringement or
misappropriation, which, if adversely determined, could reasonably be expected
to result in a material liability or a Company Material Adverse Effect. All of
the material Intellectual Property Rights owned or used by the Company or any
Subsidiary as of the date hereof will be owned or available for use by the
Company or such Subsidiary on substantially the same terms immediately
subsequent to the Closing. The Company and each Subsidiary have taken all action
that they have reasonably deemed to be necessary to maintain and protect their
material Intellectual Property Rights. For the purposes of this Agreement,
"Intellectual Property Rights" means all patents, patent applications and patent
disclosures; all inventions (whether or not patentable and whether or not
reduced to practice); all trademarks, service marks, trade dress, trade names,
corporate names and all the goodwill associated therewith; all registered and
unregistered copyrights; all registrations, applications and renewals for any of
the foregoing; and all trade secrets, confidential information, know-how,
research information, specifications, proposals, technical and computer data,
documentation and software, financial business and marketing plans, customer and
supplier lists and related information, marketing materials and all other
proprietary rights.
Section 2.16 Year 2000 Compliance. The Company and each of its
Subsidiaries have conducted an inventory and assessment of the hardware,
software and embedded microcontrollers in noncomputer equipment (the "Computer
Systems") used by the Company and its Subsidiaries in their business, in order
to determine which parts of the Computer Systems are not yet Year 2000 Compliant
(as defined below) and to estimate the cost of rendering such Computer Systems
Year 2000 Compliant prior to January 1, 2000 or such earlier date on which the
Computer Systems may shut down or produce incorrect calculations or otherwise
malfunction without becoming totally inoperable. The Company does not expect to
suffer a Company Material Adverse Effect by reason of its failure to be Year
2000 Compliant with respect to its Computer Systems. For purposes of this
Agreement, "Year 2000 Compliant" means that all of the Computer Systems
correctly recognize, manipulate and process (including calculating, comparing
and sequencing) date information relating to dates on or after January 1, 2000,
including leap year calculations, and that the operation and functionality of
such Computer Systems will not be adversely affected by the advent of the year
2000 or any manipulation of data featuring date information relating to dates
before, on or after January 1, 2000.
Section 2.17 Real Property.
(a) Owned Real Property. Section 2.17(a) of the Company Disclosure
Document sets forth the address and description of each material parcel of real
property owned by the Company or any of its Subsidiaries (the "Owned Real
Property"). With respect to each parcel of Owned Real Property, the Company has
good and marketable fee simple title to such parcel, free and clear of all liens
and encumbrances, except Permitted Encumbrances (as defined in subsection (c)
below). Section 2.17(a) of the Company Disclosure Document sets forth a list of
all material leases, licenses, concessions or other agreements pursuant to which
the Company or any of its Subsidiaries has granted the right of use or occupancy
to any third party with respect to any parcel of Owned Real Property (including
all amendments, extensions, renewals, guaranties and other agreements with
respect thereto) (the "Owned Real Property Leases"), and the Company has
delivered or made available to Parent a true and complete copy of each such
lease or other document.
10
11
(b) Leased Real Property. Section 2.17(b) of the Company Disclosure
Document sets forth the address of each material parcel of real property leased,
subleased or otherwise owned by a third party and used or occupied by the
Company or any of its Subsidiaries (the "Leased Real Property"; and together
with the Owned Real Property, the "Real Property") and a list of all leases,
subleases, licenses, concessions or other agreements (including all amendments,
extensions, renewals, guaranties and other agreements with respect thereto) (the
"Leases") for each parcel of Leased Real Property. The Company has delivered or
made available to Parent a true and complete copy of each Lease. Except as set
forth in Section 2.17(b) of the Company Disclosure Document and for other
events, facts or circumstances that could not reasonably be expected to result
in a Company Material Adverse Effect, with respect to each of the Leases: (i)
such Lease is legal, valid, binding, enforceable and in full force and effect;
(ii) the consummation of the Merger does not require the consent of any other
party to such Lease, will not result in a breach of or default under such Lease,
or otherwise cause such Lease to cease to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the Closing; (iii) the
Company is not in breach or default under such Lease, and no event has occurred
or circumstance exists which, with the delivery of notice, the passage of time
or both, would constitute such a breach or default or permit the termination,
modification or acceleration of rent under such Lease; and (iv) neither the
Company nor any of its Subsidiaries has assigned, subleased, mortgaged, deeded
in trust or otherwise transferred or encumbered such Lease or any interest
therein.
(c) Permitted Encumbrances. The term "Permitted Encumbrances" shall
mean with respect to each parcel of Real Property: (a) real estate taxes,
assessments and other governmental levies, fees or charges imposed with respect
to such parcel which are not due and payable as of the Closing Date; (b)
mechanics and similar statutory liens for labor, materials or supplies provided
with respect to such parcel incurred in the ordinary course of business for
amounts which are not delinquent and which would not, individually or in the
aggregate, have a Company Material Adverse Effect; (c) zoning, building and
other land use laws imposed by any governmental authority having jurisdiction
over such parcel which are not violated in any material respect by the current
use or occupancy of such parcel or the operation of the Company or any of its
Subsidiaries thereon; (d) Owned Real Property Leases; and (e) easements,
covenants, conditions, restrictions, liens, encumbrances and other matters
affecting title to such parcel which (i) secure indebtedness reflected in the
Company's financial statements included in the Commission Filings or (ii) do not
materially impair the use or value of such parcel in the operation of the
Company's business.
Section 2.18 Takeover Provisions Inapplicable. The provisions of
Article 1 "Control Share Acquisitions," of Chapter 2, Title 35, of the 1976
South Carolina Code (S.C. Code xx.xx. 35-2-101 et seq.) and Article 2, "Business
Combinations," of Chapter 2, Title 35, of the 1976 South Carolina Code (S.C.
Code xx.xx. 35-2-201 et seq.) are not applicable to the transactions
contemplated hereby.
Section 2.19 Change of Control Provisions. Except as described in
Section 2.19 of the Company Disclosure Document, none of (a) the arrangements,
agreements or understandings to which the Company or any of its Subsidiaries is
a party with any of their employees or affiliates or (b) the Company's or any of
its Subsidiary's employee benefit plans, programs or
11
12
arrangements contains any provision that would become operative as the result of
a change of control of the Company or that will become operative as a result of
the Merger or any other transactions contemplated by this Agreement.
Section 2.20 Board Recommendation. As of the date hereof, the Board of
Directors of the Company has recommended that the shareholders of the Company
approve the Plan of Merger and this Agreement.
Section 2.21 Fairness Opinion. The Company has received the written
opinion (the "Fairness Opinion") of The Xxxxxxxx-Xxxxxxxx Company, LLC,
satisfactory in form and substance to the Company, to the effect that the
consideration to be received by the shareholders of the Company pursuant to the
merger is fair to them from a financial point of view.
Section 2.22 No Brokers. Except for The Xxxxxxxx-Xxxxxxxx Company, LLC,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Company who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub, jointly and severally, hereby represent and
warrant to, and covenant and agree with, the Company that:
Section 3.1 Corporate Organization and Good Standing. Parent is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware. Acquisition Sub is a corporation duly organized and
validly existing in good standing under the laws of the State of South Carolina.
Parent and Acquisition Sub have full corporate power and authority to conduct
their businesses as they are now being conducted and to own, lease and operate
their assets.
Section 3.2 Authority. Parent and Acquisition Sub have full corporate
power to enter into this Agreement, and all other instruments and documents to
be executed and delivered by either of them in connection herewith, and to carry
out their obligations hereunder and thereunder. Parent's and Acquisition Sub's
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all requisite
corporate action on either of their parts, and this Agreement constitutes, and
all agreements and other instruments or documents to be executed and delivered
by each of them hereunder will constitute, their legal, valid and binding
obligations of the Parent and Acquisition Sub enforceable against Parent and
Acquisition Sub in accordance with their terms.
Section 3.3 No Conflicts. Parent's and Acquisition Sub's execution and
delivery of this Agreement and performance of their obligations hereunder,
including Acquisition Sub's effecting the Merger, do not and will not: (a)
contravene or conflict with their respective Articles of Incorporation or
Bylaws; (b) conflict with, violate or result in a default under any material
mortgage, indenture, agreement, instrument or other contract to which either of
them is a party or by
12
13
which either of them or their property is bound; (c) assuming compliance with
the matters referred to in Section 3.4 hereof, violate any judgment, order,
decree, law, statute, regulation or other judicial or governmental restriction
to which either of them is subject; or (d) assuming compliance with the matters
referred to in Section 3.4 hereof, require the consent of, or any prior filing
with or notice to, any governmental authority; except for any occurrences or
results referred to in clauses (b), (c) or (d) which would not have or
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations of Parent
and its subsidiaries taken as a whole, or on the ability of Parent and
Acquisition Sub to effect the Merger and perform their other obligations
hereunder (a "Parent Material Adverse Effect").
Section 3.4 Governmental Authorization. Parent's and Acquisition Sub's
execution and delivery of this Agreement and performance of their obligations
hereunder, including Acquisition Sub's effecting the Merger, require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of articles of merger in accordance with the
SCBCA, and (b) compliance with the applicable requirements of the HSR Act,
except where the failure of any such action to be taken or filing to be made
would not have or reasonably be expected to have a Parent Material Adverse
Effect.
Section 3.5 Proxy Statement; Schedule 13E-3. The information as to
Parent and Acquisition Sub to be contained in the Definitive Proxy Statement to
be provided to the Company's shareholders in connection with their voting on the
Plan of Merger and in the Schedule 13E-3 (provided such information and the
presentation thereof shall have been approved by Parent) will not as of their
dates and as of the Effective Time contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. The information supplied or to be supplied
in writing by or on behalf of Parent and Acquisition Sub for inclusion in the
Preliminary Proxy Statement, the Definitive Proxy Statement and the Schedule
13E-3 will comply as to form and substance in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of the
Commission thereunder. Notwithstanding the foregoing, Parent and Acquisition Sub
make no representation or warranty regarding information furnished by the
Company for inclusion in the Preliminary Proxy Statement, or any amendment or
supplement thereto, the Definitive Proxy Statement, or any amendment or
supplement thereto, or the Schedule 13E-3, or any amendment or supplement
thereto.
Section 3.6 Financing. Parent and Acquisition Sub have previously
delivered to the Company a true and correct copy of the letters evidencing the
interest of SunTrust Equitable Securities Corporation, SunTrust Bank, Atlanta
and SunTrust Banks, Inc. in providing financing for the Merger. The letters
evidencing such financing commitments have been executed by Parent and are in
full force and effect.
Section 3.7 Litigation. There are no claims, actions, suits or
proceedings pending against Parent or Acquisition Sub before any court, agency
or other judicial, administrative or other governmental body or arbitrator, as
to which there is a reasonable likelihood of an adverse determination and which,
if adversely determined, could reasonably be expected to have a Parent Material
Adverse Effect.
13
14
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
Section 4.1 Acquisition Proposals.
(a) Non-Solicitation. From the date hereof through the Effective Time
or earlier termination of this Agreement, neither the Company nor any of its
Subsidiaries shall, directly or indirectly, nor shall any of them authorize or
permit any officer, director, employee, financial advisor, counsel, agent or
other representative to: (i) solicit, encourage or initiate submission of
proposals or offers from any corporation, person or other entity or group
relating to any acquisition or purchase of all or a material amount of the
assets of, or any securities of, or any merger, share exchange, consolidation or
business combination with, the Company or any of its Subsidiaries (a "Take-over
Proposal"), or (ii) with respect to any effort or attempt by any corporation,
person or other entity or group to do or seek any of the foregoing, except as
required by legal process, furnish to any corporation, person or other entity or
group any non-public or confidential information with respect to the Company and
its Subsidiaries or their businesses or participate in any discussion or
negotiation as to the matters described in clause (i); provided, however, if the
Company receives a Take-over Proposal that is unsolicited or that did not
otherwise result from a breach of this Section 4.1(a), the Company may furnish
non-public or confidential information to the corporation, person, entity or
group that made such Take-over Proposal and may participate in negotiations
regarding such Take-over Proposal if the Board of Directors of the Company
determines, after consulting with legal advisors, that (A) failure to do so
would be reasonably likely to constitute a breach of its fiduciary duties to the
Company's shareholders under applicable law and (B) such Take-over Proposal is
reasonably likely to lead to a Superior Take-over Proposal.
(b) Superior Take-Over Proposal. The Company shall not enter into any
agreement with respect to any Take-over Proposal or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement
unless the Company's Board of Directors:
(i) determines (which determination shall be made by the
recommendation or approval of a majority of any Special Committee
formed to consider a Take-over Proposal and by the approval of a
majority of the Board of Directors) in good faith after consultation
with (and receiving such written advice and opinions as it deems
appropriate from) its financial and legal advisors that:
(A) such transaction (1) is more favorable to the
shareholders of the Company from a financial point of view
than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions of such
transaction proposed in writing by Parent in response to such
Take-over Proposal), (2) is not subject to any greater
material contingency (considering all of the conditions
relating to such Take-over Proposal in their entirety) than
those set forth in Section 5.1 of this Agreement (considered
in their entirety) (provided that the other party to such
transaction has also reasonably demonstrated its ability to
overcome or address all the contingencies contained in its
Take-over Proposal
14
15
(including any approval required under the HSR Act)) and (3)
is in the best interest of the shareholders of the Company,
and
(B) failure to approve such Take-over Proposal would
constitute a breach of its fiduciary duties to the Company's
shareholders under applicable law; and
(ii) receives an opinion of The Xxxxxxxx-Xxxxxxxx Company, LLC
(or any other nationally recognized investment banking firm) to the
effect that the consideration to be received by the shareholders of the
Company in connection with such Take-over Proposal is fair to them from
a financial point of view (any such transaction satisfying clauses (i)
and (ii) is referred to as a "Superior Take-over Proposal");
provided, that the Company shall at the time of or prior to entering into such
agreement have complied with the provisions of Section 5.3(g) hereof, including
the payment to Parent of the Termination Fee provided for in Section 5.4.
(c) Notice. The Company agrees to (i) promptly notify Parent if the
Company, or any of its officers, directors, representatives or agents receives
any indication of interest, request for information or offer in respect of a
Take-over Proposal, (ii) communicate to Parent in reasonable detail the material
terms of any such indication, request or proposal, and (iii) in the event that
the Company receives any Superior Take-over Proposal, give Parent a reasonable
opportunity to present a counterproposal.
Section 4.2 Conduct of the Company. From the date hereof through the
Effective Time, unless Parent shall otherwise consent in writing and except as
otherwise contemplated by this Agreement, the Company and its Subsidiaries shall
conduct their operations only in the ordinary course of business (provided,
however, that the Company may take appropriate actions and may incur costs and
expenses (including those referred to in Section 2.22 hereof) in connection with
the preparation for, and consummation of, the transactions contemplated hereby),
and the Company and its Subsidiaries shall use their commercially reasonable
efforts to preserve intact their business organization and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time, without the prior written consent of Parent the
Company will not, and will not permit any of its Subsidiaries to:
(a) amend its Articles of Incorporation or Bylaws or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its outstanding capital stock;
(b) (i) split, combine or reclassify any shares of its capital
stock, (ii) declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock, or (iii) directly or
indirectly, redeem, purchase or otherwise acquire any shares of its
capital stock or any rights, warrants or options to acquire any such
shares (other than Outstanding Employee Stock Options set forth in
Section 2.3 of the Company Disclosure Document);
15
16
(c) issue, sell, pledge or deliver or agree or commit to
issue, sell or deliver any of its capital stock or any securities
convertible into or exercisable or exchangeable for shares of its
capital stock; provided, however, the Company may issue shares of
Company Common Stock upon the exercise of Outstanding Employee Stock
Options set forth in Section 2.3 of the Company Disclosure Document;
(d) incur any material liability or obligation (including any
indebtedness for borrowed money or any guaranty of any such
indebtedness of any other person) other than in the ordinary course of
business;
(e) except as set forth in Section 4.2(e) of the Company
Disclosure Document, acquire any material assets or properties or
dispose of, mortgage, license, abandon or encumber any material assets
or properties (tangible or intangible) or amend or terminate any Lease
that is material to the Company's operations, other than in the
ordinary course of business;
(f) acquire any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof (or any interest therein) that would be material to the
Company's consolidated financial condition;
(g) sell or otherwise dispose of any assets that are material
to the Company's consolidated financial condition;
(h) grant or agree to grant to any employee any increase in
wages or bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish
any new compensation or benefit plans or arrangements, or amend or
agree to amend any existing employee stock option plans, except (i) for
increases and other changes in the ordinary course of business and (ii)
the Company's 1993 Stock Option Plan may be amended to (1) cause
unvested stock options to vest and (2) accelerate the expiration dates
of outstanding stock options;
(i) merge, amalgamate or consolidate with any other entity in
any transaction;
(j) enter into or amend any employment, consulting, severance
or similar agreement with any individual, except in the ordinary course
of business;
(k) change its cash management or accounting policies in any
material respect, except as required by generally accepted accounting
principles;
(l) cancel, terminate, amend, modify or waive any of the terms
of any confidentiality or standstill agreement executed with respect to
the Company by any other party prior to the date of this Agreement;
(m) except as contemplated by Section 4.1 hereof or as set
forth in Section 4.2(e) of the Company Disclosure Document, authorize,
recommend, propose or announce an intention to authorize, recommend or
propose, or enter into an agreement in principle or an agreement with
respect to, any merger, consolidation or business
16
17
combination (other than the Merger), any acquisition or disposition of
a material amount of assets or securities (including, without
limitation, the assets or securities of any Subsidiary and other than
inventory in the ordinary course); or
(n) commit or agree to take any of the foregoing actions.
Section 4.3 Access to Information; Confidentiality. The Company
covenants and agrees to afford to Parent and to cause its Subsidiaries to afford
to Parent, and its accountants, counsel, financing sources and other
representatives, full access, during normal business hours from the date hereof
until the Effective Time, to all properties, premises, books, contracts,
records, financial and operating data, projections, forecasts, business plans,
strategic plans, management, personnel, accountants, representatives, and other
information relating to the Company and its Subsidiaries. Notwithstanding the
foregoing, neither the Company nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would impose an unreasonable burden on the Company, any Subsidiary or any
employee of the Company or any such Subsidiary or would violate or prejudice the
rights of the customers of the Company or any Subsidiary, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. In the event of termination of this Agreement, Parent,
Acquisition Sub and the Company will deliver to the appropriate party all
documents, work papers and other material so obtained before or after the
execution hereof and will not themselves use, directly or indirectly, any
information so obtained or otherwise obtained from the Company, Parent or
Acquisition Sub hereunder, or in connection herewith, and will use their
reasonable best efforts to have all such information kept confidential and not
used in any way detrimental to the Company, Parent or Acquisition Sub. The
Company agrees to cause its and its Subsidiaries' officers, employees,
consultants, agents, accountants and attorneys to cooperate with the Parent,
Acquisition Sub and their accountants, counsel, financing sources and other
representatives in connection with such investigation of the Company and its
Subsidiaries, including the preparation by Parent, Acquisition Sub and their
financing sources of any offering memorandum or related documents. No
investigation by the Parent or Acquisition Sub heretofore or hereafter made
shall modify or otherwise affect any representations and warranties of the
Company, which shall survive any such investigation in accordance with the terms
of this Agreement, or the conditions to the obligation of the Parent and
Acquisition Sub to consummate the transactions contemplated hereby. The
obligations of Parent and Acquisition Sub under this Section 4.3 are in addition
to and not in limitation of the obligations of Citicorp Venture Capital, Ltd.
under its letter agreement dated May 5, 1999 with The Xxxxxxxx-Xxxxxxxx Company,
LLC as financial advisor to, and on behalf of the Company (the "Confidentiality
Agreement"), and each of Parent and Acquisition Sub hereby agrees to be bound by
the terms of the Confidentiality Agreement to the same extent as though it were
a signatory thereto.
Section 4.4 Approval by the Company's Shareholders; Proxy Statement.
(a) Shareholders' Meeting. The Company shall cause a meeting of its
shareholders (the "Shareholders' Meeting") to be duly called and held as soon as
reasonably practicable after the date hereof for the purpose of considering and
acting upon approval of the Plan of Merger and all actions contemplated hereby
which require approval and adoption by the Company's shareholders. The
17
18
Company will, through its Board of Directors, recommend to its shareholders
approval of the Plan of Merger and shall take all lawful action necessary to
obtain such approval.
(b) SEC Filings. In connection with the Shareholders' Meeting, the
Company will, as promptly as practicable after the date hereof, prepare and
file, and Parent will cooperate with the Company in the preparation and filing
of, a preliminary proxy statement relating to the transactions contemplated by
this Agreement (the "Preliminary Proxy Statement") and a Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3") with the Commission and will use its
commercially reasonable efforts to respond to any comments of the Commission and
to cause the definitive proxy statement (the "Definitive Proxy Statement") to be
mailed to the Company's shareholders and filed with the Commission, in each case
as soon as reasonably practicable. The Preliminary Proxy Statement, the
Definitive Proxy Statement and the Schedule 13E-3 shall contain such information
or statements regarding the Company, Parent, Acquisition Sub, this Agreement and
the transactions contemplated hereby as Parent shall reasonably request,
including any such information to be provided in response to any request or
comment by the Commission. Each party to this Agreement will notify the other
parties promptly of the receipt of the comments of the Commission, if any, and
of any request by the Commission for amendments or supplements to the
Preliminary Proxy Statement, the Definitive Proxy Statement or the Schedule
13E-3 or for additional information, and will supply the others with copies of
all correspondence between such party or its representatives, on the one hand,
and the Commission or members of its staff, on the other hand, with respect to
the Preliminary Proxy Statement, the Definitive Proxy Statement, the Schedule
13E-3 or the Merger. If at any time prior to the Shareholders' Meeting, any
event should occur relating to the Company or any of the Subsidiaries which
should be set forth in an amendment of, or a supplement to, the Definitive Proxy
Statement or the Schedule 13E-3, the Company will promptly inform Parent. If at
any time prior to the Shareholders' Meeting, any event should occur relating to
Parent or Acquisition Sub or any of their respective affiliates, or relating to
the plans of any such persons for the Surviving Corporation after the Effective
Time of the Merger, or relating to the financing commitments described in
Section 3.6, that should be set forth in an amendment of, or a supplement to,
the Definitive Proxy Statement or the Schedule 13E-3, the Company, with the
reasonable cooperation and at the expense of Parent, will, upon learning of such
event, promptly prepare, file and, if required, mail any such amendment or
supplement to the Company's shareholders; provided that (i) prior to such filing
or mailing the Company shall consult with Parent with respect to such amendment
or supplement and shall afford Parent reasonable opportunity to comment thereon
and (ii) if the events or circumstances giving rise to the need to prepare such
amendment or supplement constituted a material breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement, the
costs and expenses related to the preparation, filing and mailing of such
amendment or supplement shall be borne by the Company. Parent will furnish to
the Company the information relating to Parent and Acquisition Sub, their
respective affiliates and the plans of such persons for the Surviving
Corporation after the Effective Time of the Merger, and relating to the
financing commitments described in Section 3.6, to the extent required to be set
forth in the Preliminary Proxy Statement, the Definitive Proxy Statement or the
Schedule 13E-3 under the Exchange Act and the rules and regulations of the
Commission thereunder. The Definitive Proxy Statement will not contain any
information or statement that Parent reasonably believes to be materially
adverse to the Company's ability to obtain the approval of the Company's
shareholders of the Merger and the consummation of the transactions contemplated
hereby, except to the extent required by
18
19
applicable law or the Commission's rules and regulations. The Company will use
its commercially reasonable efforts to cause the Definitive Proxy Statement to
contain the written opinion of The Xxxxxxxx-Xxxxxxxx Company, LLC to the effect
that the Merger Consideration is fair to the shareholders of the Company from a
financial point of view.
Section 4.5 Expenses. Except as provided in Section 5.4, all costs and
expenses incurred by a party in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses; provided, however, that in no event shall any costs and expenses
incurred by any party hereto reduce the consideration to be received by the
shareholders of the Company in exchange for their shares of Company Common Stock
as provided in the Plan of Merger.
Section 4.6 Certain Filings, Consents and Arrangements.
(a) HSR Act. Parent and the Company shall use their commercially
reasonable efforts to cause Notification and Report Forms under the HSR Act to
be filed with the Federal Trade Commission and the Antitrust Division of the
Department of Justice as soon as reasonably practicable after the execution of
this Agreement. Parent and the Company shall cooperate and consult with each
other with respect to the preparation of the Notification and Report Forms and
any other submissions, including but not limited to responses to written or oral
comments or requests for additional information or documenting material by the
Federal Trade Commission or the Antitrust Division of the Department of Justice,
required to be made pursuant to the HSR Act in connection with the transactions
contemplated hereby. Parent shall pay the filing fee associated with such
filings.
(b) Other Filings, Consents and Arrangements. Parent, Acquisition Sub
and the Company shall cooperate with one another (i) in promptly determining
whether any other filings are required to be made or other consents, approvals,
permits or authorizations are required to be obtained under any other federal,
state or foreign law or regulation and (ii) in promptly making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such consents, approvals, permits or authorizations.
Section 4.7 Notification of Certain Events. Each party covenants and
agrees to give prompt written notice to the others of (a) the occurrence (or
non-occurrence) of any event the occurrence (or non-occurrence) of which would
be likely to cause (i) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (ii) any
covenant, agreement or condition contained in this Agreement not to be complied
with or satisfied in all material respects (in each case, if any such
representation or warranty or covenant or agreement is already qualified by
materiality or by reference to a Company Material Adverse Effect, then in all
respects) or (b) any material failure by it to comply or satisfy any covenant,
agreement or condition contained in this Agreement.
Section 4.8 Public or Shareholder Communications. From and after the
date of this Agreement, except as Parent and the Company may otherwise agree,
Parent, Acquisition Sub and the Company shall not issue any press release with
respect to this Agreement or the transactions contemplated hereby unless such
party believes in good faith based on advise of counsel that such action is
required by applicable law (including the rules and regulations of the
Commission) or
19
20
obligations pursuant to stock exchanges and the Nasdaq National Market. In such
case, the party making such release shall use its reasonable best efforts to
consult with the other parties, provide the other parties with reasonable
opportunity to comment on the form, substance and timing of, and use its
reasonable best efforts to agree upon the text of, any press release, before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency with respect thereto.
Section 4.9 Indemnification and Insurance.
(a) Articles of Incorporation and Bylaws. Parent and Acquisition Sub
agree to cause the Articles of Incorporation and Bylaws of the Surviving
Corporation to contain the provisions with respect to exculpation and
indemnification of directors of the Company set forth in the Articles of
Incorporation and Bylaws of the Company on the date of this Agreement, which
provisions shall not be amended for a period of six years after the Effective
Time (unless such amendment is required by law and except for amendments that do
not adversely affect the rights of the current directors of the Company
thereunder).
(b) Indemnification. (i) From and after the Effective Time, Parent and
the Surviving Corporation shall each indemnify, defend and hold harmless, to the
fullest extent permitted by the SCBCA, each person who was an officer, director,
employee or agent of the Company at any time on or prior to the Effective Time
(an "Indemnified Party") against any loss, damage, liability, cost or expense
incurred by such Indemnified Party in connection with any claim, action, suit,
proceeding or investigation ("Claim") which is based on or arises out of, in
whole or in part, the actions, conduct or omissions of such Indemnified Party at
or prior to the Effective Time in his or her capacity as such officer, director,
employee or agent, or in any other capacity in which he or she is serving at the
request of the Company (including serving as a trustee or administrator of any
employee benefit plan of the Company or any of its Subsidiaries). Without
limiting the generality of the preceding sentence, in the event any Indemnified
Party becomes involved in any Claim, after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, periodically advance to such
Indemnified Party its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith) to the fullest
extent permitted by the SCBCA, subject to the providing by such Indemnified
Party of an undertaking to reimburse all amounts so advanced in the event of a
final and non-appealable determination by a court of competent jurisdiction that
such Indemnified Party is not entitled thereto.
(ii) The Indemnified Party shall control the defense of any
Claim with counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to Parent, provided, that Parent and the Surviving
Corporation shall be permitted to participate in the defense of such Claim at
their own expense, and provided, further, that if any D&O Insurance (as defined
in paragraph (c) of this Section 4.10) in effect at the time shall require the
insurance company to control such defense in order to obtain the full benefits
of such insurance and such provision is consistent with the provisions of the
Company's D&O Insurance existing as of the date of this Agreement, then the
provisions of such policy shall govern. Neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent, which consent shall not be withheld unreasonably.
20
21
(c) Insurance. For a period of not less than six years after the
Effective Time, Parent shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance ("D&O Insurance)
maintained by the Company, or substitute policies providing at least the same
coverage and amounts and containing terms and conditions which are not less
advantageous in any material respect, in each case with respect to claims
arising from facts or events which occurred at or prior to the Effective Time;
provided, that Parent and the Surviving Corporation shall not be required to pay
in the aggregate an annual premium for D&O Insurance in excess of 200% of the
last annual premium paid prior to the date hereof, but in each case, shall
purchase the maximum amount of coverage as is reasonably available for such
amount.
(d) Beneficiaries. This Section 4.10 is intended to be for the benefit
of, and shall be enforceable by, the Indemnified Parties and their heirs and
personal representatives and shall be binding upon Parent, the Company and the
Surviving Corporation and their respective successors and assigns.
Section 4.10 Dissenters' Rights. The Company shall not settle or
compromise prior to the Effective Time any claim of a shareholder in respect of
such shareholder's dissenters' rights pursuant to Chapter 13 of the SCBCA in
connection with the Merger without the prior written consent of Parent.
Section 4.11 Termination or Exercise of Stock Options; Accelerated
Vesting. Prior to the Effective Time, the Company will take appropriate action
so that, at the Effective Time, all of the Outstanding Employee Stock Options
and any other plans, programs or arrangements providing for the issuance or
grant of any other interest in respect of the capital stock of the Company or
any Subsidiary shall have been exercised, shall have expired, or shall have been
terminated in exchange for or in consideration of cash in an amount not in
excess of the amount by which the Merger Consideration exceeds the exercise
price for such underlying shares. The Company shall take all action reasonably
necessary to ensure that following the Effective Time no participant in the
Company's 1993 Stock Option Plan or in any other plans, programs or arrangements
shall have any right thereunder to acquire or participate in changes in value of
equity securities of the Company, the Surviving Corporation, Acquisition Sub or
any of their respective subsidiaries after, and to terminate such plans
effective as of, the Effective Time. Notwithstanding the foregoing, the terms of
all such Outstanding Employee Stock Options may be amended to cause all unvested
stock options to become vested prior to the Effective Time.
Section 4.12 Fairness Opinion. The Company agrees that it will use its
commercially reasonable efforts to assist The Xxxxxxxx-Xxxxxxxx Company, L.L.C.
in updating or confirming its fairness opinion prior to each of (a) the date the
Company mails the Proxy Statement to its shareholders, (b) the Meeting Date and
(c) the Closing.
Section 4.13 Shareholder Litigation. The Company shall notify Parent of
any shareholder litigation against the Company and its directors relating to the
transactions contemplated by this Agreement and shall consult with Parent prior
to entering into any settlement of such litigation.
Section 4.14 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its commercially
reasonable 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
21
22
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement and to cooperate with each other
in connection with the foregoing, including using its commercially reasonable
efforts to (i) obtain all necessary waivers, consents and approvals and
effecting all necessary registrations and filings under any federal or foreign
law or regulation (including, but not limited to, filings under the HSR Act),
(ii) obtain all necessary waivers, consents and approvals from other parties to
material agreements, leases and other contracts or other agreements subject,
however, to any required vote of the shareholders of the Company and (iii) cause
there to be delivered at the Closing such certificates, assurances and documents
as are reasonable and customary in transactions of this type. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and/or directors
of Parent, Acquisition Sub and the Company shall take such necessary action.
Section 4.15 Financing. Parent and Acquisition Sub shall, and shall
cause their respective officers, directors, employees, affiliates and
representatives to, use their commercially reasonable efforts to arrange as
promptly as practicable and (subject only to the simultaneous consummation of
the transactions contemplated hereby on the terms and conditions set forth
herein) complete the financings contemplated by the financing commitments
described in Section 3.6. Parent and Acquisition Sub shall use their reasonable
best efforts to notify the Company if Parent or Acquisition Sub becomes aware of
any fact, occurrence or event that it reasonably believes would be likely to
prevent Parent from completing financing arrangements for the Merger.
ARTICLE V
CONDITIONS TO THE MERGER; TERMINATION
Section 5.1 Conditions to Obligations of Parent and Acquisition Sub.
The obligations of Parent and Acquisition Sub to complete the Closing and effect
the Merger are contingent upon the fulfillment of each of the following
conditions at or before the Effective Time, except to the extent that Parent
may, in its sole and absolute discretion, waive any one or more thereof in whole
or in part:
(a) Representations and Warranties. All of the representations and
warranties made by the Company herein shall be true and correct in all material
respects (or if such representation or warranty is already qualified by
materiality or by reference to a Company Material Adverse Effect, then in all
respects) as of the date of this Agreement and as of the Effective Time as
though made at and as of the Effective Time.
(b) Obligations and Agreements. The Company shall have performed in all
material respects its obligations and agreements contained herein to be
performed prior to or at the Effective Time.
(c) Bringdown Certificate. Parent and Acquisition Sub shall have
received a certificate from an authorized officer of the Company, dated as of
the date of the Closing, to the effect that the conditions set forth in Sections
5.1(a) and 5.1(b) have been satisfied.
22
23
(d) Approval of the Company's Shareholders; Dissent. The Plan of Merger
shall have been duly approved by the shareholders of the Company in accordance
with Section 00-00-000 of the SCBCA, and Parent shall have received evidence, in
form and substance reasonably satisfactory to it, that the holders of no more
than 6% of the outstanding shares of Company Common Stock, in the aggregate
calculated on a fully-diluted basis immediately prior to the Effective Time,
shall have given the Company written notice pursuant to Section 00-00-000 of the
SCBCA of their intent to exercise dissenters' rights with respect to such shares
in connection with the Merger.
(e) HSR Act. Any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated.
(f) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, (i)
which seeks to restrain, prevent or change the transactions contemplated hereby
or questioning the validity or legality of any of such transactions or seeking
damages in connection with any of such transactions or (ii) which if adversely
determined could reasonably be expected to have a material adverse effect on the
business, assets or condition (financial or otherwise) of the Surviving
Corporation taken as a whole, or on the ability of any party to this Agreement
to perform any of its material obligations hereunder.
(g) Financing. Parent shall have received the cash proceeds of debt
financing in an amount necessary to satisfy its obligations hereunder (including
payment of the aggregate Merger Consideration) and pay all fees and expenses in
connection herewith on terms and conditions satisfactory to it. Parent
acknowledges that receipt of the cash proceeds of debt financing from parties
satisfactory to it in an amount not less than and on substantially the same
terms and conditions (including with respect to availability) as set forth in
the debt financing commitments described in Section 3.6 (without giving effect
to any "market-flex" language contained therein) shall satisfy this condition;
provided, that such amount is sufficient to satisfy its obligations arising
hereunder and repay all other outstanding funded debt of the Company and its
Subsidiaries on a consolidated basis.
(h) Options. All outstanding options to acquire the Company Common
Stock shall have been exercised or cancelled.
Section 5.2 Conditions to the Company's Obligations. The obligations of
the Company to complete the Closing and effect the Merger are contingent upon
the fulfillment of each of the following conditions at or before the Effective
Time, except to the extent that the Company may, in its sole and absolute
discretion, waive any one or more thereof in whole or in part:
(a) Representations and Warranties. All of the representations and
warranties made by Parent and Acquisition Sub herein shall be true and correct
in all material respects (or if such representation and warranty is already
qualified by materiality or by reference to a Parent Material Adverse Effect,
then in all respects) as of the date of this Agreement and as of the Effective
Time as though made at and as of the Effective Time.
23
24
(b) Obligations and Agreements. Parent and Acquisition Sub shall have
performed in all material respects their obligations and agreements contained
herein to be performed prior to or at the Effective Time.
(c) Bringdown Certificate. The Company shall have received a
certificate from authorized officers of the Parent and Acquisition Sub, dated as
of the date of the Closing, to the effect that the conditions set forth in
Sections 5.2(a) and 5.2(b) have been satisfied.
(d) Approval of the Company's Shareholders. The Plan of Merger shall
have been duly approved by the shareholders of the Company in accordance with
Section 00-00-000 of the SCBCA.
(e) HSR Act. Any applicable waiting period under the HSR Act relating
to the Merger shall have expired.
(f) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them,
seeking to restrain, prevent or change the transactions contemplated hereunder
or questioning the validity or legality of any of such transactions or seeking
damages in connection with any of such transactions.
Section 5.3 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, notwithstanding prior approval by the Company's shareholders, by the
following parties under the following circumstances:
(a) by Parent or the Company by their mutual consent; or
(b) by Parent or the Company, if the Effective Time shall not have
occurred on or before January 31, 2000 (provided that the right to terminate
this Agreement under this clause shall not be available to any party whose
failure to fulfill any of its obligations under this Agreement has been the
cause or resulted in the failure to consummate the Merger by such date); or
(c) by Parent, if there has been a material breach by the Company of
any covenant, agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of
Parent and Acquisition Sub impossible and such breach has not been waived by
Parent or cured in all material respects within 10 days; or
(d) by the Company, if there has been a material breach by Parent or
Acquisition Sub of any covenant, agreement, representation or warranty contained
in this Agreement which has rendered the satisfaction of any condition to the
obligations of the Company impossible and such breach has not been waived by the
Company or cured in all material respects within 10 days; or
(e) by Parent or the Company, if there shall be any applicable domestic
law, rule or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any
24
25
judgment, injunction order or decree of a court of competent jurisdiction shall
restrain or prohibit the consummation of the Merger, and such judgment,
injunction, order or decree shall become final and nonappealable; or
(f) by Parent or the Company, if the Plan of Merger fails to receive
the requisite vote for approval and adoption at the Shareholders' Meeting; or
(g) by the Company, if the Company proposes to enter into an agreement
providing for a Superior Take-over Proposal which satisfies all of the terms of
the definition thereof; provided, that, any such termination shall not be
effective unless (i) the Company has provided Parent written notice (the
"Termination Intention Notice") that it intends to terminate this Agreement
pursuant to this Section 5.3(g), which notice shall also identify the Superior
Take-over Proposal then determined to be more favorable and the parties thereof
and include, at the Company's option, either a copy of the acquisition agreement
or other similar agreement for such Superior Take-over Proposal in substantially
the form to be entered into or a summary thereof, (ii) at least two (2) full
business days after the Company has delivered the Termination Intention Notice,
the Company delivers to Parent and Acquisition Sub a written notice (the
"Termination Notice") of termination of this Agreement pursuant to this Section
5.3(g), and (iii) upon delivery of Termination Notice, the Company pays the
Termination Fee as provided in Section 5.4 through delivery to Parent of a check
or wire transfer of immediately available funds to such account as is designated
by Parent; or
(h) by Parent, if (i) the Board of Directors of the Company shall have
withdrawn or modified, in a manner adverse to Parent or Acquisition Sub, the
approval or recommendation by the Board of Directors of this Agreement, (ii) if
the Board of Directors of the Company shall have approved another Take-over
Proposal, or (iii) the Company shall have materially breached any provision of
Section 4.1; or
(i) by the Company or Parent, if The Xxxxxxxx-Xxxxxxxx Company, LLC
shall have withdrawn its Fairness Opinion or modified its Fairness Opinion in a
manner adverse to Parent or Acquisition Sub, including with respect to the
adequacy of the Merger Consideration; or
(j) by Parent, if there shall have occurred and continue to be in
existence (i) any general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, the American Stock Exchange or in the
Nasdaq National Market System, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) any limitation by any United States governmental authority or
agency that has a material adverse effect generally on the extension of credit
by banks or other financial institutions, (iv) commencement of a war or armed
hostilities or other national or international crises directly or indirectly
involving the United States which war, hostility or crisis is reasonably likely
to have a Company Material Adverse Effect or materially and adversely affect the
ability of the Company to perform its obligations hereunder or to consummate the
Merger or to materially and adversely affect Parent's ability to obtain the
financing referred to Sections 5.1(g), or (v) in the case of any of the events
described in (i) through (iv) above existing as of the date hereof, a material
acceleration or worsening thereof.
Section 5.4 Effect of Termination.
25
26
(a) In the event of any such termination and abandonment pursuant to
Section 5.3, neither party shall have any further obligation hereunder except as
expressly provided in Sections 4.3, 4.5 and 4.8 and Article VI hereof, and
neither party shall have any liability to the others by reason of such
termination or abandonment except as provided in this Section 5.4. The election
of a party to terminate this Agreement and abandon the Merger shall be pursuant
to action of its Board of Directors. In the event of the termination of this
Agreement by Parent pursuant to Section 5.3(c), or by the Company pursuant to
Section 5.3(d), and the material breach giving rise to such right of termination
was a willful breach, then the breaching party shall be liable to the
terminating party for the actual damages resulting from such breach.
(b) In the event of the termination of this Agreement by the Company
pursuant to Section 5.3(g) or by Parent pursuant Section 5.3(h), then the
Company shall pay to Parent a termination fee equal to $2,000,000 (the
"Termination Fee") and Parent and Acquisition Sub shall be entitled to
reimbursement by the Company for their out-of-pocket expenses actually incurred
in connection with the negotiation, execution, delivery and performance of this
Agreement and the financing including, without limitation, any and all fees and
expenses payable to attorneys, consultants, advisors and financing sources, and
their respective representatives, agents and counsel, whether incurred prior to
or after the date hereof ("Transaction Expenses"); provided, however, in no
event shall the Company be obligated, pursuant to any provision of this Section
5.4, to reimburse Parent and Acquisition Sub for any Transaction Expenses in
excess of $1,000,000. In addition, if this Agreement is terminated by the
Company pursuant to Section 5.3(i), the Parent and Acquisition Sub shall be
entitled to reimbursement by the Company for Transaction Expenses (subject to
the same limitations as contained in the preceding sentence). The Termination
Fee shall be payable on the date this Agreement is terminated pursuant to
Section 5.3(g) or 5.3(h) and any such required reimbursement of Transaction
Expenses shall take place concurrently with the termination of this Agreement
upon delivery by Parent to the Company of a certificate of an officer of Parent
setting forth in reasonable detail the true and correct amount of costs and
expenses (whether paid or payable) incurred by Parent or Acquisition Sub in
connection with the transactions contemplated by this Agreement.
(c) In the event that (i) this Agreement is terminated by either Parent
or the Company pursuant to Section 5.3(b) or (f) and (ii) within six months of
such termination, the Company enters into any definitive agreement with respect
to or publicly announces or consummates a merger, share exchange, consolidation,
business combination, sale of substantially all of the Company's assets or
direct or indirect acquisition or purchase of a material amount of Company
Common Stock which involves aggregate consideration payable to the Company or
the Company's shareholders greater than or equal to the aggregate consideration
which would otherwise be received by the shareholders of the Company pursuant to
this Agreement (a "Subsequent Transaction"), the Company shall be required to
pay the Termination Fee and reimburse Transaction Expenses (subject to the
limitations contained in subsection (b) above) upon the closing of such
Subsequent Transaction. Finally, in the event that (i) this Agreement is
terminated by the Company pursuant to Section 5.3(i), and (ii) within six months
the Company enters into a definitive agreement with respect to or publicly
announces or consummates a Subsequent Transaction, Parent and Acquisition Sub
shall be entitled to the Termination Fee (but not any additional Transaction
Expenses) upon the closing of such Subsequent Transaction.
26
27
(d) Payment of the Termination Fee and reimbursement of Transaction
Expenses pursuant to this Section 5.4 shall be Parent and Acquisition Sub's sole
and exclusive legal remedy in connection with any termination of this Agreement.
Any payment of the Termination Fee shall be accompanied by a written
acknowledgement from the Company and any other party that the Company has
entered into a definitive agreement with regard to a Subsequent Transaction or
Takeover Proposal that the Company and such other party have irrevocably waived
any right to contest any such payment.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Entire Agreement. This Agreement (including the Exhibits
hereto) contains the final, complete and exclusive statement of the agreement
between the parties with respect to the transactions contemplated herein and all
prior or contemporaneous written or oral agreements with respect to the subject
matter hereof are merged herein.
Section 6.2 No Survival. None of the representations, warranties,
covenants and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time, except for those
covenants and agreements contained herein or therein which by their terms apply
in whole or in part after the Effective Time.
Section 6.3 Amendments. This Agreement may be amended by the parties
hereto, at any time prior to the Effective Time, by action taken by their
respective Boards of Directors; provided, however, that, after approval of the
Plan of Merger by the shareholders of the Company, no amendment, which under
applicable law may not be made without the approval of such shareholders, may be
made without such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.
Section 6.4 Assignment. Except as expressly permitted by the terms
hereof, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the proper
written consent of the other parties. Parent and Acquisition Sub may assign all
of its rights or obligations under this Agreement to a direct or indirect
wholly-owned subsidiary of Acquisition Sub, provided that any such assignment
will have no material adverse tax or other effects on the Company and will have
no adverse tax or other effects on the holders of the Company's shares, and
provided further that if such assignment takes place, Parent and Acquisition Sub
shall continue to be liable to the Company for all obligations under this
Agreement and for any default in performance by the assignee.
Section 6.5 Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof', "herein" and "hereunder" and words of similar
import when used in this
27
28
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
Section 6.6 Benefits and Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns (with the provisions of Section 4.9 inuring to
the benefit of the Indemnified Parties referred to therein). Except as otherwise
expressly provided in this Agreement (including Section 4.9), nothing contained
herein is intended or shall be construed to confer on any person other than the
parties hereto any rights or benefits hereunder.
Section 6.7 Notices. Any notice to be given to a party in connection
with this Agreement shall be in writing addressed to such party at the address
set forth below ("Notice Address"), with a copy thereof addressed to such
party's counsel, as indicated, to be given at the same time and in the same
manner as the notice to the party, which Notice Address may be changed from time
to time by such addressee by notice thereof to each of the other addressees as
herein provided. Any such notice shall be deemed effectively given to a party
upon the first to occur of (a) the third business day following the date on
which it is mailed to such party by first class registered or certified United
States mail, postage prepaid, addressed to such party at such party's Notice
Address, or (b) the date on which it is actually delivered to such party's
Notice Address properly addressed to such party (whether delivered by mail,
courier, facsimile transmission, or otherwise) if such date is a business day
and such delivery is made prior to 5:00 p.m, local time at such address, on such
business day, or if the date of such delivery is not a business day or such
delivery is made after 5:00 p.m., on the next business day following the date of
delivery, or (c) when it is actually received by the representative of such
party specified in such party's Notice Address. Transmission by facsimile shall
be confirmed by telephone to the addressee at the time of transmission.
Notice Address of the Company:
Conso International Corporation
000 X. Xxxxxx XxXxxx
P. X. Xxx 000
Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 864/000-0000
Telecopy: 864/427-8820
Attention: X. Xxxx Findlay
with a copy to (which shall not constitute notice to
the Company):
28
29
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P
Bank of America Corporate Center, Suite 4200
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telephone: 704/000-0000
Telecopy: 704/331-7598
Attention: X. Xxxxxxxx Xxxxxx, III
Notice Address of Parent or Acquisition Sub:
CIC Acquisition Co.
CIC Acquisition Sub, Inc.
c/o Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 212/000-0000
Telecopy: 212/888-2940
Attention: M. Xxxxxx Xxxxxxxx
with a copy to (which shall not constitute notice to
Parent or Acquisition Sub):
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 212/ 000-0000
Telecopy: 212/ 446-4900
Attention: Xxxx X. Xxxxx
Section 6.8 Time Of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence. Whenever the
last day for the exercise of any privilege or the discharge of any duty
hereunder shall fall upon any day which is not a business day, the party having
such privilege or duty may exercise such privilege or discharge such duty on the
next succeeding business day.
Section 6.9 Waiver of Jury Trial. Each of the parties hereto waives to
the fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
29
30
Section 6.10 Captions. The captions herein are for convenience of
reference only and shall not be construed as a part of this Agreement.
Section 6.11 Governing Law. This Agreement shall be construed,
interpreted, enforced and governed by and under the laws of the State of South
Carolina without regard to its rules of conflicts of laws.
Section 6.12 Exhibits. All of the Exhibits hereto referred to in this
Agreement are hereby incorporated herein by reference and shall be deemed and
construed to be a part of this Agreement for all purposes.
Section 6.13 Severability. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or provisions of this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement or any part thereof.
Section 6.14 Counterparts. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument.
* * *
30
31
IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have each
caused this Agreement to be duly executed by their duly authorized officers
under seal as of the day and year first above written.
CIC ACQUISITION CO.
[CORPORATE SEAL]
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
ATTEST: Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
/s/ M. Xxxxxx Xxxxxxxx
------------------------------
Name: M. Xxxxxx Xxxxxxxx
Title: President and Secretary
CIC ACQUISITION SUB, INC.
[CORPORATE SEAL]
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
ATTEST: Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
/s/ M. Xxxxxx Xxxxxxxx
------------------------------
Name: M. Xxxxxx Xxxxxxxx
Title: President and Secretary
CONSO INTERNATIONAL CORPORATION
[CORPORATE SEAL]
By: /s/ X. Xxxx Xxxxxxx
--------------------------------------
ATTEST: X. Xxxx Findlay
Chairman of the Board,
President and Chief Executive Officer
/s/ Konstance X.X. Xxxxxxx
------------------------------
Konstance X.X. Xxxxxxx
Secretary
31
32
EXHIBITS
Exhibit Description
------- -----------
A Plan of Merger
33
EXHIBIT A
PLAN OF MERGER
OF
CIC ACQUISITION SUB, INC.
WITH AND INTO
CONSO INTERNATIONAL CORPORATION
This Plan of Merger sets forth the terms and conditions upon which, at
the Effective Time (as hereinafter defined), CIC Acquisition Sub, Inc. shall be
merged with and into Conso International Corporation:
1. Constituent Corporations; Surviving Corporation. The constituent
corporations party to this Plan of Merger (the "Constituent Corporations") are
Conso International Corporation, a South Carolina corporation (the "Company"),
and CIC Acquisition Sub, Inc., a South Carolina corporation ("Acquisition Sub").
Acquisition Sub shall be merged with and into the Company (the "Merger"), and
the Company shall be the surviving corporation in the Merger (the "Surviving
Corporation"), with its corporate name continuing to be "Conso International
Corporation."
2. Effective Time. The Merger shall become effective at the time
appropriate articles of merger, including this Plan of Merger, are filed with
the Secretary of State of South Carolina (the "Effective Time").
3. Terms and Conditions of Merger; Abandonment. The Merger shall be
effected in accordance with the terms and conditions set forth in this Plan of
Merger. The Merger may be abandoned at any time prior to the Effective Time in
the event that the Merger Agreement, dated as of October __, 1999 (the "Merger
Agreement"), by and among the Constituent Corporations and CIC Acquisition Co.,
a Delaware corporation ("Parent"), shall be terminated. The obligations of the
Constituent Corporations to cause articles of merger to be filed to effect the
Merger are subject to the satisfaction or waiver of the conditions to the
closing under the Merger Agreement.
4. Effect of Merger.
(a) As of the Effective Time, Acquisition Sub will be merged with and
into the Company with the effects set forth in Section 00-00-000 of the South
Carolina Business Corporation Act, and the separate corporate existence of
Acquisition Sub shall cease and the corporate existence of the Company shall
continue as the Surviving Corporation.
(b) As of the Effective Time, the Articles of Incorporation of the
Company shall be amended to cause Section 3 thereof to be amended and restated
in its entirety to read as set forth on Schedule I attached hereto. The Articles
of Incorporation of the Company, as so amended, shall continue to be the
Articles of Incorporation of the Surviving Corporation after the Effective Time
until they may be thereafter duly amended in accordance with applicable law
(subject, however, to the provisions of Section 4.9(a) of the Merger Agreement).
34
(c) The Bylaws of the Company as in effect immediately prior to the
Effective Time shall continue to be the Bylaws of the Surviving Corporation
after the Effective Time until they may be thereafter duly amended in accordance
with applicable law.
(d) The directors of Acquisition Sub and the officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected and qualified, or until their earlier death, removal or
resignation, in accordance with the Bylaws of the Surviving Corporation and
applicable law.
(e) The manner and basis of converting and exchanging the shares of the
Constituent Corporations is set forth in Section 5 hereof.
5. Conversion of Shares. At the Effective Time:
(a) All of the shares of Common Stock of the Company ("Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than Retained Shares (as defined in subsection (b) below), Acquisition Sub
Shares (as defined in subsection (c) below) and Dissenting Shares (as defined in
Section 6(h))), shall be automatically converted into the right to receive a
cash amount equal to $9.00 per share, without interest thereon (the "Per Share
Amount").
(b) 533,378 shares of Common Stock of the Company held by X. Xxxx
Findlay (the "Retained Shares") shall be automatically converted into an
aggregate of 151,000 shares of Class A Common Stock, 197,420 shares of Class C
Common Stock and 44,519.8 shares of Series A Preferred Stock of the Surviving
Corporation. The Retained Shares, in the aggregate, at the Effective Time will
evidence ownership of the shares of Class A Common Stock, Class C Common Stock
and Series A Preferred Stock of the Surviving Corporation into which they are so
converted and the certificates representing the Retained Shares shall be
exchanged for certificates representing the appropriate number of shares of
Class A Common Stock, Class C Common Stock and Series A Preferred Stock of the
Surviving Corporation.
(c) all of the issued and outstanding shares of Company Common Stock
held by Acquisition Sub ("Acquisition Sub Shares") shall be canceled and shall
cease to exist.
(d) Each of the 299,000 shares of Class A Common Stock of Acquisition
Sub ("Class A Acquisition Sub Common Stock") issued and outstanding immediately
prior to the Effective Time shall be automatically converted into one share of
Class A Common Stock of the Surviving Corporation; each of the 1,202,580 shares
of Class B Common Stock of Acquisition Sub ("Class B Acquisition Sub Common
Stock") issued and outstanding immediately prior the Effective Time shall be
automatically converted into one share of Class B Common Stock of the Surviving
Corporation; and each of the 185,480.2 shares of Series A Preferred Stock of
Acquisition Sub (together with Class A Acquisition Sub Common Stock and Class B
Acquisition Sub Common Stock, "Acquisition Sub Stock") issued and outstanding
immediately prior the Effective Time shall be automatically converted into one
share of Series A Preferred Stock of the Surviving Corporation. Each certificate
evidencing ownership of any such shares of Acquisition Sub Stock shall, at the
Effective Time, evidence ownership of the same number of shares of the Class A
Common Stock,
2
35
Class B Common Stock and Series A Preferred Stock of the Surviving Corporation,
as applicable, without any requirement for any exchange of certificates or
further action.
(e) Each share of capital stock of the Surviving Corporation issued
upon conversion of the Retained Shares or shares of Acquisition Sub Stock shall
be validly issued, fully paid and nonassessable upon such conversion.
6. Exchange of Certificates and Cash.
(a) Deposit of Merger Consideration. Immediately prior to the Effective
Time, Parent shall deposit, or cause to be deposited, with or for the account of
a bank or trust company mutually designated by the Parent and the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock (other than any Retained Shares, Acquisition Sub Shares or Dissenting
Shares) for exchange in accordance with this Section 6, cash in the aggregate
amount required to be exchanged for all outstanding shares of Company Common
Stock (including for this purpose Dissenting Shares, but excluding Retained
Shares and Acquisition Sub Shares) pursuant to Section 5 hereof (the "Merger
Consideration"). The Exchange Agent shall, pursuant to irrevocable instructions,
hold the Merger Consideration pending remittance thereof to holders of shares of
Company Common Stock (or, with respect to Dissenting Shares, to the Surviving
Corporation) in accordance with this Section 6. The Merger Consideration shall
not be used for any other purpose. The Exchange Agent shall invest the Merger
Consideration, as directed by the Surviving Corporation, in (i) direct
obligations of the United States of America, (ii) obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (iii) commercial paper rated the highest
quality by either Xxxxx'x Investors Services, Inc. or Standard & Poor's
Corporation, (iv) bank deposits, certificates of deposit, bank repurchase
agreements or acceptances of commercial banks with capital exceeding $100
million, or (v) mutual funds investing solely in the types of investments
described in clauses (i) through (iv). In the event that any such investments
reduce the Merger Consideration to an amount which is less than that required to
be exchanged for all shares of Company Common Stock (including for this purpose
Dissenting Shares) pursuant to Section 5 hereof which have not theretofore been
exchanged, the Surviving Corporation shall, upon written notice thereof from the
Exchange Agent, promptly make up any such shortfall. Any interest, dividends or
other income earned on the investment of the Merger Consideration while held by
the Exchange Agent shall be for the account of the Surviving Corporation.
(b) Surrender of Certificates; Payment of Merger Consideration. As soon
as reasonably practicable after the Effective Time, the Surviving Corporation
will instruct the Exchange Agent to mail to each holder of record, as of
immediately prior to the Effective Time, of the outstanding shares of Company
Common Stock (other than Retained Shares, Acquisition Sub Shares and Dissenting
Shares) (a) a letter of transmittal (which shall specify that delivery of a
holder's certificates representing shares of Company Common Stock
("Certificates") shall be effected only upon proper delivery of Certificates to
the Exchange Agent) and (b) instructions to effect the surrender of such
holder's Certificates in exchange for the cash such holder is entitled to
receive hereunder, each in a form approved jointly by the Company and Parent
prior to the Effective Time. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with the duly
3
36
executed letter of transmittal, the holder of record of such Certificate shall
be entitled to receive in exchange therefor cash in an amount equal to the Per
Share Amount multiplied by the number of shares of Company Common Stock
evidenced by the Certificate less any required withholding of U.S. Federal
income taxes. No interest from the Effective Time will be accrued or paid on any
cash payable upon surrender of Certificates. In the event of a transfer of
ownership of any shares of Company Common Stock which is not registered in the
transfer records of the Company, it shall be a condition of payment of cash to
the transferee that the Certificate surrendered shall be properly endorsed or
otherwise in proper form for transfer, that the signatures on the Certificate or
any related stock power shall be properly guaranteed and that the Person
requesting such payment either pay any transfer or other taxes or present
evidence that any applicable stock transfer taxes have been paid.
(c) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such amount as the Surviving Corporation may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the cash deliverable in respect
thereof pursuant to Section 5 hereof.
(d) Cancellation and Retirement of Common Stock. As of the Effective
Time, all certificates representing shares of Company Common Stock, other than
certificates representing Dissenting Shares, issued and outstanding immediately
prior to the Effective Time, shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section
6(b).
(e) Termination of Deposit with the Exchange Agent. Any portion of the
Merger Consideration deposited with the Exchange Agent which remains
undistributed to the holders of shares of Company Common Stock for 270 days
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holders of shares of Company Common Stock who have not
theretofore complied with this Section 6 shall thereafter look only to the
Surviving Corporation as general creditors for the Merger Consideration to which
they are entitled pursuant to this Section 6. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. The Surviving Corporation, Parent or
Acquisition Sub shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts (each a "Withholding Amount") as the Surviving Corporation,
Parent or Acquisition Sub is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended, or
any provision of state, local or foreign tax law. To the extent that amounts are
required by law to be and are so withheld by the Surviving Corporation, Parent
or Acquisition
4
37
Sub, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder in respect of which such deduction and
withholding was made.
(g) Closing of Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
(h) Dissenting Shares. Notwithstanding any other provision of the
Merger Agreement, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by a holder of shares
of Company Common Stock who shall have (i) duly given written notice to the
Company, prior to the taking of the vote by the Company's shareholders on
approval of this Plan of Merger, of such holder's intent to dissent from the
Merger and demand payment of the "fair value" of such shares in accordance with
Chapter 13 of the South Carolina Business Corporation Act (the "Dissenters'
Rights Provisions"), (ii) not voted such shares in favor of the Merger (other
than a vote by proxy that does not disqualify such holder under the Dissenters'
Rights Provisions), and (iii) not withdrawn, waived or otherwise lost or
forfeited such holder's dissenter's rights under the Dissenters' Rights
Provisions prior to the Effective Time (collectively, the "Dissenting Shares"),
shall not be converted into or represent the right to receive any part of the
Merger Consideration. Such Dissenting Shares shall instead be converted into the
right to receive from the Surviving Corporation payment of the "fair value"
thereof in accordance with the Dissenters' Rights Provisions. All Dissenting
Shares held by holders who after the Effective Time shall have failed to perfect
or who effectively shall have withdrawn, waived or otherwise lost or forfeited
their dissenters' rights under such Dissenters' Rights Provisions shall
thereupon be deemed to have been converted into and to become exchangeable, as
of the Effective Time, for the right to receive, without any interest or
dividend thereon, the appropriate part of the Merger Consideration, upon
surrender, in the manner provided in this Section 6, of the Certificate or
Certificates that formerly evidenced such shares of Company Common Stock. Upon
application by the Surviving Corporation to the Exchange Agent therefor,
accompanied by the Certificate or Certificates formerly evidencing Dissenting
Shares and a certificate of the Surviving Corporation to the effect that there
has been paid, or will be paid contemporaneously with the remittance to the
Surviving Corporation of the Merger Consideration otherwise allocable to such
Dissenting Shares, the amount to which the holder thereof is entitled, or has
agreed with the Surviving Corporation to receive, as payment for such Dissenting
Shares pursuant to the exercise of such holder's dissenters' rights, then the
Exchange Agent shall remit to the Surviving Corporation that part of the Merger
Consideration otherwise (but for the exercise of such dissenters' rights)
allocable to such Dissenting Shares. In such event, remittance to the Surviving
Corporation shall be a full acquittance of the Exchange Agent with respect
thereto, and, to the extent such payment was not previously made, the holder of
such Dissenting Shares shall look only to the Surviving Corporation for the
payment to which such holder is entitled with respect to such Dissenting Shares.
5
38
SCHEDULE I
3. The Corporation is authorized to issue 60,000,000 shares of capital
stock, divided into two classes: (a) 50,000,000 shares of Common Stock, of which
20,000,000 shares shall be designated as "Class A Common Stock," 15,000,000
shares shall be designated as "Class B Common Stock" and 15,000,000 shares shall
be designated as "Class C Common Stock," and (b) 10,000,000 shares of Preferred
Stock.
3.1 Common Stock. The relative rights, privileges, qualifications,
limitations and restrictions of the Class A Common Stock, Class B Common Stock
and Class C Common Stock are as set forth in this Section 3.1. As used herein,
the term "Common Stock" shall collectively mean Class A Common Stock, Class B
Common Stock and Class C Common Stock. Except as otherwise provided herein or as
otherwise required by applicable law, all shares of Common Stock shall be
identical in all respects and shall entitle the holders thereof to the same
rights and privileges, subject to the same qualifications, limitations and
restrictions.
(a) Voting Rights. The holders of Class A Common Stock shall have the
general right to vote for all purposes, including the election of directors, as
provided by law. Each holder of Class A Common Stock shall be entitled at all
elections of directors to as many votes as shall equal the number of votes which
such holder would be entitled to cast for the election of directors with respect
to his shares of Class A Common Stock multiplied by the number of directors to
be elected, and such holder may cast all of such votes for a single director or
may distribute them among the number to be voted for, or for any two or more of
them, as he may see fit, and to one vote for each share upon all other matters.
Except as otherwise required by law, the holders of Class B Common Stock and
Class C Common Stock shall have no voting rights.
(b) Dividends. Holders of Common Stock will be entitled to receive
ratably such dividends as may be declared by the Board of Directors, provided,
that if dividends are declared that are payable in shares of Common Stock,
dividends will be declared that are payable at the same rate on each class of
Common Stock and the dividends payable to holders of Class A Common Stock will
be payable in shares of Class A Common Stock, the dividends payable to holders
of Class B Common Stock will be payable in shares of Class B Common Stock and
the dividends payable to the holders of Class C Common Stock will be payable in
shares of Class C Common Stock.
(c) Liquidation. Subject to the provisions of any series of Preferred
Stock, the holders of the Common Stock shall be entitled to participate ratably
on a per share basis in all distributions to the holders of Common Stock in any
liquidation, dissolution or winding up of the Corporation.
(d) Conversion of Common Stock
(i) Right to Convert. Each record holder of Class A Common
Stock will be entitled to convert any or all of such holder's Class A Common
Stock into the same number of shares of Class B Common Stock and each record
holder of Class B Common Stock will be entitled to convert any or all of such
holder's Class B Common Stock into the same number of shares of Class A Common
Stock; provided, however, that at the time of conversion of shares of Class B
Common Stock into shares of Class A Common Stock, such holder determines, in its
sole
39
discretion, that it would be permitted, pursuant to applicable law, to hold the
total number of shares of Class A Common Stock which such holder would hold
after giving effect to such conversion; provided, further, that the
determination of a holder of Class B Common Stock that such holder is permitted,
pursuant to applicable law, to convert Class B Common Stock into Class A Common
Stock pursuant to this Section 3.1(d)(i) shall be final and binding upon the
Corporation. Record holders of Class C Common Stock will not be entitled to
convert any shares of Class C Common Stock into shares of Class A Common Stock
or Class B Common Stock and record holders of Class A Common Stock and Class B
Common Stock will not be entitled to convert any shares of Class A Common Stock
or Class B Common Stock into shares of Class C Common Stock.
(ii) Surrender of Certificates. Each conversion of shares of a
class of Common Stock into shares of another class of Common Stock permitted
pursuant to Section 3.1(d)(i) will be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation at any time during normal business hours,
together with a written notice by the holder of such shares stating the number
of shares that such holder desires to convert into the other class. Such
conversion will be deemed to have been effected as of the close of business on
the date on which such certificate or certificates have been surrendered and
such notice has been received by the Corporation, and at such time the rights of
any such holder with respect to the converted class of Common Stock will cease
and the person or persons in whose name or names the certificate or certificates
for shares of the other class of Common Stock are to be issued upon such
conversion will be deemed to have become the holder or holders of record of the
shares of such other class of Common Stock represented thereby.
(iii) Issuance of Certificates. Promptly after such surrender
and the receipt by the Corporation of the written notice from the holder
hereinbefore referred to, the Corporation will issue and deliver in accordance
with the surrendering holder's instructions the certificate or certificates for
the other class of Common Stock issuable upon such conversion and a certificate
representing any shares of Common Stock which were represented by the
certificate or certificates delivered to the Corporation in connection with such
conversion but which were not converted. The issuance of certificates for the
other class of Common Stock upon conversion will be made without charge to the
holder or holders of such shares for any issuance tax (except stock transfer
taxes) in respect thereof or other cost incurred by the Corporation in
connection with such conversion.
(iv) Reservation of Shares for Conversion. So long as any
shares of Class A Common Stock or Class B Common Stock are outstanding, the
Corporation will at all times reserve and keep available out of its authorized
but unissued shares of Class A Common Stock and Class B Common Stock the number
of shares sufficient for issuance upon conversion of all outstanding shares of
the other class of Common Stock.
(e) Transfers. The Corporation will not close its books against the
transfer of any share of Class A Common Stock or Class B Common Stock, or of any
share of Common Stock issued or issuable upon conversion of shares of any other
class Common Stock, in any manner that would interfere with the timely
conversion of such shares of Common Stock.
2
40
(f) Subdivision and Combination of Shares. If the Corporation in any
manner subdivides or combines the outstanding shares of any class of Common
Stock, the outstanding shares of all other classes of Common Stock will be
proportionately subdivided or combined.
(g) Registration of Transfer. The Corporation shall keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender of
any certificate representing shares of any class of Common Stock at such place,
the Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares of such class represented by the surrendered certificate and the
Corporation shall forthwith cancel such surrendered certificates. Each such new
certificate shall be registered in such name and shall represent such number of
shares of such class as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate. The issuance of new certificates shall be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
issuance.
(h) Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (it being understood that an affidavit of the registered holder
will be satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of any class of
Common Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided that
if the holder is a financial institution or other institutional investor its own
agreement will be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
(i) Notices. All notices referred to herein shall be in writing, and
shall be delivered by registered or certified mail, return receipt requested,
postage prepaid, and shall be deemed to have been given when so mailed (i) to
the Corporation at its principal executive offices and (ii) to any stockholder
at such holder's address as it appears in the stock records of the Corporation
(unless otherwise specified in a written notice to the Corporation by such
holder).
(j) Action by Written Consent. Any action required to be taken at any
annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken and bearing the dates
of signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
(k) Amendment and Waiver. No amendment or waiver of any provision of
this Section 3 shall be effective without the prior consent of the holders of a
majority of the then
3
41
outstanding shares of Common Stock voting as a single class. For purposes of
votes on amendments and waivers to this Section 3, each share of Common Stock
shall be entitled to one vote. No amendment directly to any terms or provisions
of any class of Common Stock that adversely affects such class of Common Stock
vis-a-vis any other class of Common Stock shall be effective without the prior
consent of the holders of a majority of the then outstanding shares of such
class of Common Stock (it being understood that the issuance of preferred stock
shall not be deemed to adversely affect the Common Stock).
3.2 Preferred Stock. The Board of Directors of the Corporation is
authorized, to the fullest extent permitted by applicable law, to determine the
rights, privileges, qualifications, limitations and restrictions of the
Preferred Stock or to create one or more series of the Preferred Stock and
determine the rights, privileges, qualifications, limitations and restrictions
of each such series, all as the Board of Directors may from time to time
determine.
3.3 Series A Preferred Stock. A total of 250,000 of the authorized
shares of Preferred Stock are hereby designated as "Series A Preferred Stock."
The following is a statement of the relative rights, privileges, qualifications,
limitations and restrictions with respect to the Series A Preferred Stock.
Except as otherwise provided in this Section 3.3 or as otherwise required by
applicable law, all shares of Series A Preferred Stock shall be identical in all
respects and shall entitle the holders thereof to the same rights and
privileges, subject to the same qualifications, limitations and restrictions.
(a) Dividends.
(i) General Obligation. When and as declared by the Board of
Directors and to the extent permitted under the South Carolina Business
Corporation Act, the Corporation shall pay preferential dividends to the holders
of the Series A Preferred Stock as provided in this Section 3.3(a). Except as
otherwise provided herein, dividends on each Series A Preferred Share shall
accrue on a daily basis at the rate of 12% per annum (the "Series A Dividend
Rate") on the Liquidation Value thereof, from and including the date of issuance
of such Series A Preferred Share to and including the date on which the
Liquidation Value of such Series A Preferred Share (plus all accrued,
accumulated and unpaid dividends thereon) is paid in full. Such dividends shall
accrue whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Series A Preferred Share shall be deemed to be its "date of issuance" regardless
of the number of times transfer of such Series A Preferred Share is made on the
stock records maintained by or for the Corporation and regardless of the number
of certificates which may be issued to evidence such Series A Preferred Share.
(ii) Series A Preferred Dividend Reference Dates. To the
extent not paid on each January 31 and July 31 of each year beginning January
31, 2000 the "Series A Preferred Dividend Reference Dates"), all dividends which
have accrued on each Series A Preferred Share outstanding during the six-month
period (or other period in the case of the initial Series A Preferred Dividend
Reference Date) ending upon each such Series A Preferred Dividend Reference Date
shall be accumulated and shall remain accumulated dividends with respect to
4
42
such Series A Preferred Share until paid and shall continue to accumulate
dividends thereon at the Series A Dividend Rate.
(iii) Distribution of Partial Dividend Payments. If at any
time the Corporation pays less than the total amount of dividends then accrued
with respect to the Series A Preferred Stock, such payment shall be distributed
ratably among the holders of the Series A Preferred Stock based upon the number
of Series A Preferred Shares held by each such holder.
(iv) Priority of Series A Preferred Stock. Subject to the
terms of any other series of Preferred Stock, so long as any Series A Preferred
Stock remains outstanding, neither the Corporation nor any Subsidiary shall
declare or pay any cash dividends or make any cash distributions with respect to
or redeem, purchase or otherwise acquire for cash, directly or indirectly, any
Junior Securities, if at the time of or immediately after any such redemption,
purchase, acquisition, dividend or distribution the Corporation has failed to
pay the full amount of dividends accrued on the Series A Preferred Stock or the
Corporation has failed to make any redemption of the Series A Preferred Stock
required hereunder.
(v) Liquidation. Subject to the terms of any other series of
Preferred Stock, upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Series A Preferred Stock shall be entitled to be
paid, before any distribution or payment is made upon any Junior Securities, an
amount in cash equal to the aggregate Liquidation Value (plus all accrued,
accumulated and unpaid dividends) of all such Series A Preferred Shares held by
such holder, and the holders of Series A Preferred Stock shall not be entitled
to any further payment. If upon any such liquidation, dissolution or winding up
of the Corporation, the Corporation's assets to be distributed among the holders
of the Series A Preferred Stock are insufficient to permit payment to such
holders of the aggregate amount which they are entitled to be paid, then the
entire assets to be distributed shall be distributed ratably among such holders
based upon the aggregate Liquidation Value (plus all accrued, accumulated and
unpaid dividends) of the Series A Preferred Stock held by each such holder.
Neither the consolidation or merger of the Corporation into or with any other
entity or entities, nor the sale or transfer by the Corporation of all or any
part of its assets, nor the reduction of the capital stock of the Corporation,
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 2.
(b) Redemptions.
(i) Optional Redemptions. The Corporation may, at any time
after 20 years after the first date of issuance of any shares of Series A
Preferred Stock, redeem all or any portion of the Series A Preferred Stock then
outstanding at a price per Series A Preferred Share equal to the Liquidation
Value thereof (plus all accumulated and accrued and unpaid but not yet
accumulate dividends thereon); provided, that all optional redemptions pursuant
to this Section 3.3(b) are made pro rata among the holders of Series A Preferred
Stock based upon the aggregate Liquidation Value (plus all accrued, accumulated
and unpaid dividends thereon) of such Series A Preferred Stock held by each such
holder.
5
43
(ii) Redemption Price. For each Series A Preferred Share which
is to be redeemed, the Corporation shall be obligated on the Redemption Date to
pay to the holder thereof (upon surrender by such holder at the Corporation's
principal office of the certificate representing such Preferred Share) an amount
in immediately available funds equal to the Liquidation Value thereof (plus all
accrued, accumulated and unpaid dividends, thereon). If the Corporation's funds
which are legally available for redemption of Series A Preferred Shares on any
Redemption Date are insufficient to redeem the total number of Series A
Preferred Shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of Series A
Preferred Shares pro rata among the holders of the Series A Preferred Shares to
be redeemed based upon the aggregate Liquidation Value (plus all accrued,
accumulated and unpaid dividends thereon) of such Series A Preferred Shares held
by each such holder, and other Series A Preferred Shares not so redeemed shall
remain issued and outstanding until redeemed in accordance with the terms
thereof. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of Series A Preferred Shares, such funds
shall immediately be used to redeem the balance of the Series A Preferred Shares
which the Corporation has become obligated to redeem on any Redemption Date
which it has not redeemed.
(iii) Notice of Redemption. The Corporation shall mail written
notice of each redemption of Series A Preferred Stock to each record holder not
more than thirty (30) nor less than ten (10) days prior to the date on which
such redemption is to be made. Upon mailing any notice of redemption, the
Corporation shall become obligated to redeem the total number of Series A
Preferred Shares specified in such notice at the time of redemption specified
therein. In case fewer than the total number of Series A Preferred Shares
represented by any certificate are redeemed, a new certificate representing the
number of unredeemed Series A Preferred Shares shall be issued to the holder
thereof without cost to such holder within three business days after surrender
of the certificate representing the redeemed Series A Preferred Shares.
(iv) Determination of the Number of Each Holder's Series A
Preferred Shares to be Redeemed. Except as otherwise provided herein, the number
of Series A Preferred Shares of Preferred Stock to be redeemed from each holder
thereof in redemptions hereunder shall be the number of Series A Preferred
Shares determined by multiplying the total number of Series A Preferred Shares
to be redeemed times a fraction, the numerator of which shall be the total
number of Series A Preferred Shares then held by such holder and the denominator
of which shall be the total number of shares of Series A Preferred Stock then
outstanding.
(v) Dividends After Redemption Date. No Series A Preferred
Share is entitled to any dividends accruing after the date on which the
Liquidation Value of such Series A Preferred Share (plus all accrued,
accumulated and unpaid dividends thereon) is paid in full to the holder thereof.
On such date all rights of the holder of such Series A Preferred Share shall
cease, and such Series A Preferred Share shall not be deemed to be outstanding.
(vi) Redeemed or Otherwise Acquired Preferred Shares. Any
Series A Preferred Shares which are redeemed or otherwise acquired by the
Corporation shall be canceled and shall not be reissued, sold or transferred.
6
44
(vii) Other Redemptions or Acquisitions. So long as any shares
of Series A Preferred Stock remain outstanding, the Corporation shall not
redeem, purchase or otherwise acquire any Junior Securities; provided, that the
Corporation may purchase Junior Securities from present or former employees
pursuant to written contracts with such employees.
(c) Voting Rights. The shares of Series A Preferred Stock shall not
have any voting rights attaching to them, except as required by applicable law.
(d) Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate representing Series A Preferred Stock at
such place, the Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Series A Preferred Shares represented by the surrendered
certificate. Each such new certificates shall be registered in such name and
shall represent such number of Series A Preferred Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate, and dividends shall accrue on the Series A
Preferred Stock represented by such new certificate from the date to which
dividends have been fully paid on such Series A Preferred Stock represented by
the surrendered certificate.
(e) Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Series A Preferred Shares, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is an institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of Series A Preferred Shares represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
Series A Preferred Stock represented by such new certificate from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
(f) Definitions. The following definitions apply to this Section C
only.
"Junior Securities" means any of the Corporation's equity
securities other than Series A Preferred Stock and any other series of Preferred
Stock having a right or preference equal with or senior to the Series A
Preferred Stock.
"Liquidation Value" of any share of Series A Preferred Stock
shall be an amount equal to $100.00 per share.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated
7
45
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Redemption Date" as to any Series A Preferred Share means the
date specified in the notice of any redemption.
"Subsidiary" means with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity or which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the time owned
or controlled directly or indirectly, by any person or one or more Subsidiaries
of that Person or a combination thereof. For purposes hereof, a Person or
persons shall be deemed to have a majority ownership interest in a partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
(g) Amendment and Waiver. No amendment, modification or waiver shall be
binding or effective with respect to any provision of Section 3.3 without the
prior written consent of the holders of Series A Preferred Stock representing
more than fifty percent (50%) of the aggregate Liquidation Value (plus all
accumulated and accrued and unpaid but not yet accumulated dividends thereon) of
such Series A Preferred stock then outstanding.
(h) Notices. Except as otherwise expressly provided, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested, postage prepaid and shall be deemed to
have been given when so mailed (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
8
