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EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXX COMPUTER SERVICES, INC.,
GREENWICH ACQUISITION CORP.,
AND
GRAPHIC INDUSTRIES, INC.
DATED AS OF SEPTEMBER 28, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
The Offer
SECTION 1.01. The Offer........................................................2
SECTION 1.02. Company Actions..................................................3
ARTICLE II
The Merger
SECTION 2.01. The Merger.......................................................5
SECTION 2.02. Closing..........................................................5
SECTION 2.03. Effective Time...................................................6
SECTION 2.04. Effects of the Merger............................................6
SECTION 2.05. Articles of Incorporation and By-laws............................6
SECTION 2.06. Directors........................................................6
SECTION 2.07. Officers.........................................................6
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock..........................................7
(a) Capital Stock of Sub........................................7
(b) Cancellation of Treasury Stock and Parent Owned Stock.......7
(c) Conversion of Shares and Class B Shares.....................7
(d) Shares of Dissenting Stockholders...........................7
SECTION 3.02. Exchange of Certificates.........................................8
(a) Paying Agent................................................8
(b) Exchange Procedure..........................................8
(c) No Further Ownership Rights in Shares
or Class B Shares...........................................9
(d) Termination of Payment Fund.................................9
(e) No Liability................................................9
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization.....................................................10
SECTION 4.02. Subsidiaries.....................................................10
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SECTION 4.03. Capitalization...................................................11
SECTION 4.04. Authority........................................................11
SECTION 4.05. Consents and Approvals; No Violations............................12
SECTION 4.06. SEC Reports and Financial Statements.............................13
SECTION 4.07. Absence of Certain Changes or Events.............................13
SECTION 4.08. No Undisclosed Liabilities.......................................14
SECTION 4.09. Information Supplied.............................................14
SECTION 4.10. Benefit Plans; Employees and Employment Practices................15
SECTION 4.11. Contracts; Indebtedness..........................................18
SECTION 4.12. Litigation.......................................................19
SECTION 4.13. Compliance with Applicable Law...................................19
SECTION 4.14. Tax Matters......................................................19
SECTION 4.15. State Takeover Statutes; Charter Provisions......................21
SECTION 4.16. Environmental Matters............................................22
SECTION 4.17. Intellectual Property............................................23
SECTION 4.18. Brokers; Schedule of Fees and Expenses...........................23
SECTION 4.19. Opinion of Financial Advisor.....................................24
ARTICLE V
Representations and Warranties of Parent and Sub
SECTION 5.01. Organization.....................................................24
SECTION 5.02. Authority........................................................24
SECTION 5.03. Consents and Approvals; No Violations............................24
SECTION 5.04. Information Supplied.............................................25
SECTION 5.05. Interim Operations of Sub........................................25
SECTION 5.06. Brokers..........................................................26
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company.........................................26
(a) Ordinary Course.............................................26
(b) Dividends; Changes in Stock.................................26
(c) Issuance of Securities......................................26
(d) Governing Documents.........................................27
(e) No Acquisitions.............................................27
(f) No Dispositions.............................................27
(g) Indebtedness................................................27
(h) Advice of Changes; Filings..................................28
(i) Tax Matters.................................................28
(j) Capital Expenditures........................................28
(k) Discharge of Liabilities....................................28
(l) Benefit Plans...............................................28
(m) Compensation................................................29
(n) Material Contracts..........................................29
(o) General.....................................................29
SECTION 6.02. No Solicitation..................................................29
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SECTION 6.03. Third Party Standstill Agreements................................31
SECTION 6.04. Other Actions....................................................32
SECTION 6.05. Certain Waivers and Consents.....................................32
SECTION 6.06. Information Relating to Certain Benefit Plans....................32
SECTION 6.07. Certain Deliveries...............................................32
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement.............33
SECTION 7.02. Access to Information............................................34
SECTION 7.03. Reasonable Best Efforts..........................................35
SECTION 7.04. Directors........................................................34
SECTION 7.05. Fees and Expenses................................................35
SECTION 7.06. Indemnification; Insurance.......................................36
SECTION 7.07. Certain Litigation...............................................37
SECTION 7.08. Stock-Based Compensation.........................................37
SECTION 7.09. Allocation of Shares Under Qualified Plans.......................38
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger................................................38
(a) Company Stockholder Approval................................38
(b) No Injunctions or Restraints................................38
(c) Purchase of Shares..........................................38
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination......................................................39
SECTION 9.02. Effect of Termination............................................40
SECTION 9.03. Amendment........................................................40
SECTION 9.04. Extension; Waiver................................................40
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties
and Agreements..................................................41
SECTION 10.02. Notices.........................................................41
SECTION 10.03. Interpretation..................................................42
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SECTION 10.04. Counterparts....................................................42
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries...................................................43
SECTION 10.06. Governing Law...................................................43
SECTION 10.07. Publicity.......................................................43
SECTION 10.08. Assignment......................................................43
SECTION 10.09. Merger of the Company into Sub..................................43
SECTION 10.10. Enforcement.....................................................43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 28, 1997, among
XXXXXXX COMPUTER SERVICES, INC., a Delaware corporation ("Parent"), GREENWICH
ACQUISITION CORP., a Georgia corporation and a wholly owned subsidiary of Parent
("Sub"), and GRAPHIC INDUSTRIES, INC., a Georgia corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase the shares of Common
Stock, par value $.10 per share, of the Company (the "Company Common Stock"; the
shares of Company Common Stock being hereinafter referred to as the "Shares") at
a purchase price of $18.50 per share (the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement; and the Board of Directors of the Company has adopted
resolutions approving the Offer and the Merger (as defined below) and
recommending that holders of Shares accept the Offer and that the Company's
stockholders approve and adopt this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each of the Shares and each share of Class B Common Stock,
par value $.10 per share, of the Company (the "Class B Common Stock"; the shares
of Class B Common Stock being hereinafter referred to as the "Class B Shares"),
other than the Shares and Class B Shares owned directly or indirectly by Parent
or the Company and Dissenting Shares (as defined in Section 3.01(d)), will be
converted into the right to receive the price per share paid in the Offer;
WHEREAS, the Board of Directors of the Company has approved
the terms of the Stockholder Agreement (the "Stockholder Agreement") to be
entered into by Parent, Sub and Xxxx X. Xxxx III, as a stockholder of the
Company, concurrently with the execution of this Agreement as an inducement to
Parent to enter into this Agreement, pursuant to which such stockholder has,
among other things, granted to Sub the right to purchase, and in certain
circumstances Sub has agreed to purchase, such stockholder's Class B Shares; and
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WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject only to the conditions set forth in Exhibit A (the "Offer
Conditions") and to the terms and conditions of this Agreement (any of which may
be waived in whole or in part by Sub in its sole discretion, except that Sub
shall not waive the Minimum Condition (as defined in Exhibit A) without the
consent of the Company). Sub expressly reserves the right to modify the terms of
the Offer, except that, without the consent of the Company, Sub shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) impose any other conditions to the Offer other than the Offer Conditions
or modify the Offer Conditions (other than to waive any Offer Conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer or (v) change the form of consideration payable in
the Offer. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (i) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 15 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence, in each case subject to the right of Parent, Sub or the Company
to terminate this Agreement pursuant to the terms hereof. Parent and Sub agree
that if at any scheduled expiration date of the Offer, the Minimum Condition,
the HSR Condition (as defined in Exhibit A) or either of the conditions set
forth in paragraphs (e) or (f) of Exhibit A
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shall not have been satisfied, but at such scheduled expiration date all the
conditions set forth in paragraphs (a), (b), (c), (d) and (g) shall then be
satisfied, at the request of the Company (confirmed in writing), Sub shall
extend the Offer from time to time, subject to the right of Parent, Sub or the
Company to terminate this Agreement pursuant to the terms hereof. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
Documents"), and Parent and Sub shall cause to be disseminated the Offer
Documents to holders of Shares as and to the extent required by applicable
Federal securities laws. Parent, Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable Federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the SEC
or dissemination to the stockholders of the Company. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and to cooperate with the Company
and its counsel in responding to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents and warrants that the Board of
Directors of the Company, at a meeting duly called and held, at which all
directors were present, duly and unanimously adopted resolutions approving and
adopting this Agreement, approving the Offer, the Merger and the Stockholder
Agreement, determining that the terms of the Offer and the Merger
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are fair to, and in the best interests of, the Company's stockholders and
recommending that holders of Shares accept the Offer and that the Company's
stockholders approve this Agreement and the Merger. The Company represents and
warrants that its Board of Directors has received the opinion of
Interstate/Xxxxxxx Lane Corporation that the proposed consideration to be
received by holders of Shares pursuant to the Offer, and by holders of Shares
and Class B Shares pursuant to the Merger, is fair to such holders from a
financial point of view, and a complete and correct signed copy of such opinion
has been delivered by the Company to Parent. The Company has been advised by
each of its directors and executive officers that each such person intends to
tender all Shares owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) (subject to the right of the Board of Directors of the Company to
withdraw or modify its approval or recommendation of the Offer, the Merger and
this Agreement as set forth in Section 6.02(b)), and the Company shall cause to
be disseminated the Schedule 14D-9 to holders of Shares as and to the extent
required by applicable Federal securities laws. Each of the Company, Parent and
Sub agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to any such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent or agents to furnish Sub promptly with mailing
labels containing the names and addresses of the record holders of Shares and
Class B Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of stockholders,
security position listings and computer files and all other information in the
Company's possession or control, to the extent reasonably available to the
Company, regarding the beneficial owners of Shares, Class B Shares and any
securities convertible
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into Shares, and shall furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
(d) The Company shall transmit to each holder of Class B
Shares contemporaneously with the transmission of the Offer Documents to the
holders of Shares (i) the Offer Documents, (ii) a letter stating that holders of
Class B Shares who wish to participate in the Offer must request the conversion
of their Class B Shares into Shares pursuant to the Amended and Restated
Articles of Incorporation of the Company and (iii) a form of conversion request,
which conversion request shall provide that a holder of Class B Shares requests
conversion thereof simultaneous with Sub's first acceptance for payment of
Shares pursuant to the Offer, and that the Shares received upon such conversion
shall be deemed validly tendered pursuant to the Offer.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Georgia
Business Corporation Code (the "GBCC"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 2.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the GBCC.
SECTION 2.02. Closing. The closing of the Merger will take
place at 10:00 a.m. on a date mutually agreed to by Parent and the Company,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
unless another date, time or place is agreed to in writing by the parties
hereto.
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SECTION 2.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the GBCC and shall make all other filings or recordings required
under the GBCC. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Georgia, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 14-2-1106 of the GBCC.
SECTION 2.05. Articles of Incorporation and By-laws. (a) The
Amended and Restated Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that Article V of such Amended and Restated Articles of Incorporation
reads in its entirety as follows: "The total number of shares of all classes of
stock that the corporation shall have authority to issue is 1,000 shares of
Common Stock, par value $.10 per share. Any references to Class B Common Stock,
Class B Stock or Preferred Stock contained in any other Article hereof shall be
disregarded." Such Amended and Restated Articles of Incorporation, as so
amended, shall be the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any Shares or Class B Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.10 per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share and Class B Share that is owned by the Company or by any
subsidiary of the Company and each Share and Class B Share that is
owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares and Class B Shares. Subject to
Section 3.01(d), each Share and Class B Share issued and outstanding
(other than Shares and Class B Shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares and Class B Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Shares or Class B
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding
Shares or Class B Shares held by a person (a "Dissenting Stockholder")
who objects to the Merger and complies with all the provisions of GBCC
concerning the right of holders of Shares and/or Class B Shares to
dissent from the Merger and require appraisal of their Shares and/or
Class B Shares ("Dissenting Shares") shall not be converted as
described in Section 3.01(c), but shall be converted into the right to
receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the GBCC. If, after the Effective
Time, such Dissenting Stockholder withdraws his demand for appraisal or
fails to perfect or otherwise loses his right of appraisal, in any case
pursuant to the GBCC,
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his Shares and/or Class B Shares shall be deemed to be converted as of
the Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares or Class B Shares received by the Company and (ii)
the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company to
act as paying agent in the Merger (the "Paying Agent"), and, from time to time
on, prior to or after the Effective Time, Parent shall make available, or cause
the Surviving Corporation to make available, to the Paying Agent cash in amounts
and at the times necessary for the payment of the Merger Consideration upon
surrender of certificates representing Shares or Class B Shares as part of the
Merger pursuant to Section 3.01 (it being understood that any and all interest
earned on funds made available to the Paying Agent pursuant to this Agreement
shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented Shares or Class B Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash into which the
Shares or Class B Shares theretofore represented by such Certificate shall have
been converted pursuant to Section 3.01, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Shares
or Class B Shares that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation
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that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.02, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares or Class B Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate. Parent, Sub, the Surviving Corporation, the
Company or the Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares or Class B Shares such amounts as Parent, Sub, the Surviving Corporation,
the Company or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under the Code (as hereinafter defined) or under
any provisions of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, Sub, the Surviving Corporation, the Company or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares or Class B Shares in
respect of which such deduction or withholding was made by Parent, Sub, the
Surviving Corporation, the Company or the Paying Agent.
(c) No Further Ownership Rights in Shares or Class B Shares.
All cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares and Class B Shares theretofore represented by
such Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares and the
Class B Shares that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares or Class B Shares for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares or Class B Shares who have not theretofore complied with this Article III
and the instructions set forth in the letter of transmittal mailed to such
holders after the Effective Time shall thereafter look only to Parent for
payment of the Merger Consideration to which they are entitled.
(e) No Liability. None of Parent, Sub, the Company or
the Paying Agent shall be liable to any person in respect of any
cash delivered to a public official pursuant to any applicable
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abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any payment pursuant to this Article III
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.05)), the cash payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interests of any person
previously entitled thereto.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as
follows:
SECTION 4.01. Organization. The Company and each of its
subsidiaries (as defined in Section 10.03) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now being conducted. The Company and each of its subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a material adverse effect (as
defined in Section 10.03) on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company has delivered to Parent
complete and correct copies of its Amended and Restated Articles of
Incorporation and By-laws and the articles of incorporation and by-laws (or
similar organizational documents) of its subsidiaries.
SECTION 4.02. Subsidiaries. Item 4.02 of the letter from the
Company to Parent dated the date hereof, which letter relates to this Agreement
and is designated therein as the Company Disclosure Letter (the "Company
Letter") lists each subsidiary of the Company. Except as set forth in Item 4.02
of the Company Letter, all the outstanding shares of capital stock of each such
subsidiary are owned by the Company, by another wholly owned subsidiary of the
Company or by the Company and another wholly owned subsidiary of the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Item 4.02 of the Company Letter and except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock
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or other ownership interest in any corporation, partnership, joint venture,
limited liability company or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 20,000,000 Shares, 10,000,000 Class B Shares and 500,000
shares of Preferred Stock, no par value per share. At the close of business on
September 26, 1997, (i) 8,086,951 Shares were issued and outstanding, (ii)
83,287 Shares were held by the Company in its treasury, (iii) 1,506,163 Shares
were reserved for issuance upon exercise of options to purchase Shares ("Company
Stock Options") issued pursuant to the Company's stock option plans, (iv)
307,374 shares were reserved for issuance under the Company's Associate Stock
Purchase Plan and 477,786 shares were reserved for issuance under the Company's
1992 Stock Award Plan, (v) 1,190,954 Shares were reserved for issuance upon
conversion of the Company's 7% Convertible Subordinated Debentures due May 15,
2006 (the "Convertible Debentures"), (vi) 4,518,817 Class B Shares were issued
and outstanding and (vii) no Class B Shares were held by the Company in its
treasury. Except as set forth above, as of the date of this Agreement, no shares
of capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth above, there are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote. Except as set forth
above, as of the date of this Agreement, there are not any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations of the Company
or any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or (ii) to vote or to dispose of any
shares of the capital stock of any of the Company's subsidiaries.
SECTION 4.04. Authority. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to the approval of this Agreement by the holders of a majority of the combined
voting power of the Shares and the Class B Shares (the "Company Stockholder
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Approval"), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of
Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as
set forth in Item 4.05 of the Company Letter, and except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including the filing with the SEC of the Schedule 14D-9 and a
proxy statement relating to any required Company Stockholder Approval (the
"Proxy Statement")), the Xxxx- Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the GBCC, the laws of other states in which the
Company is qualified to do or is doing business, state takeover laws and foreign
and supranational laws relating to antitrust and anticompetition clearances,
neither the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the Amended and
Restated Articles of Incorporation or By-laws of the Company or of the similar
organizational documents of any of its subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any Federal, state or
local government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic, foreign or
supranational (a "Governmental Entity") (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
have a material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their properties or
assets, except in the
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case of clauses (iii) or (iv) for violations, breaches or defaults that would
not have a material adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger.
SECTION 4.06. SEC Reports and Financial Statements. The
Company and each of its subsidiaries has filed with the SEC, and has heretofore
made available to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
February 1, 1994, under the Exchange Act or the Securities Act of 1933 (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein, are
referred to as the "Company SEC Documents"). The Company SEC Documents, at the
time filed, (a) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. Except
to the extent that information contained in any Company SEC Document has been
revised or superseded by a subsequently filed Company Filed SEC Document (as
defined in Section 4.07) (a copy of which has been made available to Parent
prior to the date hereof), none of the Company SEC Documents contains an untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Company Filed SEC Documents") or in Item 4.07 of
the Company Letter, since February 1, 1997, the Company and its subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any material adverse change
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with respect to the Company, (ii) any declaration, setting aside or payment of
any dividend or other distribution with respect to its capital stock (other than
regular quarterly cash dividends not in excess of $.07 per Share and $.05 per
Class B Share with usual record and payment dates and in accordance with the
Company's present dividend policy) or any redemption, purchase or other
acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business (including in connection with promotions) consistent with past practice
or as was required under employment agreements in effect as of September 26,
1997, (y) any granting by the Company or any of its subsidiaries to any such
officer of any increase in severance or termination pay, except as part of a
standard employment package to any person promoted or hired, or as was required
under employment, severance or termination agreements in effect as of September
26, 1997, or (z) except employment agreements in the ordinary course of business
consistent with past practice with employees other than any executive officer of
the Company, any entry by the Company or any of its subsidiaries into any
employment, consulting, severance, termination or indemnification agreement with
any such employee or executive officer, (v) any damage, destruction or loss,
whether or not covered by insurance, that has or reasonably could be expected to
have a material adverse effect on the Company, (vi) any revaluation by the
Company of any of its material assets or (vii) any material change in accounting
methods, principles or practices by the Company.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
extent set forth in Item 4.08 of the Company Letter or in the Company's Annual
Report to Shareholders for the fiscal year ended January 31, 1997, as of January
31, 1997, neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto). Since January 31, 1997, except as and to the extent set forth in
Item 4.08 of the Company Letter or in the Company Filed SEC Documents, neither
the Company nor any of its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, that would be
reasonably expected to have a material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the
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information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting (as
defined in Section 7.01), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9, the Information Statement and
the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
SECTION 4.10. Benefit Plans; Employees and Employment
Practices. (a) Except as disclosed in the Company Filed SEC Documents or Item
4.10(a) of the Company Letter, since the date of the most recent audited
financial statements included in the Company Filed SEC Documents, there has not
been any adoption or amendment in any material respect (including any increase
or improvements in benefits or coverage) by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, fringe benefit, excess
supplemental executive compensation, employee stock purchase, stock
appreciation, restricted stock or other material employee benefit plan, policy,
arrangement or understanding (whether or not in writing) providing benefits to
any current or former employee, officer or director of the Company or any of its
subsidiaries (collectively, "Benefit Plans"); provided that, with respect to any
Benefit Plans sponsored by a subsidiary of the Company, the foregoing
representation is limited to the actual knowledge of the Company. Except as
disclosed in Item 4.10(a) of the Company Letter, there exist no employment,
consulting, severance, termination or indemnification agreements, or any other
similar arrangements or understandings (whether or not in writing) between the
Company or any of its subsidiaries and any current or former employee, officer
or director of the Company or any of its subsidiaries.
(b) Item 4.10(b) of the Company Letter contains a list
of all "employee pension benefit plans" (as defined in
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Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, sponsored or contributed to, by the Company or any of its
subsidiaries for the benefit of any current or former employees, officers or
directors of the Company or any of such subsidiaries (the "Subject Benefit
Plans"); provided that, with respect to any Subject Benefit Plans sponsored by a
subsidiary of the Company ("Subsidiary Subject Benefit Plans"), the foregoing
representation is limited to the actual knowledge of the Company. The Company
has delivered to Parent true, complete and correct copies of (i) each Subject
Benefit Plan listed in Item 4.10(b) of the Company Letter, including any
amendments thereto (or, in the case of any unwritten Subject Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 (and
related schedules and financial statements or opinions required in connection
therewith) filed with the Internal Revenue Service with respect to each such
Subject Benefit Plan (if any such report was required), (iii) if applicable, the
most recent actuarial report with respect to each such Subject Benefit Plan,
(iv) the most recent summary plan description (and a summary of material
modifications, if applicable) for each such Subject Benefit Plan, (v) if
applicable, the most recent determination letter issued by the Internal Revenue
Service with respect to each such Subject Benefit Plan and (vi) if applicable,
each trust agreement and group annuity contract relating to each such Subject
Benefit Plan. Any Benefit Plan that is not a Subject Benefit Plan is either
required by and maintained in accordance with applicable local law or is
immaterial to the applicable subsidiary.
(c) Except as disclosed in Item 4.10(c) of the Company Letter,
all Pension Plans listed in Item 4.10(b) of the Company Letter which are
intended to be tax-qualified have been timely amended to comply with ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"), including changes
required by the Unemployment Compensation Amendments of 1992 and the Omnibus
Budget Reconciliation Act of 1993, and determination letters in respect of such
Pension Plans have been received from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income taxes under
Section 401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the best knowledge of the Company, has
revocation been threatened, nor has any such Pension Plan been amended since the
date of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or materially increase its
costs. With respect to any Pension Plan maintained by a subsidiary of the
Company, the representation set forth in the preceding sentence is limited to
the actual knowledge of the Company.
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(d) Except as disclosed in Item 4.10(d) of the Company Letter,
each Benefit Plan has been administered in all material respects in conformity
with its terms and the applicable requirements of ERISA and the Code and other
applicable laws; and all contributions required to be made have been made in
accordance with the provisions of each such Benefit Plan and with ERISA and the
Code and other applicable laws.
(e) Except as disclosed in on Item 4.10(e) of the Company
Letter, none of the Company or any of its subsidiaries, or any other person or
entity that, together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code, currently maintains or has
maintained, or has or had any obligation to contribute to, during the five-year
period preceding the date hereof any "defined benefit plan" (within the meaning
of Section 3(35) of ERISA) or any "multiemployer plan" (within the meaning of
Section 3(37) of ERISA), or has incurred any liability under Title IV of ERISA
or to the Pension Benefit Guaranty Corporation that has not been fully paid as
of the date hereof. None of the Company, any officer of the Company, any of the
Benefit Plans which are subject to ERISA, including the Pension Plans, any
trusts created thereunder or, to the knowledge of the Company, any trustee or
administrator thereof or any subsidiary of the company (or officer thereof), has
engaged in a non-exempt "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could reasonably be expected to subject the
Company, any of its subsidiaries or any officer of the Company or any of its
subsidiaries to any tax or penalty on prohibited transactions imposed by Section
4975 of the Code or to any liability or civil penalty under Section 502(i) or
(1) of ERISA.
(f) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Item 4.10(f) of the Company Letter,
(i) no such Benefit Plan is funded through a "welfare benefits fund", as such
term is defined in Section 419(e) of the Code, (ii) each such Benefit Plan that
is a "group health plan," as such term is defined in Section 607 of ERISA,
complies with the applicable requirements of part 6 of Title I of ERISA, (iii)
each such Benefit Plan that is a "group health plan," as such term is defined in
Section 706 of ERISA, complies with the applicable requirements of part 7 of
Title I of ERISA and (iv) except as disclosed on Item 4.10(f) of the Company
Letter, each such Benefit Plan (including any such Plan covering retirees or
other former employees) may be amended or terminated without material liability
to the Company or any of its subsidiaries on or at any time after the
consummation of the Offer.
(g) Except as disclosed on Item 4.10(g) of the Company
Letter, with respect to each Benefit Plan, all material reports
and information required to be filed with the U.S. Department of
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Labor, the Internal Revenue Service or each Benefit Plan participant have been
timely filed.
(h) There is no dispute, arbitration, claim, suit or
grievance, pending or threatened, involving a Benefit Plan (other than routine
claims for benefits payable under any such plan), and, to the knowledge of the
Company, there is no basis for such a claim.
(i) Item 4.10(i) of the Company Letter sets forth the names of
all current officers and directors of the Company and all employees of the
Company whose compensation is in excess of $80,000 per year, together with each
employee's current salary, most recent bonus (excluding sales bonuses), date of
birth and date of employment.
(j) Except as disclosed in Item 4.10(j) of the Company Letter,
there are no material controversies, strikes, work stoppages or disputes pending
or, to the knowledge of the Company, threatened between the Company or any of
its subsidiaries and any current or former employees, no labor union or other
collective bargaining unit represents or has ever represented any employee of
the Company or any of its subsidiaries and no organizational effort by any labor
union or other collective bargaining unit currently is under way or threatened
with respect to any employee. A true, complete and correct copy of any
applicable collective bargaining agreement has been provided to Parent, and the
Company and its subsidiaries are in compliance in all material respects with the
terms thereof.
SECTION 4.11. Contracts; Indebtedness. (a) Except as disclosed
in Item 4.11 of the Company Letter or in the Company Filed SEC Documents, there
are no contracts or agreements that are material to the business, properties,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice would cause such a violation of
or default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not reasonably be expected to result in a material adverse effect on the
Company.
(b) Item 4.11 of the Company Letter sets forth (i) a list of
all agreements, instruments and other obligations pursuant to which any
indebtedness of the Company or any of its subsidiaries in a principal amount in
excess of $250,000 is
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outstanding or may be incurred and (ii) the respective principal amounts
outstanding thereunder as of August 31, 1997.
SECTION 4.12. Litigation. Except as disclosed in Item 4.12 of
the Company Letter or in the Company Filed SEC Documents, as of the date of this
Agreement, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries that could reasonably be expected to have a material adverse
effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in Item 4.12 of the Company Letter
or in the Company Filed SEC Documents, as of the date of this Agreement, neither
the Company nor any of its subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree that could reasonably be expected to have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.13. Compliance with Applicable Law. The Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals that would not
have a material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company and its subsidiaries
are in compliance with the terms of the Company Permits, except where the
failure so to comply would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger.
Except as disclosed in the Company Letter or in the Company Filed SEC Documents,
to the knowledge of the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that would
not have a material adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger. To the knowledge of the
Company, except as set forth in the Company Filed SEC Documents, as of the date
of this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or threatened,
other than, in each case, those the outcome of which would not be reasonably
expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 4.14. Tax Matters. Except as set forth in Item 4.14 of
the Company Letter:
(a) The Company and each of its subsidiaries has filed
all Federal income tax returns and reports and all other material
tax returns and reports required to be filed by it. All such
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returns and reports are complete and correct in all material respects. The
Company and each of its subsidiaries has paid (or the Company has paid on its
subsidiaries' behalf) all taxes (as defined below) shown as due on such returns
and reports and all material taxes for which no return was required to be filed,
and the most recent financial statements contained in the Company Filed SEC
Documents reflect an adequate reserve for all taxes payable by the Company and
its subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.
(b) No material tax return of the Company or any of its
subsidiaries is under audit or, to the knowledge of the Company, examination by
any taxing authority. Each material deficiency resulting from any audit or
examination relating to taxes of the Company or any of its subsidiaries by any
taxing authority has been paid. No material issues relating to taxes were raised
in writing by the relevant taxing authority during any presently pending audit
or examination, and no material issues relating to taxes were raised in writing
by the relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period. The Federal income
tax returns of the Company and each of its subsidiaries consolidated in such
returns have been examined by and settled with the Internal Revenue Service for
all years through the taxable year ended January 31, 1994.
(c) There is no agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) None of the Company or any of its subsidiaries is a party
to or is bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority), in all cases other than this Agreement.
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state, local or foreign tax law.
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(g) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its subsidiaries under any contract, plan, program,
arrangement or understanding currently in effect.
(h) No amount or other entitlement that could be received
(whether in cash or property or the vesting of property) by any Person who, with
respect to the Company or any of its affiliates, is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or Company Benefit Plan currently in effect will be characterized as
an "excess parachute payment" or a "parachute payment" (as such terms are
defined in Section 280G(b)(1) of the Code) as a result of any of the
transactions contemplated by this Agreement.
(i) No taxes will be required to be withheld under Section
1445, and no sales taxes, transfer, real property transfer or gains taxes, or
similar taxes will be imposed as a result of the transactions contemplated by
this Agreement.
(j) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, use, excise,
employment, withholding and other taxes, tariffs or governmental charges of any
nature whatsoever, together with any interest and penalties, and "tax return"
shall include any return, report or similar statement required to be filed with
respect to any tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated tax.
SECTION 4.15. State Takeover Statutes; Charter Provisions.
Section 14-2-1111 of the GBCC is inapplicable to the Offer, the Merger, this
Agreement, the Stockholder Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement. The action of the Board of Directors of
the Company in approving and adopting this Agreement and approving the Offer,
the Merger and the Stockholder Agreement is sufficient (i) to render
inapplicable to the Offer, the Merger, this Agreement, the Stockholder Agreement
and the transactions contemplated by this Agreement and the Stockholder
Agreement the supermajority voting provisions of Article VII of the Company's
Amended and Restated Articles of Incorporation and (ii) to comply with the
provisions of Section 14-2-1132 of the GBCC. To the knowledge of the Company, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement, the Stockholder
Agreement or any of the transactions contemplated by this Agreement or the
Stockholder Agreement.
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SECTION 4.16. Environmental Matters. (a) Except as set forth
in Item 4.16 of the Company Letter, neither the Company nor any of its
subsidiaries has (i) placed, held, located, released, transported or disposed of
any Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any of its subsidiaries' properties or any other properties, other
than in a manner that could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a material adverse effect on the
Company, (ii) any knowledge or reason to know of the presence of any Hazardous
Substances on, under or at any of the Company's or any of its subsidiaries'
properties or any other property but arising from the Company's or any of its
subsidiaries' properties, other than in a manner that could not reasonably be
expected to result in a material adverse effect on the Company, or (iii)
received any written notice (A) of any violation of any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment, environmental
regulation or control or regarding Hazardous Substances on, under or emanating
from any of the Company's or any of its subsidiaries' properties or any other
properties (collectively, "Environmental Laws") that has not been resolved or
settled with the relevant Governmental Entity, (B) of the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any such violation,
(C) requiring the response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its subsidiaries' properties or any
other properties, (D) alleging noncompliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental Law
in any manner reasonably likely to require material expenditures or to result in
material liability or (E) demanding payment for response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of its
subsidiaries' properties or any other properties, except in each case for the
notices set forth in Item 4.16 of the Company Letter. For purposes of this
Agreement, the term "Hazardous Substance" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined as, or included in the definition of, "hazardous
substances", "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in Item 4.16 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or its subsidiaries
arising out of or as a condition to any transaction contemplated by this
Agreement or the Stockholder Agreement, including any requirement to modify or
to transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the
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modification of or provision of notice under any agreement, consent order or
consent decree, except where any failure to notify or place any notice would not
reasonably be expected to result in a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger. No
Lien has been placed upon any of the Company's or its subsidiaries' properties
under any Environmental Law.
(c) Except as set forth in the Item 4.16 of the Company
Letter, none of the Company or any of its subsidiaries owns, operates or leases
any facility qualifying as an industrial establishment under the New Jersey
Industrial Site Recovery Act.
SECTION 4.17. Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade names, service marks, copyrights,
know how and other proprietary intellectual property rights and computer
programs (collectively, "Intellectual Property Rights") that are material to the
conduct of the business of the Company and its subsidiaries taken as a whole.
Item 4.17 of the Company Letter sets forth a description of all Intellectual
Property Rights that are material to the conduct of the business of the Company
and its subsidiaries taken as a whole. Except as set forth in Item 4.17 of the
Company Letter, no claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect any of the
Company's material Intellectual Property Rights, and the Company is not aware of
any basis for any such claims. To the knowledge of the Company, except as set
forth in Item 4.17 of the Company Letter, no person is infringing the rights of
the Company or any of its subsidiaries with respect to any material Intellectual
Property Right so as to materially adversely affect such Intellectual Property
Right.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Interstate/Xxxxxxx Xxxx Corporation and X. X. Xxxxxxx & Company, Incorporated,
the fees and expenses of which will be paid by the Company (and as reflected in
agreements between Interstate/Xxxxxxx Xxxx Corporation and the Company and X. X.
Xxxxxxx & Company, Incorporated and the Company, copies of which have been
furnished to Parent), is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The estimated fees and expenses incurred and to be incurred by the
Company in connection with this Agreement and the transactions contemplated by
this Agreement (including the fees of the Company's legal counsel and the legal
counsel for its
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financial advisor) are set forth in Item 4.18 of the Company Letter.
SECTION 4.19. Opinion of Financial Advisor. The Company has
received the opinion of Interstate/Xxxxxxx Xxxx Corporation, dated the date of
this Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent.
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as
follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted.
SECTION 5.02. Authority. Parent and Sub have requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub and no other corporate proceedings on the part of
Parent and Sub are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by Parent and
Sub, as the case may be, and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a valid and binding obligation of
each of Parent and Sub enforceable against them in accordance with its terms.
SECTION 5.03. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act, the GBCC, the laws of
other states in which Parent is qualified to do or is doing business, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by Parent and Sub nor the consummation by Parent and Sub of the
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transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or by-laws of
Parent and Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
be reasonably expected to prevent or materially delay the consummation of the
Offer and/or the Merger), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of clauses
(iii) and (iv) for violations, breaches or defaults which would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in the case of
the Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
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SECTION 5.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxx Xxxxxx Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. Until such time as
Parent's designees shall constitute a majority of the members of the Board of
Directors of the Company, the Company agrees as to itself and its subsidiaries
that (except as expressly contemplated or permitted by this Agreement or except
to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable best efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its subsidiaries to, (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock (other than
regular quarterly cash dividends not in excess of $.07 per Share or $.05 per
Class B Share with usual record and payment dates and in accordance with the
Company's present dividend policy), except for dividends by a direct or indirect
wholly owned subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its subsidiaries to, issue, deliver, sell, pledge or encumber,
or authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire,
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any such shares or convertible securities, or any other ownership interest
(including stock appreciation rights or phantom stock) other than (i) the
issuance of Shares upon the exercise of stock options pursuant to Stock-Based
Compensation Plans outstanding on the date of this Agreement and in accordance
with the terms of such stock options, (ii) the issuance of Shares upon the
conversion of Class B Shares, and (iii) the issuance of Shares upon the
conversion of any Convertible Debentures.
(d) Governing Documents. The Company shall not, and shall not
permit any of its subsidiaries to, amend or propose to amend its articles of
incorporation or by-laws (or similar organizational documents).
(e) No Acquisitions. The Company shall not, and shall not
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging
or consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, limited liability company,
association or other business organization or division thereof or (ii) any
assets having a purchase price in excess of $1,000,000, individually, or
$5,000,000, in the aggregate, except purchases of inventory in the ordinary
course of business consistent with past practice and expenditures consistent
with the Company's current capital budget previously furnished to Parent.
(f) No Dispositions. Except as disclosed in Item 6.01(f) of
the Company Letter, other than sales of its products to customers and immaterial
dispositions of personal property, in each case in the ordinary course of
business consistent with past practice, the Company shall not, and shall not
permit any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets.
(g) Indebtedness. The Company shall not, and shall not permit
any of its subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any "keep-
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings incurred in the ordinary
course of business consistent with past practice, or (ii) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned subsidiary of the
Company, except for travel advances made in the ordinary course of business.
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(h) Advice of Changes; Filings. The Company shall confer on a
regular basis with Parent with respect to operational matters and promptly
advise Parent orally and in writing of any material adverse change with respect
to the Company. The Company shall promptly provide to Parent (or its counsel)
copies of all filings made by the Company with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election
that would have a material effect on the tax liability of the Company or any of
its subsidiaries or settle or compromise any tax liability of the Company or any
of its subsidiaries that would materially affect the tax liability of the
Company or any of its subsidiaries. The Company shall, before filing or causing
to be filed any material tax return of the Company or any of its subsidiaries or
settling any tax liability not described in the preceding sentence, consult with
Parent and its advisors as to the positions and elections that may be taken or
made with respect to such return or with respect to such settlement.
(j) Capital Expenditures. Neither the Company nor any of its
subsidiaries shall make or agree to make any new capital expenditure or
expenditures other than expenditures consistent with the Company's current
capital budget previously furnished to Parent.
(k) Discharge of Liabilities. The Company shall not, and shall
not permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, (i) in the ordinary course of business consistent with past
practice or in accordance with their terms, of claims, liabilities or
obligations recognized or disclosed in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company Filed
SEC Documents or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice or (ii) of claims,
liabilities or obligations to the extent they are less than $50,000 and
unrelated to the Company's stockholders or the transactions contemplated by this
Agreement and the Stockholder Agreement, or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party.
(l) Benefit Plans. Except as disclosed in Item 6.01(l) of the
Company Letter, neither the Company nor any of its subsidiaries shall enter into
or accept, or amend any existing, severance plan, agreement or arrangement or
enter into or amend any Benefit Plan or employment or consulting agreement,
other than as required by law.
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(m) Compensation. Neither the Company nor any of its
subsidiaries shall increase the compensation payable or to become payable to its
directors, officers or employees, except for increases required under employment
agreements existing on the date hereof, and increases for employees in the
ordinary course of business consistent with past practice that, in any event, do
not increase such employee's aggregate compensation by more than 5% over such
employee's aggregate compensation in effect on the date hereof, or grant any
severance or termination pay to, or enter into any employment or severance
payment, or establish, adopt, enter into, or amend in any material respect or
take action to enhance in any material respect or accelerate any rights or
benefits under, any collective bargaining, bonus, profit sharing, thrift,
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except, in each case, as may be required to comply with applicable law
or regulation.
(n) Material Contracts. Except in the ordinary course of
business, neither the Company nor any of its subsidiaries shall (i) modify,
amend or terminate any material contract or agreement to which the Company or
such subsidiary is a party or (ii) waive, release or assign any material rights
or claims.
(o) General. The Company shall not, and shall not permit any
of its subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions otherwise prohibited by this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company shall, and
shall direct and use reasonable best efforts to cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information), or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal which was not solicited
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subsequent to the date hereof, and subject to compliance with Section 6.02(c),
(x) furnish information with respect to the Company to any person pursuant to a
customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in negotiations
regarding such Takeover Proposal. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its subsidiaries or 20% or more of any class of equity securities of
the Company or any of its subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries, any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement, or any
other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Offer and/or the Merger
or which would reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated by this Agreement and the Stockholder
Agreement.
(b) Except as set forth in this Section 6.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Takeover Proposal or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the foregoing, in
the event that prior to the acceptance for payment of Shares pursuant to the
Offer the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to this and the
following sentences) (x) withdraw or modify its approval or recommendation of
the Offer, the Merger and this Agreement or (y) approve or recommend a Superior
Proposal (as defined below) or terminate this Agreement (and concurrently with
or after such termination, if it so chooses, cause the Company to enter into an
Acquisition Agreement with respect to any Superior Proposal), but in each of the
cases set forth in this clause (y), only at a time that is after the fifth
business day following Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that (i) the Board of Directors of the Company has
received a Superior Proposal and (ii) the actions the Board of Directors of the
Company intends to
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take with respect to such Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "Superior Proposal" means
any bona fide proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock and Class B Common
Stock then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger and for which financing, to the extent required, is
then committed.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request or Takeover
Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by the Exchange Act or from making any disclosure to the Company's stockholders
if, in the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, such disclosure is required by applicable
state or Federal securities laws or is necessary in order to comply with its
fiduciary duties to the Company's stockholders under applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b), withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the Offer,
this Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, a Takeover Proposal.
SECTION 6.03. Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill agreement to which the Company or any of its subsidiaries is a
party (other than any involving Parent) unless the Company's Board of Directors
shall have determined in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law.
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SECTION 6.04. Other Actions. Except as expressly contemplated
or permitted by this Agreement, the Company shall not, and shall not permit any
of its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the Offer
Conditions not being satisfied (subject to the Company's right to take actions
specifically permitted by Section 6.02).
SECTION 6.05. Certain Waivers and Consents. The Company shall
use its reasonable best efforts to obtain any and all waivers or consents
necessary from the lenders listed on Item 6.05 of the Company Letter prior to
the acceptance by Sub of any Shares tendered pursuant to the Offer.
SECTION 6.06. Information Relating to Certain Benefit Plans.
(a) As soon as practicable, but in no event later than 30 days after the date of
this Agreement, the Company shall deliver to Parent each of the items listed in
clauses (i) through (vi) of the second sentence of Section 4.10(b) hereof with
respect to each Subsidiary Subject Benefit Plan, to the extent such information
was not previously delivered to Parent in accordance with Section 4.10(b)
hereof.
(b) As soon as practicable, but in no event later than three
business days after the date of this Agreement, the Company shall deliver to the
union pension fund office for each multiemployer plan to which the Company and
its subsidiaries contribute a written request for a withdrawal liability
calculation or for information that will allow the Company to make such a
calculation and the Company shall deliver such information to Parent no later
than one business day following the receipt by the Company.
SECTION 6.07. Certain Deliveries. The Company shall deliver to
Parent, not more than 20 days prior to, but not later than, Sub's acceptance for
payment of any Shares pursuant to the Offer, a statement in accordance with
Treas. Reg. xx.xx. 1.1445-2(c)(3) and 1.897-2(h), and neither Parent nor Sub
shall have actual knowledge that such statement is false or received a notice
that the statement is false pursuant to Treas. Reg. ss. 1.1445-4. In addition,
the Company shall deliver to Parent on the date Sub first accepts for payment
any Shares pursuant to the Offer the notification to the Internal Revenue
Service, in accordance with the requirements pursuant to Treas. Reg. ss.
1.897-(h)(2), of delivery of the statement referred to in the preceding
sentence, signed by a responsible corporate officer of the Company.
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ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Company shall, through its Board of Directors (but subject to the
right of its Board of Directors to withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement as set forth in
Section 6.02(b)), recommend to its stockholders that the Company Stockholder
Approval be given. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the outstanding Shares and at
least 90% of the outstanding Class B Shares, the parties shall, at the request
of Parent, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting in accordance with Section 14-2-1104 of the
GBCC. Without limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to the first sentence of this Section 7.01(a) shall not
be affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and shall use its reasonable best efforts to respond to any comments of the
SEC or its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. Parent
shall cooperate with the Company in the
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preparation of the Proxy Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. Upon reasonable notice
and subject to restrictions contained in confidentiality agreements to which the
Company is subject (from which it shall use reasonable best efforts to be
released) and subject to the terms of the Confidentiality Agreement (the
"Confidentiality Agreement"), dated July 3, 1997, between the Company and
Parent, the Company shall, and shall cause each of its subsidiaries to, afford
to Parent and to the officers, employees, accountants, counsel and other
representatives of Parent all reasonable access, during normal business hours
during the period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause each of its subsidiaries to) furnish promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of the Federal or state securities laws or the Federal tax laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request.
SECTION 7.03. Reasonable Best Efforts. Except as otherwise
contemplated in this Agreement, each of the Company, Parent and Sub agree to use
its reasonable best efforts to take, or cause to be taken, all actions necessary
to comply promptly with all legal requirements that may be imposed on itself
with respect to the Offer and the Merger (which actions shall include furnishing
all information required under the HSR Act and in connection with approvals of
or filings with any other Governmental Entity) and shall promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with the
Offer and the Merger. Except as otherwise contemplated in this Agreement, each
of the Company, Parent and Sub shall, and shall cause its subsidiaries to, use
its reasonable best efforts to take all reasonable actions necessary to obtain
(and shall cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, Sub,
the Company or any of their subsidiaries in connection with the Offer and the
Merger or the taking of any action contemplated thereby or by this Agreement,
except that no party need waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of any assets. Without
limiting the foregoing, Parent shall (i) contemporaneously with the purchase
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of Shares pursuant to the Offer, lend, contribute or otherwise transfer to the
Company funds in an amount sufficient to enable the Company to repay its then
outstanding indebtedness under the Amended and Restated Credit Agreement dated
as of July 15, 1997 referred to in Item 4.05 of the Company Letter and (ii) use
its reasonable best efforts to cause the Company to repay such indebtedness
contemporaneously with such purchase and obtain the release of all guaranties
and security interests granted in connection with such indebtedness.
SECTION 7.04. Directors. Promptly upon Sub having acquired a
majority of the combined voting power of the Shares and Class B Shares, Sub
shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with Section
14(f) of the Exchange Act, a majority of such directors, and the Company shall,
at such time, cause Sub's designees to be so elected by its existing Board of
Directors; provided, however, that in the event that Sub's designees are elected
to the Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least three directors who are directors on the date of
this Agreement and who are not officers of the Company (the "Independent
Directors"); and provided further that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
the remaining Independent Directors or Director shall designate a person or
persons to fill such vacancy or vacancies, each of whom shall be deemed to be an
Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate three persons to fill
such vacancies who shall not be officers or affiliates of the Company or any of
its subsidiaries, or officers or affiliates of Parent or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Subject to applicable law, the Company shall take
all action requested by Parent that is reasonably necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Company's Board of Directors and/or obtain the resignation of
such number of its current directors as is necessary to enable Sub's designees
to be elected or appointed to, and to constitute a majority of the directors on,
the Company's Board of Directors as provided above.
SECTION 7.05. Fees and Expenses. (a) Except as provided below
in this Section 7.05, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement
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and the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent (x) the Expenses (as hereinafter defined) in an amount up to but
not to exceed $500,000 and (y) $5,500,000 (the "Termination Fee") under the
circumstances and at the times set forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
9.01(d), the Company shall pay the Expenses and the Termination Fee
upon demand;
(ii) if the Company terminates this Agreement under Section
9.01(e), the Company shall pay the Expenses and the Termination Fee
concurrently therewith; and
(iii) if, at the time of any other termination of this Agreement
(other than by the Company pursuant to Section 9.01(f) or 9.01(g)), a
Takeover Proposal shall have been made (other than a Takeover Proposal
made prior to the date hereof), the Company shall pay the Expenses, if
terminated by the Company, concurrently therewith or, if terminated by
Parent, upon demand; in addition, if within 18 months of such
termination, the Company shall enter into an Acquisition Agreement
providing for a Takeover Proposal or a Takeover Proposal shall be
consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or
the consummation of such Takeover Proposal.
"Expenses" shall mean documented and reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent.
SECTION 7.06. Indemnification; Insurance. (a) Parent and Sub
agree that all rights to indemnification for acts or omissions occurring at or
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees and agents (the "Indemnified Parties") of the
Company and its subsidiaries as provided in their respective articles of
incorporation or by-laws (or similar organizational documents) shall survive the
Merger and shall continue in full force and effect in accordance with their
terms.
(b) For six years from the date Sub first purchases Shares
pursuant to the Offer, Parent shall maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's
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directors' and officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent); provided, however, that in no event shall
Parent be required to pay a premium in any one year in an amount in excess of
150 percent of the last per annum amount of premiums paid by the Company prior
to the date hereof; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(c) This Section 7.06 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of
Parent and the Surviving Corporation.
SECTION 7.07. Certain Litigation. The Company agrees that it
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating to
the Offer, the Merger, this Agreement or the Stockholder Agreements, without the
prior written consent of Parent. In addition, the Company shall not voluntarily
cooperate with any third party that may hereafter seek to restrain or prohibit
or otherwise oppose the Offer or the Merger and shall cooperate with Parent and
Sub to resist any such effort to restrain or prohibit or otherwise oppose the
Offer or the Merger; provided, however, that the foregoing shall not limit any
rights of the Company under Section 6.02(b).
SECTION 7.08. Stock-Based Compensation. (a) Prior to purchase
of Shares pursuant to the Offer, the Company shall terminate each stock option
plan, stock appreciation right plan, limited stock appreciation right plan,
restricted stock plan, employee stock purchase plan, or any other plan or
arrangement providing for compensation wholly or partially in the form of Shares
(excluding any plan which is intended to be qualified under section 401(a) of
the Code) (collectively, the "Stock-Based Compensation Plans"), and shall grant
no additional options or awards under such Stock-Based Compensation Plans.
(b) Immediately upon the purchase of Shares pursuant to the
Offer, all outstanding options or awards under the Stock- Based Compensation
Plans, whether vested or unvested, shall cease to be exercisable, shall be
canceled by the Company, and shall thereafter represent only a right to receive,
upon its surrender to the Company, a cash payment from the Company in an amount
(if any) equal to the number of Shares subject to each such surrendered option
or award multiplied by the difference (if positive) between the exercise price
per Share (if any) covered by the option or award and the highest per Share
price paid to shareholders of the Company in the Offer.
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(c) All amounts payable pursuant to this Section shall be
subject to any required withholding of taxes and shall be paid without interest.
SECTION 7.09. Allocation of Shares Under Qualified Plans. The
Company shall take such action as is necessary so that, prior to the purchase of
Shares pursuant to the Offer, (i) no participant in a Pension Plan that is a
defined contribution plan intended to be qualified under section 401(a) of the
Code can have any additional amount allocated to the participant's account in
the form of Shares or in the form of any other securities of the Company and
(ii) to the extent any such plan provides for investment of participants'
accounts in an investment fund which is invested primarily in Shares, no
participant may direct that any portion of the participant's account be invested
in such fund (other than the portion of such account invested in such fund
immediately prior to the purchase of Shares pursuant to the Offer).
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction (or waiver by each party) prior to the Closing
Date of the following conditions:
(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other Governmental Entity preventing the
consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
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ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer or (y) Sub shall not
have accepted for payment any Shares pursuant to the Offer
prior to January 31, 1998; provided, however, that the right
to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results
in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute
a breach of any representation or warranty under this
Agreement by such party; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, shares of Company Common Stock
pursuant to the Offer or shares of Company Common Stock or
Class B Shares pursuant to the Merger and such order, decree
or ruling or other action shall have become final and
nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant
to the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be or has
not been cured within 20 days after the giving of written notice to the
Company;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement;
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(e) by the Company in accordance with Section 6.02(b),
provided that it has complied with all provisions thereof, including
the notice provisions therein, and simultaneously with such termination
the Company pays to Parent the Expenses and the Termination Fee
specified under Section 7.05(b)(ii);
(f) by the Company, if Sub or Parent shall have breached in
any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform is incapable of being cured or has
not been cured within 20 days after the giving of written notice to
Parent or Sub, as applicable; or
(g) by the Company, if the Offer has not been timely
commenced in accordance with Section 1.01.
SECTION 9.02. Effect of Termination. In the event of a
termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.06, Section 7.05, this Section 9.02 and
Article X; provided, however, that nothing herein shall relieve any party for
liability for any breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after the purchase of Shares pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration and,
after the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of the Sub's designees pursuant to Section 7.04 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement, (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement or (iv) take any action to
amend or otherwise modify the Company's Certificate of Incorporation or By-Laws.
SECTION 9.04. Extension; Waiver. At any time prior to
the Effective Time, the parties hereto, by action taken or
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authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) subject to the provisions of Section 9.03, extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) subject to the provisions of Section 9.03, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) subject to the provisions of Section 9.03, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to the Company, to:
Graphic Industries, Inc.
0000 Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
and with a copy (which copy shall not constitute a
notice) to:
Powell, Goldstein, Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: G. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
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and
(b) if to the Parent or Sub, to:
Xxxxxxx Computer Services, Inc.
0000 Xxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
and with a copy (which copy shall not constitute a
notice) to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx and
Xxxxx Xxxxxxxxxx
Telecopy No.: (000) 000-0000
SECTION 10.03. Interpretation. When a reference is made in
this Agreement to an Article or a Section, such reference shall be to an Article
or a Section of 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 phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
As used in this Agreement, "material adverse change" or "material adverse
effect" means, when used in connection with the Company, any change or effect
(or any development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) or fact or condition that, individually or in
the aggregate with any such other changes or effects, is materially adverse to
the business, properties, assets, financial condition, results of operations or
prospects of the Company and its subsidiaries taken as a whole.
SECTION 10.04. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the
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parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Stockholder Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and except as provided in Section 7.06 are not intended
to confer upon any person other than the parties hereto or thereto any rights or
remedies hereunder or thereunder.
SECTION 10.06. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of Georgia without regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law,
court process or the rules of the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement without prior consultation with the other party, which consent
shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.09. Merger of the Company into Sub. If at any time
prior to the Closing Date Parent notifies the Company that it desires for the
Company to be merged with and into Sub (in lieu of Sub merging with and into the
Company), the Company, Parent and Sub will promptly negotiate in good faith an
amendment to and restatement of this Agreement which provides for such changes
to this Agreement as are necessary or appropriate to effectuate such merger (and
upon finalization thereof, the parties will promptly enter into such amendment
and restatement).
SECTION 10.10. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this
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Agreement in any court of the United States or any state, this being in addition
to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
XXXXXXX COMPUTER SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
GREENWICH ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
GRAPHIC INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxx III
----------------------------
Name: Xxxx X. Xxxx III
Title: Chairman
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that, together with
the Shares and Class B Shares subject to the Option contained in the Stockholder
Agreement, would constitute a majority of the Shares and Class B Shares that in
the aggregate are outstanding, determined on a fully diluted basis for all
outstanding stock options, the Convertible Debentures, other securities
convertible into Shares or Class B Shares and any other rights to acquire Shares
or Class B Shares(the "Minimum Condition") and (ii) any waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated (the "HSR Condition"). Furthermore, notwithstanding
any other term of the Offer or this Agreement, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of this Agreement and before the acceptance of
such Shares for payment or the payment therefor, any of the following conditions
exists (other than as a result of any action or inaction of Parent or any of its
subsidiaries that constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer or pursuant to the
Stockholder Agreement, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by this Agreement or the
Stockholder Agreement (including the voting provisions thereunder), or
seeking to obtain from the Company, Parent or Sub any damages that are
material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective
subsidiaries of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the Offer or any
of the other transactions contemplated by this Agreement or the
Stockholder Agreement,
52
(iii) seeking to impose material limitations on the ability of Parent
or Sub to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer or purchased
under the Stockholder Agreement including, without limitation, the
right to vote such Shares on all matters properly presented to the
stockholders of the Company, (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect
any material portion of the business or operations of the Company or
its subsidiaries or (v) which otherwise is reasonably likely to have a
material adverse effect on the business, properties, assets, financial
condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to
have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental Entity
any statute, rule, regulation, judgment, order or injunction, other
than the application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any material adverse
change with respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement;
53
(g) there shall have occurred and continued to exist for not
less than three business days (i) any general suspension of trading in,
or limitation on prices for, securities on a national securities
exchange in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any Governmental Entity on, or other
event that materially adversely affects, the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which in any case is
reasonably expected to have a material adverse effect on the Company or
to materially adversely affect Parent's or Sub's ability to complete
the Offer and/or the Merger or materially delay the consummation of the
Offer and/or the Merger;
(h) the Stockholder Agreement shall not be in full force and
effect or the Stockholder (as defined therein) shall be in material
breach thereof or have indicated its intention not to perform its
obligations thereunder; and
(i) this Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent
and Sub and may, subject to the terms of this Agreement, be waived by Parent and
Sub in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time. Terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement to which this Exhibit A is a part.
