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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEMETER HOLDINGS CORPORATION
WRC MERGER CORP.,
WRV MERGER CORP.,
WHITE RIVER CORPORATION
AND
WHITE RIVER VENTURES, INC.
Dated as of December 11, 1997
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TABLE OF CONTENTS
ARTICLE I....................................................................2
THE MERGER...................................................................2
SECTION 1.1 The Closing............................................2
SECTION 1.2 Effective Time.........................................2
SECTION 1.3 Effect of the Merger...................................2
SECTION 1.4 Certificate of Incorporation; By-Laws..................2
SECTION 1.5 Directors and Officers.................................3
SECTION 1.6 Effect on Capital Stock................................3
SECTION 1.7 Exchange of Certificates...............................3
SECTION 1.8 Stock Transfer Books...................................6
SECTION 1.9 No Further Ownership Rights in Company Stock...........6
SECTION 1.10 Lost, Stolen or Destroyed Certificates.................6
SECTION 1.11 Common Stock Merger Price..............................6
SECTION 1.12 Further Action.........................................8
SECTION 1.13 Material Adverse Effect................................8
ARTICLE 1A...................................................................8
THE SUBSIDIARY MERGER........................................................8
SECTION 1A.1 The Closing............................................8
SECTION 1A.2 Effective Time.........................................9
SECTION 1A.3 Effect of the Subsidiary Merger........................9
SECTION 1A.4 Certificate of Incorporation; By-Laws..................9
SECTION 1A.5 Directors and Officers. ...............................9
SECTION 1A.6 Effect on Capital Stock...............................10
SECTION 1A.7 Stock Transfer Books..................................10
SECTION 1A.8 Further Action. ......................................10
ARTICLE II..................................................................10
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................10
SECTION 2.1 Organization and Qualification; Subsidiaries..........10
SECTION 2.2 Certificate of Incorporation and By-Laws..............10
SECTION 2.3 Capitalization........................................11
SECTION 2.4 Authority Relative to this Agreement..................12
SECTION 2.5 No Conflict; Required Filings and Consents............13
SECTION 2.6 Compliance; Permits...................................15
SECTION 2.7 SEC Filings; Financial Statements; Investments........15
SECTION 2.8 Absence of Certain Changes or Events..................17
SECTION 2.9 No Undisclosed Liabilities; No Liabilities Related
to Purchasing LLC.....................................18
SECTION 2.10 Absence of Litigation.................................18
SECTION 2.11 Employee Benefit Plans; Employment Agreements.........19
SECTION 2.12 Labor Matters.........................................20
SECTION 2.13 Proxy Statement.......................................20
SECTION 2.14 Subsidiaries..........................................20
SECTION 2.15 Title to Property; Restrictions on Transfer...........20
SECTION 2.16 Taxes.................................................21
SECTION 2.17 Environmental Matters.................................22
SECTION 2.18 Intellectual Property.................................23
SECTION 2.19 Interested Party Transactions.........................24
SECTION 2.20 Powers of Attorney....................................24
SECTION 2.21 Books and Records.....................................24
SECTION 2.22 Brokers...............................................24
SECTION 2.23 Change in Control Payments............................24
SECTION 2.24 Disclosure............................................25
ARTICLE III.................................................................25
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO.......................25
SECTION 3.1 Organization and Qualification........................25
SECTION 3.2 Charter and By-Laws...................................25
SECTION 3.3 Subsidiaries. .......................................25
SECTION 3.4 Authority Relative to this Agreement..................25
SECTION 3.5 No Conflict; Required Filings and Consents............26
ARTICLE IV..................................................................27
CONDUCT OF BUSINESS PENDING THE MERGER......................................27
SECTION 4.1 Conduct of Business by the Company Pending the
Merger................................................27
SECTION 4.2 Notice of Acquisition Proposal........................30
SECTION 4.3 Actions With Respect To Company Plans.................30
SECTION 4.4 Voting................................................32
SECTION 4.5 Fairness Opinion......................................32
SECTION 4.6 Partnership Debt......................................32
SECTION 4.8 Acceleration Payments.................................32
SECTION 4.9 Indemnity Agreements..................................33
SECTION 4.12 Trust Assets..........................................33
SECTION 4.13 Tax Returns...........................................33
ARTICLE V...................................................................33
ADDITIONAL AGREEMENTS.......................................................33
SECTION 5.1 HSR Act; Etc..........................................33
SECTION 5.2 Proxy Statement.......................................34
SECTION 5.3 Stockholders Meeting..................................34
SECTION 5.4 Access to Information.................................35
SECTION 5.5 Consents; Approvals...................................35
SECTION 5.6 Notification of Certain Matters.......................36
SECTION 5.7 Further Action. .....................................36
SECTION 5.8 Public Announcements..................................36
SECTION 5.9 Conveyance Taxes......................................36
ARTICLE VI..................................................................37
CONDITIONS TO THE MERGER....................................................37
SECTION 6.1 Conditions to Obligation of Each Party to Effect
the Merger............................................37
SECTION 6.2 Additional Conditions to Obligations of Parent,
MergerCo and Merger Sub...............................37
SECTION 6.3 Additional Conditions to Obligation of the Company
and WRV...............................................39
ARTICLE VII.................................................................40
TERMINATION.................................................................40
SECTION 7.1 Termination...........................................40
SECTION 7.2 Effect of Termination.................................41
SECTION 7.3 Expenses Upon Termination.............................41
ARTICLE VIII................................................................42
GENERAL PROVISIONS..........................................................42
SECTION 8.1 Non-Survival of Representations, Warranties,
Covenants and Agreements..............................42
SECTION 8.2 Investigations; Disclosure............................42
SECTION 8.3 Notices...............................................42
SECTION 8.4 Definitions...........................................44
SECTION 8.5 Definitions...........................................45
SECTION 8.6 Amendment.............................................47
SECTION 8.7 Waiver................................................47
SECTION 8.8 Headings..............................................47
SECTION 8.9 Severability..........................................48
SECTION 8.10 Entire Agreement......................................48
SECTION 8.11 Assignment............................................48
SECTION 8.12 Parties in Interest...................................48
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies
Cumulative............................................48
SECTION 8.14 Governing Law.........................................48
SECTION 8.15 Counterparts..........................................48
SECTION 8.17 Expenses..............................................49
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is dated as of December 11, 1997 (this
"Agreement"), among Demeter Holdings Corporation, a Massachusetts corporation
("Parent"), WRC Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("MergerCo."), WRV Merger Corp., a Delaware corporation and
a wholly owned subsidiary of WRC Merger Corp. ("Merger Sub"), White River
Corporation, a Delaware corporation (the "Company") and White River Ventures,
Inc., a Delaware corporation and a wholly owned subsidiary of Company ("WRV").
RECITALS:
WHEREAS, the Boards of Directors of Parent, MergerCo, Merger Sub, the
Company and WRV have each determined that it is advisable and in the best
interests of their respective stockholders for (i) MergerCo to enter into a
business combination with the Company and (ii) Merger Sub to enter into a
business combination with WRV, each upon the terms and subject to the conditions
set forth herein;
WHEREAS, in furtherance of such combination, (i) the Boards of Directors of
MergerCo and the Company have each approved the merger (the "Merger") of
MergerCo with and into the Company in accordance with the applicable provisions
of the Delaware General Corporation Law (the "DGCL") and (ii) the Boards of
Directors of Merger Sub and WRV have each approved the merger (the "Subsidiary
Merger") of Merger Sub with and into the WRV in accordance with the applicable
provisions of the DGCL;
WHEREAS, pursuant to the Merger, each outstanding share (each, a "Share")
of (i) the Company's common stock, $0.01 par value (the "Company Common Stock"),
shall be converted into the right to receive the Common Stock Merger Price (as
defined in Section 1.11) and (ii) the Company's Series A Non-Participating
Cumulative Preferred Stock, $1.00 par value (the "Company Series A Preferred
Stock"), shall be converted into the right to receive the Series A Merger Price
(as defined in Section 1.7(b)) (the Company Common Stock and the Company Series
A Preferred Stock are referred to collectively herein as the "Company Stock"),
all upon the terms and subject to the conditions set forth herein; and
WHEREAS, prior to the consummation of the Merger, the Company will sell to
a limited liability company or other entity (the "Purchasing LLC") (i) those
assets described on Exhibit A for a cash purchase price (the "Excluded Asset
Price") of at least $3.2 million and (ii) all investment assets purchased by the
Company after September 30, 1997 and all assets acquired other than in the
ordinary course of business after September 30, 1997 (other than cash and cash
equivalents) for a cash amount equal to the aggregate price paid by the Company
for such assets (collectively, the "Excluded Assets"), and the Purchasing LLC
will assume any and all liabilities (absolute, accrued, contingent, due, to
become due or otherwise) of or relating to the Excluded Assets (collectively,
the "Excluded Liabilities"). Such transaction is referred to herein as the
"Asset Disposition."
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations and warrants and mutual covenants and agreements herein
contained, and intending to be legally bound hereby, Parent, MergerCo, Merger
Sub, the Company and WRV hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Closing.
(a) The Merger. At the Effective Time (as defined in Section 1.2), and
subject to and upon the terms and conditions of this Agreement and the DGCL,
MergerCo shall be merged with and into the Company, the separate corporate
existence of MergerCo shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Time and Place. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place at the
offices of Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless
another place is agreed to in writing by the parties hereto.
SECTION 1.2 Effective Time. As promptly as practicable but in any event no
later than the third business day after the satisfaction or waiver of the
conditions set forth in Article VI, the parties hereto shall cause the Merger to
be consummated by filing a certificate of merger as contemplated by the DGCL
(the "Certificate of Merger"), together with any required related certificates,
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with the relevant provisions of, the DGCL (the
time of such filing or such later time as is specified in the Certificate of
Merger being the "Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and MergerCo shall vest in the
Surviving Corporation.
SECTION 1.4 Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. At the Effective Time, the Certificate of
Incorporation of MergerCo, as in effect on the date hereof, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the DGCL and such Certificate of Incorporation,
except that the name of the Surviving Corporation shall be the name of the
Company.
(b) By-Laws. The By-Laws of MergerCo, as in effect on the date hereof,
shall be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with the DGCL, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws; and the Board of Directors of the Surviving
Corporation shall consist of the same number of directors as the number of
directors of MergerCo at the Effective Time.
SECTION 1.5 Directors and Officers. The directors of MergerCo immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
MergerCo immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, MergerCo, the Company
or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding immediately
prior to the Effective Time (excluding any Shares to be canceled pursuant to
Section 1.6(b)) shall be converted into the right to receive the Applicable
Merger Price (as defined in Section 1.7(b)).
(b) Cancellation. Each Share held in the treasury of the Company and each
Share owned by any wholly owned Subsidiary of the Company immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(c) Capital Stock of MergerCo. Each share of common stock, $0.001 par
value, of MergerCo issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $0.001 par value, of the Surviving
Corporation.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, (i) the Company
shall deposit to or for the account of First Chicago Trust Company of New York,
or such other bank or trust company as shall be designated by MergerCo (the
"Exchange Agent"), in trust for the benefit of the holders of Company Stock, for
exchange in accordance with this Section 1.7, through the Exchange Agent, an
amount (the "Company Deposit"), in immediately available funds, equal to all of
the Company's cash and cash equivalents (excluding any cash and cash equivalents
included in the Excluded Assets) as of the Effective Time and (ii) Parent shall
deposit, or shall cause to be deposited, to or for the account of the Exchange
Agent, in trust for the benefit of the holders of Company Stock, for exchange in
accordance with this Section 1.7 through the Exchange Agent, an amount, in
immediately available funds, equal to the aggregate amount payable in accordance
with Section 1.7(b) less the Company Deposit. The Exchange Agent shall agree to
hold such funds (together with earnings thereon, being referred to herein as the
"Exchange Fund") for delivery as contemplated by this Section 1.7 and upon such
additional terms as may be agreed upon by the Exchange Agent, the Company and
MergerCo before the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, MergerCo will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares of Company Stock (each, a
"Certificate") (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 proper delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as MergerCo may reasonably specify)
and (ii) instructions to effect the surrender of the Certificates in exchange
for the Applicable Merger Price (as defined below). Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) in the case of holders of Company
Common Stock, the Common Stock Merger Price (as determined pursuant to Section
1.11) in cash, and (B) in the case of holders of Company Series A Preferred
Stock, $1,000 per share of such Company Series A Preferred Stock plus an amount
equal to any accrued and unpaid dividends until the Effective Time in cash (the
"Series A Merger Price," and the merger price applicable to any given Share
being referred to herein as the "Applicable Merger Price") and the Certificate
so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of Company Stock which is not registered in the transfer
records of the Company as of the Effective Time, the Applicable Merger Price may
be paid in accordance with this Article I to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer pursuant to this Section
1.7(b) and by evidence that any applicable stock transfer taxes have been paid.
Anything herein to the contrary notwithstanding, no interest or dividends shall
accrue or be payable or paid on any portion of the Applicable Merger Price
payable to any person hereunder. At and after the Effective Time, each holder of
a Certificate to be canceled pursuant to this Section 1.7(b) or Dissenting
Shares (as defined below) shall cease to have any rights as a stockholder of the
Company, except for the right to surrender Certificates in the manner prescribed
by this Section 1.7(b) in exchange for payment of the Applicable Merger Price
or, in the case of a holder of Dissenting Shares, the right to perfect the right
to receive payment for Dissenting Shares pursuant to Section 262 of the DGCL. No
transfer of Company Stock shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time.
(c) No Liability. At any time following six months after the Effective
Time, the Surviving Corporation shall be entitled to require the Exchange Agent
to deliver to the Surviving Corporation any remaining amount of the Exchange
Fund which had been made available to the Exchange Agent pursuant hereto and
which has not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation only as general
creditors thereof with respect to the Applicable Merger Price payable upon due
surrender of their Certificates. Notwithstanding the foregoing, none of Parent,
MergerCo or the Company shall be liable to any holder of Company Stock for any
Applicable Merger Price delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(d) Withholding Rights. The Surviving Corporation or the Exchange Agent
shall be entitled to deduct and withhold from the Applicable Merger Price
otherwise payable pursuant to this Agreement to any holder of Company Stock such
amounts as the Surviving Corporation or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by Surviving
Corporation or the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
of Company Stock in respect of which such deduction and withholding was made by
the Surviving Corporation or the Exchange Agent.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary but only in the circumstances and to the extent provided by the DGCL,
shares of Company Stock which are outstanding immediately prior to the Effective
Time and which are held by stockholders who did not vote such shares in favor of
the Merger or consent thereto in writing and who shall have properly and timely
delivered to the Company a written demand for payment of the fair cash value of
shares of Company Stock in the manner provided in and complied with all of the
relevant provisions of Section 262 of the DGCL ("Dissenting Shares") shall not
be converted into or represent the right to receive the Applicable Merger Price.
Instead, the holders thereof shall be entitled to payment of the fair cash value
of such shares in accordance with the provisions of Section 262 of the DGCL;
provided, however, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for payment of the fair
cash value of such shares and the Board of Directors of the Company or the
Surviving Corporation, as the case may be, shall consent thereto, or (ii) if any
holder fails to establish and perfect his entitlement to the relief provided in
such Section 262 or if the right of such holder to receive the fair cash value
of such shares of Company Stock as to which he seeks relief otherwise terminates
pursuant to Section 262 of the DGCL, such shares shall thereupon cease to be
deemed to be Dissenting Shares and shall be deemed to have been converted into
and represent the right to receive, upon the surrender of the Certificates
representing such shares, as of the Effective Time, the Applicable Merger Price.
The Company will not settle any demand with respect to any Dissenting Shares
without the written consent of MergerCo.
SECTION 1.8 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company relating to the Company Stock shall be closed, and there
shall be no further registration of transfers of Company Stock thereafter on the
records of the Company.
SECTION 1.9 No Further Ownership Rights in Company Stock. The Applicable
Merger Price delivered upon the surrender for exchange of Shares of Company
Stock in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
SECTION 1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof and delivery of bond
in such sum as the Exchange Agent, Parent or MergerCo may reasonably direct as
indemnity against any claim that may be made against Parent, MergerCo or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed, such Applicable Merger Consideration as may be required
pursuant to Section 1.7.
SECTION 1.11 Common Stock Merger Price.
(a) The "Common Stock Merger Price" shall be the quotient obtained by
dividing (i) the Merger Price (as defined below) by (ii) the number of shares of
Company Common Stock issued and outstanding and not held in treasury immediately
before the Effective Time. The "Merger Price" shall be $399,850,000, as adjusted
by this Section 1.11.
(b) The Merger Price shall be decreased by the amount of any decrease in
the aggregate cash and cash equivalents of the Company and its wholly owned
Subsidiaries from September 30, 1997 until the Effective Time as a result of any
expenditures out of the ordinary course, including for this purpose, without
limitation, (i) the sum of (x) expenditures in connection with the acquisition
of investment assets and (y) cash contributed to Hanover Accessories, Inc. or to
any other companies acquired by the Company after September 30, 1997 (offset by
the aggregate of all cash payments made to the Company in respect of the
Excluded Assets by Purchasing LLC in excess of $3.2 million), (ii) Acceleration
Payments, if any, not paid on or before December 30, 1997 and (iii) any
expenditures in connection with the Merger, the Asset Disposition or otherwise
in connection with the transactions contemplated by this Agreement, except to
the extent such expenditures are applied to pay amounts reserved as "Accrued
Expenses" on the Statement of Net Assets to be Sold attached hereto as Exhibit B
(the "Statement of Assets"). The Merger Price shall be increased by the amount
of interest earned by the Company and its wholly owned Subsidiaries with respect
to the cash and cash equivalents (including interest on the Republic NY
Corporation Subordinated Note 7.25% due July 15, 2002) of the Company and its
wholly owned Subsidiaries from September 30, 1997 until the Effective Time.
(c) Without duplication of any other change in the Merger Price pursuant to
this Section 1.11, the Merger Price shall also be decreased by the aggregate
amount of all liabilities (absolute, accrued, contingent, due, to become due or
otherwise) incurred by the Company (offset by any payments made in respect of
such liabilities), other than Excluded Liabilities, after September 30, 1997 and
before the Effective Time, including without limitation any liabilities incurred
in connection with the Merger, the Asset Disposition or otherwise in connection
with the transactions contemplated by this Agreement.
(d) Without duplication of any other change in the Merger Price pursuant to
Section 1.11, the Merger Price shall also be (i) decreased by the amount equal
to 0.65 multiplied by the aggregate amount of all Benefit Costs (as herein
defined) other than any Severance Costs in excess of $36,660,000, if any, or
(ii) increased by the amount equal to 0.65 multiplied by the excess, if any, of
$36,660,000 over the aggregate amount of all Benefit Costs other than any
Severance Costs.
(e) Without duplication of any other decrease pursuant to this Section
1.11, the Merger Price shall also be decreased to the extent the Acceleration
Payments (as defined in Section 4.8) paid by the Company or its Subsidiaries on
or before December 30, 1997 exceed $7,500,000. Notwithstanding any changes which
would otherwise be made pursuant to this Section 1.11, other than the changes to
the Merger Price in this Section 1.11(e), no change shall be made to the Merger
Price as a result of the Acceleration Payments, if such payments are made in
accordance with the provisions of Section 4.8.
(f) The Merger Price shall also be decreased by the excess of (i) the sum
of the aggregate Series A Merger Price payable by Parent hereunder as a result
of the Merger and any dividends paid by the Company with respect to the Company
Series A Preferred Stock after September 30, 1997 and before the Effective Time
over (ii) $7,000,000.
(g) Without duplication of any other change in the Merger Price pursuant to
this Section 1.11, the Merger Price shall also be (i) decreased to the extent
the aggregate amount of all bonus, severance, termination and similar payments,
excluding Benefit Costs, that would be payable by the Company or its wholly
owned Subsidiaries (whether or not paid as of the Effective Time) as a result of
the termination of all of the employees of the Company and its wholly owned
Subsidiaries ("Severance Costs") exceeds $1,033,000 or (ii) increased to the
extent such amount is less than $1,033,000.
(h) In the event any of the actions set forth in Section 4.3(b) are not
taken by the Company on or before December 30, 1997, the Merger Price shall be
decreased by the amount equal to 0.35 multiplied by the aggregate amount of
payments made on or after January 1, 1998 pursuant to the Incentive Plan, as the
same may be amended.
(i) Without duplication of any other change in the Merger Price pursuant to
this Section 1.11, the Merger Price shall also be increased by the amount of any
liabilities reserved for on the Statement of Assets released prior to the
Effective Time with the consent of Parent to be granted or withheld in Parent's
sole discretion.
(j) Without duplication of any other change in the Merger Price pursuant to
this Section 1.11, the Merger Price shall be decreased to the extent, if any,
that the Excluded Asset Price is less than $3.2 million in cash.
(k) Without duplication of any other change in the Merger price pursuant to
this Section 1.11, the Merger Price shall be increased by an amount equal to
0.65 multiplied by the amount of any cash paid to the Company upon the sale by
the Company of the Trust Assets (as defined in Section 4.12 hereof) if such
Trust Assets are sold by the Company in accordance with the last sentence of
Section 4.12 hereof.
(l) Without duplication of any other change to the Merger Price pursuant to
this Section 1.11, the Merger Price shall be decreased by the amount of cash, if
any, paid to the Liquidating Trustee as described in Section 4.12 hereof.
SECTION 1.12 Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and MergerCo, the officers and directors of the Company and MergerCo
immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take all such lawful and necessary
action and will take all such lawful and reasonably necessary action.
SECTION 1.13 Material Adverse Effect. When used in connection with the
Company or any of its Subsidiaries, the term "Material Adverse Effect" means any
change, effect or circumstance that, individually or when taken together with
all other such changes, effects or circumstances that have occurred prior to the
date of determination of the occurrence of the Material Adverse Effect, (a) is
or is reasonably likely to be materially adverse to the business, assets,
financial condition or results of operations of the Company and its Subsidiaries
or the Surviving Corporation and its Subsidiaries, in each case taken as a whole
or (b) does or is reasonably likely to materially delay or prevent the
consummation of the transactions contemplated hereby.
ARTICLE 1A
THE SUBSIDIARY MERGER
SECTION 1A.1 The Closing.
(a) The Subsidiary Merger. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and the DGCL, Merger Sub shall be
merged with and into WRV, the separate corporate existence of Merger Sub shall
cease, and WRV shall continue as the surviving corporation. WRV as the surviving
corporation after the Subsidiary Merger is hereinafter sometimes referred to as
the "Subsidiary Surviving Corporation."
(b) Time and Place. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Subsidiary Merger will take place
at the offices of Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx,
unless another place is agreed to in writing by the parties hereto.
SECTION 1A.2 Effective Time. The parties hereto shall cause the Subsidiary
Merger to be consummated by filing a certificate of merger as contemplated by
the DGCL (the "Subsidiary Certificate of Merger"), together with any required
related certificates, with the Secretary of State of the State of Delaware, in
such form as required by, and executed in accordance with the relevant
provisions of, the DGCL to be effective as of the Effective Time.
SECTION 1A.3 Effect of the Subsidiary Merger. At the Effective Time, the
effect of the Subsidiary Merger shall be as provided in this Agreement, the
Subsidiary Certificate of Merger and the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
WRV and Merger Sub shall vest in the Subsidiary Surviving Corporation.
SECTION 1A.4 Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. At the Effective Time, the Certificate of
Incorporation of the Subsidiary Merger Sub, as in effect on the date hereof,
shall be the Certificate of Incorporation of the Subsidiary Surviving
Corporation until thereafter amended in accordance with the DGCL and such
Certificate of Incorporation, except that the name of the Subsidiary Surviving
Corporation shall be the name of WRV.
(b) By-Laws. The By-Laws of Merger Sub, as in effect on the date hereof,
shall be the By-Laws of the Subsidiary Surviving Corporation until thereafter
amended in accordance with the DGCL, the Certificate of Incorporation of the
Subsidiary Surviving Corporation and such By-Laws; and the Board of Directors of
the Subsidiary Surviving Corporation shall consist of the same number of
directors as the number of directors of Merger Sub at the Effective Time.
SECTION 1A.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Subsidiary Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Subsidiary Surviving
Corporation, and the officers of the Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Subsidiary Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
SECTION 1A.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Subsidiary Merger and without any action on the part of Parent, MergerCo,
Merger Sub, the Company or WRV, (i) each share of common stock, $1.00 par value,
of WRV issued and outstanding immediately prior to the Effective Time shall be
one validly issued, fully paid and nonassessable share of common stock, $0.001
par value, of the Subsidiary Surviving Corporation, and, (ii) each share of
common stock $0.001 par value, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be canceled, and (iii) any other capital stock
of either Merger Sub or WRV outstanding immediately prior to the Effective Time
shall be canceled.
SECTION 1A.7 Stock Transfer Books. At the Effective Time, the stock
transfer books of WRV relating to the capital stock of WRV shall be closed, and
there shall be no further registration of transfers of the capital stock of WRV
thereafter on the records of WRV.
SECTION 1A.8 Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Subsidiary Surviving Corporation with full right,
title and possession to all assets, property, rights, privileges, powers and
franchises of WRV and Merger Sub, the officers and directors of the WRV and
Merger Sub immediately prior to the Effective Time are fully authorized in the
name of their respective corporations or otherwise to take all such lawful and
necessary action and will take all such lawful and reasonably necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and MergerCo as
follows:
SECTION 2.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it owns, leases or operates and to carry
on its business as it is now being conducted. Each of the Company and each of
its Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary.
SECTION 2.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to MergerCo a complete and correct copy of its Certificate
of Incorporation and By-Laws and the Certificate of Incorporation and By-laws of
CCC Information Services Group Inc. ("CCC"), each as most recently restated and
subsequently amended to date. Such Certificates of Incorporation and By-Laws are
in full force and effect. Neither the Company nor any of its Subsidiaries is in
violation of any of the provisions of its respective Certificate of
Incorporation or By-Laws.
SECTION 2.3 Capitalization.
(a) Capitalization of the Company. The authorized capital stock of the
Company consists of (i) 62,500,000 shares of Company Common Stock and (ii)
5,000,000 shares of Preferred Stock, $1.00 par value, of which 7,000 shares have
been designated as Company Series A Preferred Stock and 50,000 shares have been
designated as Series B Participating Cumulative Preferred Stock (the "Company
Series B Preferred Stock"). 6,370,000 shares of Company Common Stock are issued
and outstanding, all of which are validly issued, fully paid and nonassessable,
and 1,495,244 of such 6,370,000 shares of Company Common Stock are held in
treasury. 7,000 shares of Company Series A Preferred Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
no shares of Company Series A Preferred Stock are held in treasury. No shares of
Company Series B Preferred Stock are issued and outstanding. Except as set forth
in Section 2.3(a) of the written disclosure schedule delivered on or prior to
the date hereof by the Company to Parent and MergerCo that is arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article II (the "Company Disclosure Schedule"), there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its wholly owned Subsidiaries or obligating the Company or any of its wholly
owned Subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any of its wholly owned Subsidiaries. No
shares of Company Common Stock or Company Series A Preferred Stock are held by
Subsidiaries of the Company. As of the date hereof, there are no accrued and
unpaid dividends with respect to the Company Series A Preferred Stock. None of
the outstanding securities of the Company was issued in violation of the
Securities Act of 1933, as amended (the "Securities Act"), or the securities or
blue sky laws of any state or jurisdiction. Except as disclosed in Section
2.3(a) of the Company Disclosure Schedule, there are no obligations, contingent
or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Stock or the capital stock of any
Subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution, guaranty or otherwise) in any such Subsidiary. Except as
set forth in Section 2.3(a) of the Company Disclosure Schedule, all of the
outstanding shares of capital stock of each of the Company's Subsidiaries is
duly authorized, validly issued, fully paid and nonassessable, and, except for
the shares of capital stock of CCC's Subsidiaries and except for the shares of
capital stock of CCC not owned by the Company or the Company's wholly-owned
Subsidiaries, all such shares are owned by the Company or its wholly-owned
Subsidiaries free and clear of all security interests, liens, claims, pledges,
agreements, limitations in the Company's voting rights, charges or other
encumbrances of any nature whatsoever (collectively, "Liens"), except for the
Stockholders Agreement .
(b) Capitalization of CCC. The authorized capital stock of CCC consists of
(i) 30,000,000 shares of common stock, $.10 par value (the "CCC Common Stock"),
and (ii) 100,000 shares of Preferred Stock, $1.00 par value, of which 5,000
shares have been designated Series C Cumulative Redeemable Preferred Stock (the
"CCC Series C Preferred Stock), 34,000 shares have been designated Series D
Cumulative Redeemable Preferred Stock (the "CCC Series D Preferred Stock") and
500 shares have been designated Series E Cumulative Redeemable Preferred Stock
(the "CCC Series E Preferred Stock"). 24,577,350 shares of CCC Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, and 117,618 of such 24,577,350 shares of CCC Common Stock are
held in treasury. 630 shares of CCC Series C Preferred Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
no shares of CCC Series C Preferred Stock are held in treasury. 3,785 shares of
CCC Series D Preferred Stock are issued and outstanding, all of which are fully
paid and nonassessable, and no shares of CCC Series D Preferred Stock are held
in treasury. 500 shares of CCC Series E Preferred Stock are issued and
outstanding, all of which are fully paid and nonassessable, and no shares of CCC
Series E Preferred Stock are held in treasury. Except as set forth in Section
2.3(b) of the Company Disclosure Schedule, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of CCC or any of its Subsidiaries or
obligating CCC or any of its Subsidiaries to issue or sell any shares of capital
stock of, or other equity interests in, CCC or any of its Subsidiaries. All
shares of capital stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. None of the outstanding securities of CCC issued since January 1,
1993 was issued in violation of the Securities Act or the securities or blue sky
laws of any state or jurisdiction. Except as set forth in Section 2.3(b) of the
Company Disclosure Schedule, all of the outstanding shares of capital stock of
each of CCC's Subsidiaries are owned by CCC or its wholly-owned Subsidiaries
free and clear of all Liens.
(c) The authorized capital stock of WRV consists solely of 1,000 shares of
common stock, $1.00 par value, all of which are issued and outstanding and are
validly issued, fully paid and nonassessable.
SECTION 2.4 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to requisite shareholder approval, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the Merger, the Asset Disposition and the
other transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the adoption of this Agreement by the
holders of at least a majority of the outstanding shares of Company Common Stock
entitled to vote in accordance with the DGCL and the Company's Certificate of
Incorporation and By-Laws). This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by Parent, MergerCo and Merger Sub constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, (i) except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) subject to general principles of equity.
(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by the Board of Directors for
the consummation of the Merger, the Asset Disposition and the other transactions
contemplated by this Agreement, including, but not limited to, all actions
necessary to render the provisions of Section 203 of the DGCL inapplicable to
this Agreement and the Merger. The Board of Directors of the Company has
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into a business combination with Parent
and MergerCo upon the terms and subject to the conditions of this Agreement, and
has recommended that the Company's stockholders approve and adopt this
Agreement, the Merger and the Asset Disposition.
(c) All of the Continuing Directors of the Company (as defined in the
Certificate of Incorporation of the Company) have approved the transactions
contemplated by this Agreement for purposes of Paragraph B.1 of Article Eight of
the Certificate of Incorporation of the Company. The Board of Directors of the
Company has taken all action necessary to amend the Rights Agreement to ensure
that such transactions will not cause any Rights (as defined in the Rights
Agreement) to become exercisable and to ensure that such Rights will not exist
after consummation of the Merger.
(d) WRV has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by WRV and the consummation by WRV of the Subsidiary Merger and
the other transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action, and no other corporate proceedings on the
part of WRV are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by WRV and, assuming the due authorization, execution and delivery
by Parent, MergerCo and Merger Sub, constitutes a legal, valid and binding
obligation of WRV enforceable against WRV in accordance with its terms, (i)
except as may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
(ii) subject to general principles of equity.
SECTION 2.5 No Conflict; Required Filings and Consents.
(a) The exhibit index to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1997, as supplemented by Section
2.5(a)(i) of the Company Disclosure Schedule, includes each agreement, contract
or other instrument (including all amendments thereto) to which the Company or
any of its Subsidiaries is a party or by which any of them is bound and which
would be required pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations thereunder to be filed as an
exhibit to an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K and each other agreement, contract or other
instrument to which the Company is a party. The Company has made available to
MergerCo on or prior to the date hereof true, correct and complete copies of
each such agreement, contract, instrument and amendment. To the actual knowledge
of the Company, the exhibit index to CCC's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1997, as supplemented by Section 2.5(a)(ii)
of the Company Disclosure Schedule, includes each agreement, contract or other
instrument (including all amendments thereto) to which CCC or any of its
Subsidiaries is a party or by which any of them is bound and which would be
required pursuant to the Exchange Act and the rules and regulations thereunder
to be filed as an exhibit to an Annual Report on Form 10-K, a Quarterly Report
on Form 10-Q or a Current Report on Form 8-K. The Company has made available to
MergerCo on or prior to the date hereof true, correct and complete copies of
each such agreement, contract, instrument and amendment.
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, and except as disclosed in the Company SEC Reports and the CCC SEC
Reports, (i) neither the Company nor any of its Subsidiaries has breached, is in
default under, or has received written notice of any breach of or default under,
any of the agreements, contracts or other instruments referred to in Section
2.5(a), (ii) to the best knowledge of the Company and its Subsidiaries, no other
party to any of the agreements, contracts or other instrument referred to in
Section 2.5 (a) has breached or is in default of any of its obligations
thereunder, and (iii) to the knowledge of the Company, each of the agreements,
contracts and other instruments referred to in Section 2.5(a) is in full force
and effect. The representations and warranties in this Section 2.5(b) are made
only to the actual knowledge of the Company to the extent they relate to CCC and
its Subsidiaries.
(c) Except as set forth in Section 2.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by each of the Company
and WRV does not, and the performance of this Agreement by each of the Company
and WRV and the consummation of the Merger, the Asset Disposition, the
Subsidiary Merger and the other transactions contemplated hereby will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or the Certificate of Incorporation or By-Laws of any of its
Subsidiaries, (ii) conflict with or violate any federal, foreign, state or
provincial law, rule, regulation, order, judgment or decree (collectively,
"Laws") applicable to the Company or any of its Subsidiaries or by which its or
any of their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair the Company's or any of its
Subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or its or any of
their respective properties is bound or affected. The representations and
warranties in clauses (ii) and (iii) of this Section 2.5(c) are made only to the
actual knowledge of the Company to the extent they relate to CCC and its
Subsidiaries.
(d) The execution and delivery of this Agreement by each of the Company and
WRV does not, the performance of this Agreement by each of the Company and WRV
will not, and the consummation by the Company of the Merger, the Asset
Disposition and the other transactions contemplated hereby and the consummation
by WRV or the Subsidiary Merger will not, require the Company or WRV to receive
any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
except for applicable requirements, if any, of the Securities Act, the Exchange
Act, the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the filing and
recordation of appropriate merger or other documents as required by the DGCL.
SECTION 2.6 Compliance; Permits.
(a) Except as disclosed in Section 2.5(b) or 2.6(a) of the Company
Disclosure Schedule, and except as disclosed in the Company SEC Reports and the
CCC SEC Reports, neither the Company nor any of its Subsidiaries is in conflict
with, or in default or violation of, (i) any Law applicable to the Company or
any of its Subsidiaries or by which its or any of their respective properties is
bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or its or any of their respective properties
is bound or affected. The representations and warranties in this Section 2.6(a)
are made only to the actual knowledge of the Company to the extent they relate
to CCC and its Subsidiaries.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, and except as disclosed in the Company SEC Reports and the CCC SEC
Reports, the Company and its Subsidiaries hold all permits, licenses, easements,
franchises, variances, exemptions, consents, certificates, orders,
authorizations and approvals from governmental authorities (collectively, the
"Company Permits") which are necessary or appropriate to own, lease and operate
the properties it owns, leases or operates and for the operation of the business
of the Company and its Subsidiaries as it is now being conducted. Except as
disclosed in the Company SEC Reports and the CCC SEC Reports, the Company and
its Subsidiaries are in compliance with the terms of the Company Permits. The
representations and warranties in this Section 2.6(b) are made only to the
actual knowledge of the Company to the extent they relate to CCC and its
Subsidiaries.
SECTION 2.7 SEC Filings; Financial Statements; Investments.
(a) The Company has timely filed all forms, reports and documents required
to be filed with the Securities and Exchange Commission (the "SEC") and has made
available to MergerCo (i) its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, (ii) all other reports or registration statements filed
by the Company with the SEC since January 1, 1996, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
since January 1, 1996 and (iv) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC pursuant
to the requirements of the Exchange Act or the Securities Act ((i)-(iv)
collectively, the "Company SEC Reports"). The Company SEC Reports (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then also on the date of such filing) 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 the
light of the circumstances under which they were made, not misleading. CCC has
timely filed all forms, reports and documents required to be filed with the SEC
and the Company has made available to MergerCo (i) CCC's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, (ii) all other reports or
registration statements filed by CCC with the SEC since January 1, 1996, (iii)
all proxy statements relating to CCC's meetings of stockholders (whether annual
or special) since January 1, 1996 and (iv) all amendments and supplements to all
such reports and registration statements filed by CCC with the SEC pursuant to
the requirements of the Exchange Act or the Securities Act ((i)-(iv)
collectively, the "CCC SEC Reports"). The CCC SEC Reports (i) were prepared in
all material respects in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then also on the date of such filing) 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 the light of the
circumstances under which they were made, not misleading. None of the Company's
Subsidiaries (other than CCC) is required to file any forms, reports or other
documents with the SEC.
(b) The Company has heretofore delivered to MergerCo the following
financial statements (including, in each case, any related notes thereto): (i)
audited consolidated and consolidating statements of financial condition of the
Company and its Subsidiaries as of December 31, 1995 and 1996, and the related
consolidated and consolidating statements of operations, statements of
stockholders' equity and statements of cash flow for the fiscal years ended
December 31, 1995 and 1996, and (ii) the unaudited consolidated and
consolidating statements of financial condition of the Company and its
Subsidiaries as of September 30, 1997 and the related consolidated and
consolidating statements of operations, statements of stockholders' equity and
statements of cash flows for the nine months ended September 30, 1997, each of
which such audited and unaudited financial statements has been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each of which fairly presents in all material respects the
consolidated financial position of the Company and its Subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholder's equity for the periods indicated, except that the
unaudited interim financial statements are subject to normal and recurring
year-end adjustments which will not be material in amount. Each of the
consolidated financial statements (including, in each case, any related notes
thereto) contained in the CCC SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each of which fairly presents in all material respects the
consolidated financial position of CCC and its Subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows and
stockholder's equity for the periods indicated, except that the unaudited
interim financial statements are subject to normal and recurring year-end
adjustments which will not be material in amount.
(c) As of September 30, 1997, the Company and its wholly owned Subsidiaries
had cash and cash equivalents (including cash and cash equivalents included in
the Excluded Assets and excluding cash and cash equivalents of Hanover
Accessories, Inc.) determined in accordance with generally accepted accounting
principles applied on a consistent basis with prior periods of at least
$191,832,629 (the "September 30 Cash Amount"). The Company and its wholly owned
Subsidiaries own beneficially and of record 8,584,564 shares of CCC Common
Stock, 630 shares of CCC Series C Preferred Stock, 3,601 shares of CCC Series D
Preferred Stock and 500 shares of CCC Series E Preferred Stock. The Company and
its wholly owned Subsidiaries own beneficially and of record 3,600,009 shares of
Common Stock of Cross Timbers Oil Company and a 21.33% limited partnership
interest in Xxxxxxx X. Xxxx & Associates, NWA Partners, L.P. (the
"Partnership"). The assets of the Partnership include 5,396,643 shares of Class
A Common Stock of Northwest Airlines Corp., 658,755 of which shares are subject
to the options (the "Options") set forth in the Stockholders Agreement described
in Section 2.7(c) of the Company Disclosure Schedule, and 1,727 shares of Series
B Preferred Stock (the "NWA Preferred") of Northwest Airlines Corp. As of
October 14, 1997, the Options had been exercised and the NWA Preferred then held
by the Partnership had been redeemed, and, accordingly, the Company's cash and
cash equivalents increased by $26,346,049 after the distribution of such cash
proceeds by the Partnership. The organizational and charter documents of the
Partnership and all agreements between the Company and its Subsidiaries on one
hand and the Partnership on the other, and, to the actual knowledge of the
Company, all agreements affecting the assets of the Partnership are listed on
Section 2.7(c) of the Company Disclosure Schedule. Section 2.7(c) of the Company
Disclosure Schedule lists any other securities (other than capital stock of
wholly-owned Subsidiaries) held by the Company or any of its wholly owned
Subsidiaries.
SECTION 2.8 Absence of Certain Changes or Events. As of the date of this
Agreement, except as set forth in Section 2.8(a) through Section 2.8(g) of the
Company Disclosure Schedule, the Company SEC Reports or the CCC SEC Reports and
except for the execution and delivery of this Agreement, since January 1, 1997,
each of the Company and its Subsidiaries has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (a)
any Material Adverse Effect; (b) any amendments or changes in the Certificate of
Incorporation or By-laws of the Company or similar organizational documents of
its Subsidiaries; (c) any material damage to, destruction or loss of any
material asset of the Company or any of its Subsidiaries (whether or not covered
by insurance) (d) any material change by the Company or by CCC in its accounting
methods, principles or practices; (e) any material revaluation by the Company or
by CCC of any of their respective assets or any of their respective
Subsidiaries' assets, including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable; (f) any sale,
disposition of or Lien upon any assets of the Company or any of its Subsidiaries
(except (i) sales of goods and services by CCC and its Subsidiaries in the
ordinary course of business and in a manner consistent with past practice, (ii)
dispositions by CCC of obsolete or worthless assets and (iii) sales of
immaterial assets by CCC); or (g) any other action or event that would have
required the consent of MergerCo pursuant to any of the following provisions of
Section 4.1 had such action or event occurred after the date of this Agreement:
Section 4.1(d), Section 4.1(e), Section 4.1(f), Section 4.1(g), Section 4.1(h),
Section 4.1(i), and Section 4.1(j). The representations and warranties in this
Section 2.8 are made only to the actual knowledge of the Company to the extent
they relate to CCC and its Subsidiaries.
SECTION 2.9 No Undisclosed Liabilities; No Liabilities Related to
Purchasing LLC. Except as is disclosed in Section 2.9(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has, and,
except for liabilities of MergerCo prior to the Effective Time, neither the
Surviving Corporation nor any of its Subsidiaries immediately after giving
effect to the Merger and the Asset Disposition will have, any liabilities
(absolute, accrued, contingent, due, to become due or otherwise), except
liabilities (a) in the aggregate adequately provided for on the face of the
September 30, 1997 Balance Sheet contained in the Company's Report on Form 10-Q
for the quarter ended September 30, 1997 (the "September 30, 1997 Balance
Sheet"), (b) in the aggregate adequately provided for on the face of CCC's
audited balance sheet for the fiscal year ended December 31, 1996 contained in
the CCC SEC Reports, (c) incurred since September 30, 1997 by the Company and
its wholly owned Subsidiaries in the ordinary course of business consistent with
past practices, (d) incurred since December 31, 1996 by CCC and its Subsidiaries
in the ordinary course of business consistent with past practice or (e) Excluded
Liabilities. Except as set forth in Section 2.9(ii) of the Company Disclosure
Schedule, after the consummation of the Asset Disposition, (a) neither the
Company nor any of its Subsidiaries (i) will be providing credit support for, or
guaranteeing the payment or performance of, any liability or obligation of the
Purchasing LLC, or (ii) will otherwise directly or indirectly be liable or
responsible for any Excluded Liability, (b) the Purchasing LLC will not have any
obligation or liability, or be a party to any contract, agreement or other
instrument, a default with respect to which would give rise to any right by the
Purchasing LLC or any third party against the Company or any of its Subsidiaries
or any of their respective assets and (c) neither the Company nor its
Subsidiaries will have any liability or obligation to the Purchasing LLC or any
third party as a result of the Asset Disposition. The representations and
warranties in this Section 2.9 are made only to the actual knowledge of the
Company to the extent they relate to CCC and its Subsidiaries.
SECTION 2.10 Absence of Litigation. Except as set forth in Section 2.10 of
the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the best knowledge of the Company
or its Subsidiaries, threatened against the Company or any of its Subsidiaries,
or any properties or rights of the Company or any of its Subsidiaries, or any
basis therefor, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign. Except as set forth in
Section 2.10 of the Company Disclosure Schedule, no judgment, order or decree of
any governmental authority has been issued against the Company or any of its
Subsidiaries. The representations and warranties in this Section 2.10 are made
only to the actual knowledge of the Company to the extent they relate to CCC and
its Subsidiaries.
SECTION 2.11 Employee Benefit Plans; Employment Agreements. Except in each
case as set forth in Section 2.11 of the Company Disclosure Schedule, (i) there
has been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any employee pension plans
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), any employee welfare plans (as defined in Section
3(1) of ERISA) or any bonus, stock option, stock purchase, incentive, deferred
compensation, deferred benefits, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements
(collectively, the "Company Plans"), which could result in liability of the
Company or any of its Subsidiaries; (ii) all Company Plans are in compliance in
all material respects with the requirements prescribed by any and all Laws
(including ERISA and the Code), currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Pension Benefit Guaranty Corporation (the "PBGC"), Internal
Revenue Service (the "IRS") or the Secretary of the Treasury), and the Company
and each of its Subsidiaries have performed all material obligations required to
be performed by them under, are not in any respect in default under or violation
of, and have no knowledge of any material default or violation by any other
party to, any of the Company Plans; (iii) each Company Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (iv) all contributions required to be made to any
Company Plan pursuant to Section 412 of the Code, or the terms of the Company
Plan or any collective bargaining agreement, have been made on or before their
due dates; (v) with respect to each Company Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the
30-day notice requirement has been waived under the regulations to Section 4043
of ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA has
occurred; (vi) no withdrawal (including a partial withdrawal) has occurred with
respect to any multiemployer plan within the meaning set forth in Section 3(37)
of ERISA that has resulted in, or could reasonably be expected to result in, any
withdrawal liability for the Company or any of its Subsidiaries; and (vii)
neither the Company nor any of its Subsidiaries has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA (other than liability
for premium payments to the PBGC, and contributions not in default to the
respective plans, arising in the ordinary course). As of the date of this
Agreement, the aggregate amount of cash liabilities (the "Benefit Costs") for
which the Surviving Corporation, the Company and the Company's wholly-owned
Subsidiaries will be liable pursuant to all Company Plans (taking into account
the effect of the consummation of the Merger and the Asset Disposition and the
completion by the Company of the actions set forth in Section 4.3), other than
any Severance Costs, will not exceed $36,660,000. Section 2.11 of the Company
Disclosure Schedule lists all employment and consulting agreements to which the
Company or any of its wholly owned Subsidiaries is a party and all Company
Plans. The representations and warranties in this Section 2.11 are made only to
the actual knowledge of the Company to the extent they relate only to CCC and
its Subsidiaries.
SECTION 2.12 Labor Matters. Except as set forth in Section 2.12 of the
Company Disclosure Schedule: (i) there are no claims, disputes or proceedings
pending or, to the best knowledge of the Company or any of its wholly-owned
Subsidiaries, threatened, between the Company or any of its wholly-owned
Subsidiaries and any of their respective employees; (ii) neither the Company nor
any of its wholly-owned Subsidiaries is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or its wholly-owned Subsidiaries, nor does the Company or any of its
wholly-owned Subsidiaries know of any activities or proceedings of any labor
union to organize any such employees; and (iii) neither the Company nor any of
its wholly-owned Subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or any of its wholly-owned Subsidiaries.
SECTION 2.13 Proxy Statement. The information supplied by the Company for
inclusion or incorporation by reference in the proxy statement to be sent to the
stockholders of the Company in connection with the meeting of the stockholders
of the Company to consider the Merger (the "Company Stockholders Meeting") (such
proxy statement as amended or supplemented is referred to herein as the "Proxy
Statement"), will not, on the date the Proxy Statement is first mailed to
stockholders, at the time of the Company Stockholders Meetings or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or shall omit to state any material fact necessary in
order to make the statements made in such information not false or misleading or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Stockholders Meetings which has become false or misleading. If at any
time prior to the Effective Time any event relating to the Company or any of its
respective affiliates, officers or directors should be discovered by the Company
which should be set forth in a supplement to the Proxy Statement, the Company
shall promptly inform MergerCo. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information contained in the
Proxy Statement provided by Parent or MergerCo in writing specifically for
inclusion in the Proxy Statement
SECTION 2.14 Subsidiaries. Immediately before the Effective Time, the
Company will have no Subsidiaries other than WRV, CCC and CCC's Subsidiaries.
SECTION 2.15 Title to Property; Restrictions on Transfer. Except as set
forth in Section 2.15(i) of the Company Disclosure Schedule, and except, with
respect to CCC and its Subsidiaries, as set forth in the CCC SEC Reports, the
Company and each of its Subsidiaries have good, defensible and marketable title
to all of their respective properties and assets, free and clear of all Liens;
and all leases pursuant to which the Company or any of its Subsidiaries lease
from others material amounts of real or personal property, are in good standing,
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing default or event of default (or event
which with notice or lapse of time, or both, would constitute a default). Except
as set forth in Section 2.15(ii) of the Company Disclosure Schedule no assets of
the Company or any of its wholly-owned Subsidiaries are, and none of the assets
described in Section 2.7(c) and no other material assets of the Surviving
Corporation or any of its wholly-owned Subsidiaries after giving effect to the
Merger will be, subject to any restrictions limiting the sale, transfer or other
disposition of such assets.
SECTION 2.16 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean any and all
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) all interest, penalties, additional taxes and additions to
tax imposed with respect thereto; and "Tax Returns" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with the
Internal Revenue Service or any other federal, foreign, state or provincial
taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(b) Other than as disclosed in Section 2.16(b) of the Company Disclosure
Schedule, (i) each of the Company and each wholly-owned Subsidiary has timely
filed all Tax Returns required to be filed by it and all such Tax Returns were
complete and correct when filed, (ii) the Company and its wholly-owned
Subsidiaries have paid all Taxes due, (iii) each of the Company and each
wholly-owned Subsidiary has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or to be paid to any employee,
independent contractor, creditor, stockholder or other third party.
(c) Except as disclosed in Section 2.16(c) of the Company Disclosure
Schedule: (i) no deficiency or proposed adjustment for any Taxes has been
asserted or assessed in writing by any taxing authority against the Company or
any wholly-owned Subsidiary; (ii) neither the Company nor any wholly-owned
Subsidiary has waived any statute of limitations in respect of Taxes or
consented in writing to extend the time in which any Tax may be assessed or
collected by any taxing authority; (iii) neither the Company nor any
wholly-owned Subsidiary has requested or been granted an extension of time for
filing any Tax Return to a date later than the Closing Date; (iv) neither the
Company nor any wholly-owned Subsidiary has ever been the subject of any action,
proceeding, audit or examination with respect to any liability (or asserted
liability) for Taxes within the most recent four taxable years or for taxable
years for which the applicable statute of limitations has not run; (v) there are
no liens on any assets of the Company or any wholly-owned Subsidiary arising
from the failure (or alleged failure) to pay any Tax; (vi) neither the Company
nor any wholly-owned Subsidiary is a party to or bound by any Tax allocation or
Tax sharing agreement with any Person, has ever been a member of an affiliated
group (within the meaning of Code Section 1504) filing consolidated federal
income Tax Returns (other than a group the common parent of which was the
Company), or has any liability for the Taxes of any other Person, whether under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or otherwise; (vii)
neither the Company nor any wholly-owned Subsidiary has filed a consent under
Code Section 341(f); (viii) neither the Company nor any wholly-owned Subsidiary
has agreed to make or is required to make, any adjustment under Section 481 of
the Code or any comparable provision of state or foreign tax laws by reason of a
change in accounting method or otherwise; (ix) neither the Company nor any
wholly-owned Subsidiary is or has been a United States real property holding
corporation (within the meaning of Code Section 897(c)(2)) during the applicable
period specified in Code Section 897(c)(1)(A)(ii); (x) no claim has ever been
made by a taxing authority in a jurisdiction in which the Company or a
wholly-owned Subsidiary does not file Tax Returns that either the Company or the
wholly-owned Subsidiary is or may be subject to taxation under the laws of such
jurisdiction; (ix) neither the Company nor any wholly-owned Subsidiary has a
permanent establishment in any foreign country, as defined in the relevant tax
treaty or convention between the United States of America and such foreign
country or, if a treaty does not exist, under the laws of such foreign country;
and (xii) the Company has previously furnished to MergerCo or its designee true,
correct and complete copies of all income Tax Returns, examination reports and
statements of deficiencies filed by or with respect to, assessed against or
agreed to by, as the case may be, the Company or any wholly-owned Subsidiary in
respect of each of its four most recent taxable years.
(d) Neither the Company nor any of its wholly-owned Subsidiaries owns any
property of a character, the indirect transfer of which, pursuant to this
Agreement, would give rise to any material documentary, stamp or other transfer
tax.
SECTION 2.17 Environmental Matters. Except as set forth in Section 2.17 of
the Company Disclosure Schedule, and except as disclosed in the Company SEC
Reports and the CCC SEC Reports, the Company and each of its Subsidiaries: (i)
have obtained all material Company Permits which are required to be obtained
under all applicable federal, state, foreign or local laws or any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes ("Environmental Laws") by the Company or its
Subsidiaries or their respective agents; (ii) are in material compliance with
all terms and conditions of such required Company Permits, and also are in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws; (iii) as of the date hereof, do not
have actual knowledge of nor have received written notice of any past or present
violations of Environmental Laws or (iv) have taken all actions necessary under
applicable Environmental Laws to register any products or materials required to
be registered by the Company or its Subsidiaries (or any of their respective
agents) thereunder. There is no event, condition, circumstance, activity,
practice, incident, action or plan which has occurred which is reasonably likely
to interfere with or prevent continued compliance with Environmental Laws or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, against the Company or
any of its Subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste. The representations and
warranties in this Section 2.17 are made only to the actual knowledge of the
Company to the extent they relate to CCC and its Subsidiaries.
SECTION 2.18 Intellectual Property.
(a) The Company, directly or indirectly through its Subsidiaries, owns, or
is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, technology,
know-how and tangible or intangible proprietary information or material that are
material to the business of the Company and its Subsidiaries as currently
conducted by the Company or its Subsidiaries (the "Company Intangible Property
Rights").
(b) Except as set forth in the Company SEC Reports and the CCC SEC Reports,
either the Company or one of its Subsidiaries is the owner of, or the exclusive
or non-exclusive licensee of the Company Intangible Property Rights, and, in the
case of Company Intangible Property Rights owned by the Company or any of its
Subsidiaries, has sole and exclusive rights to the use thereof or the material
covered thereby in connection with the services or products in respect of which
the Company Intangible Property Rights are being used. Except as set forth in
Section 2.18(b) of the Company Disclosure Schedule, and except as disclosed in
the Company SEC Reports and the CCC SEC Reports, no claims with respect to the
Company Intangible Property Rights have been asserted or, to the knowledge of
the Company, are threatened by any person (i) to the effect that the
manufacture, sale, licensing, or use of any of the products of the Company or
any of its Subsidiaries as now manufactured, sold or licensed or used or
proposed for manufacture, use, sale or licensing by the Company or any of its
Subsidiaries infringes on any copyright, patent, trade xxxx, service xxxx or
trade secret, (ii) against the use by the Company or any of its Subsidiaries of
any trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how used in the business of the Company and its Subsidiaries
as currently conducted or as proposed to be conducted, or (iii) challenging the
ownership by the Company or any of its Subsidiaries or the validity of any of
the Company Intangible Property Rights. All material registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth on Section 2.18(b) of the Company Disclosure Schedule, and
except as disclosed in the Company SEC Reports and the CCC SEC Reports, to the
knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intangible Property Rights by any third
party, including any employee or former employee of the Company or any of its
Subsidiaries. No Company Intangible Property Right or product of the Company or
any of its Subsidiaries is subject to any outstanding decree, order, judgment,
or stipulation restricting in any manner the licensing thereof by the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
entered into any agreement under which the Company or its Subsidiaries is
restricted from selling, licensing or otherwise distributing any of its products
to any class of customers, in any geographic area, during any period of time or
in any segment of the market. The representations and warranties in this Section
2.18 (i) are made only to the actual knowledge of the Company with respect to
CCC and its Subsidiaries and (ii) are not made to the extent any inaccuracy in
such representations and warranties with respect to CCC and its Subsidiaries
would not have a Material Adverse Effect.
SECTION 2.19 Interested Party Transactions. Except as set forth in Section
2.19(i) of the Company Disclosure Schedule or disclosed in the Company SEC
Reports under an appropriate heading, since January 1, 1996, no event has
occurred that would be required to be reported by the Company as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC. Except as set forth in Section 2.19(ii) of the Company
Disclosure Schedule or disclosed in the CCC SEC Reports under an appropriate
heading, since January 1, 1996, no event has occurred that would be required to
be reported by CCC as a Certain Relationship or Related Transaction, pursuant to
Item 404 of Regulation S-K promulgated by the SEC.
SECTION 2.20 Powers of Attorney. There are no outstanding powers of
attorney or proxies executed on behalf of the Company or WRV in respect of their
respective assets, liabilities or business.
SECTION 2.21 Books and Records. The books and corporate records (including
minute books, stock record books and financial records) of the Company and each
of its Subsidiaries are correct and complete in all material respects and have
been maintained in accordance with sound business practices and applicable law.
The representations and warranties in this Section 2.21 are made only to the
actual knowledge of the Company with respect to CCC and its Subsidiaries.
SECTION 2.22 Brokers. Except as set forth in Section 2.22 of the Company
Disclosure Schedule, no broker, finder or investment banker or other party is
entitled to any brokerage, finder'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 or its Subsidiaries or
affiliates. The fees and expenses of the entities listed on Section 2.22 of the
Company Disclosure Schedule will be paid by the Company. The Company has
heretofore furnished to MergerCo a complete and correct copy of all agreements
between the Company and the entities listed on Section 2.22 of the Company's
Disclosure Schedule pursuant to which such entities could be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 2.23 Change in Control Payments. Except as set forth on Section
2.23 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries have any plans, programs or agreements to which they are parties,
or to which they are subject, pursuant to which payments (or acceleration of
benefits) may be required upon, or may become payable directly or indirectly as
a result of, a change of control of the Company or any of its Subsidiaries. The
representations and warranties in this Section 2.23 are made only to the actual
knowledge of the Company with respect to CCC and its Subsidiaries.
SECTION 2.24 Disclosure. This Agreement (including the Company Disclosure
Schedule) and the financial statements referred to herein do not, considered as
a whole, omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading. The representations and warranties
in this Section 2.24 are made only to the actual knowledge of the Company with
respect to CCC and its Subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO
Parent, MergerCo and Merger Sub hereby jointly and severally represent and
warrant to the Company and WRV as follows:
SECTION 3.1 Organization and Qualification. Each of Parent, MergerCo and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite corporate power and authority necessary to own and lease the
properties it owns or leases and to carry on its business as it is now being
conducted. Each of Parent, MergerCo and Merger Sub is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned or leased by it or the
nature of its activities makes such qualification or licensing necessary.
SECTION 3.2 Charter and By-Laws. Neither Parent, MergerCo nor Merger Sub is
in violation of any of the provisions of its respective charter or by-laws.
SECTION 3.3 Subsidiaries. MergerCo has no Subsidiaries other than Merger
Sub.
SECTION 3.4 Authority Relative to this Agreement. Each of Parent, MergerCo
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its respective obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent, MergerCo and Merger Sub and the consummation by
Parent, MergerCo and Merger Sub of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent, MergerCo and Merger Sub, and no other corporate proceedings on the
part of Parent, MergerCo or Merger Sub are necessary to consummate the
transactions so contemplated (other than the approval of the Merger and the
Subsidiary Merger in accordance with the DGCL). The Board of Directors of
MergerCo has determined that it is advisable and in the best interest of
MergerCo's stockholder for MergerCo to enter into a business combination with
the Company upon the terms and subject to the conditions of this Agreement. The
Board of Directors of Merger Sub has determined that it is advisable and in the
best interest of Merger Sub's stockholder for Merger Sub to enter into a
business combination with WRV upon the terms and subject to the conditions of
this Agreement. This Agreement has been duly and validly executed and delivered
by Parent, MergerCo and Merger Sub and, assuming the due authorization,
execution and delivery by the Company and WRV, constitutes a legal, valid and
binding obligation of Parent, MergerCo and Merger Sub enforceable against each
of them in accordance with its terms, (i) except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors rights generally and (ii) subject to general
principles of equity.
SECTION 3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent, MergerCo and
Merger Sub do not, and the performance of this Agreement by Parent, MergerCo and
Merger Sub and the consummation of the transactions contemplated hereby will
not, (i) conflict with or violate the charter or by-laws of Parent, MergerCo or
Merger Sub, (ii) conflict with or violate any Laws applicable to Parent,
MergerCo or Merger Sub or by which any of their respective properties are bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or impair Parent's, MergerCo's or Merger Sub's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of Parent, MergerCo or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent, MergerCo or Merger Sub is a party or by which Parent, MergerCo
or Merger Sub or its respective properties are bound or affected except in the
case of clauses (ii) or (iii) for any such conflicts, violations, breaches,
defaults or other occurrences that will not adversely affect the ability of
Parent, MergerCo or Merger Sub to perform its respective obligations hereunder
or to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by Parent, MergerCo and
Merger Sub does not, and the performance of this Agreement by Parent, MergerCo
and Merger Sub will not, and the consummation by Parent, MergerCo and Merger Sub
of the Merger and the other transactions contemplated hereby will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except for applicable requirements, if any, of the Securities Act, the Exchange
Act, the pre- merger notification requirements of the HSR Act and the filing and
recordation of appropriate merger or other documents as required by the DGCL.
SECTION 3.6 Financing. Parent has, and as of the Closing will have,
sufficient cash available to it to consummate the transactions contemplated
hereby.
SECTION 3.7 Proxy Statement. The information supplied by Parent, MergerCo
or Merger Sub in writing specifically for inclusion in the Proxy Statement will
not, on the date the Proxy Statement is first mailed to stockholders, at the
time of the Company Stockholders Meetings or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or
shall omit to state any material fact necessary in order to make the statements
made in such information not false or misleading or omit to state any material
fact necessary to correct any statement in any earlier information supplied by
Parent, MergerCo or Merger Sub in writing specifically for inclusion in the
Proxy Statement which has become false or misleading. If at any time prior to
the Effective Time any event relating to Parent, MergerCo or Merger Sub or any
of its respective affiliates, officers or directors should be discovered by
Parent, MergerCo or Merger Sub which should be set forth in a supplement to the
Proxy Statement, Parent, MergerCo or Merger Sub shall promptly inform the
Company. Neither Parent, MergerCo nor Merger Sub makes any representation or
warranty with respect to any information contained in the Proxy Statement not
provided by Parent, MergerCo or Merger Sub in writing specifically for inclusion
in the Proxy Statement.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless MergerCo shall otherwise agree in writing, the
Company shall conduct its business, shall cause the businesses of its
wholly-owned Subsidiaries to be conducted and shall use its reasonable efforts
to cause the businesses of CCC and its Subsidiaries to be conducted only in, and
the Company and its wholly-owned Subsidiaries shall not and the Company shall
use its reasonable efforts to cause CCC and its Subsidiaries not to take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use all reasonable efforts to preserve
substantially intact the business, assets and organization of the Company and
its Subsidiaries; provided, however, that the Company shall not be required to
take any such action with respect to CCC and its Subsidiaries to the extent such
action would have a significant possibility, based on written advice of counsel,
of constituting a breach by CCC's directors of their fiduciary duties to the
stockholders of CCC under applicable law. By way of amplification and not
limitation, except as contemplated by this Agreement, neither the Company nor
any of its Subsidiaries shall and the Company shall use its reasonable efforts
to cause CCC and its Subsidiaries not to, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of MergerCo (provided,
however, that the Company shall not be required to take any such action with
respect to CCC and its Subsidiaries to the extent such action would have a
significant possibility, based on written advice of counsel, of constituting a
breach by CCC's directors of their fiduciary duties to the stockholders of CCC
under applicable law):
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company or similar organizational documents of any of its Subsidiaries or
the Stockholders Agreement (the "Stockholders Agreement") dated June 16, 1994
among InfoVest Corporation (predecessor to CCC), WRV, Xxxxx X. Xxxxxxxx and
various funds managed by Loeb Partners Corporation or similar documents of the
Company and its Subsidiaries;
(b) except with respect to issuances by CCC or any of its Subsidiaries
under existing benefit and incentive plans, issue, sell, pledge, dispose of or
encumber, or authorize the issuance, sale, pledge, disposition or encumbrance
of, any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) in the Company or any of its Subsidiaries;
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its Subsidiaries, including without limitation the Company's or its
Subsidiaries' interests in CCC, Cross Timbers Oil Company and the Partnership
(except for (i) sales by CCC and its Subsidiaries of goods and services in the
ordinary course of business and in a manner consistent with past practice, (ii)
dispositions by CCC of obsolete or worthless assets and (iii) sales by CCC of
immaterial assets); provided, however, nothing in this Section 4.1(c) shall
prohibit the consummation of the Asset Disposition if, after the consummation of
the Asset Disposition, the representations and warranties of the Company made in
Section 2.9 would continue to be true and correct;
(d) (i) except for regular dividends on the Company Series A Preferred
Stock or any class of CCC capital stock, declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, except that a
wholly owned Subsidiary of the Company and a wholly owned Subsidiary of CCC may
declare and pay a dividend 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 or property in respect of, in lieu of or in substitution for shares
of its capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit
any Subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its
securities or any securities of its Subsidiaries, including, without limitation,
shares of Company Stock; provided, however, nothing in this Section 4.1(d) shall
prohibit the consummation of the Asset Disposition if, after the consummation of
the Asset Disposition, the representations and warranties of the Company made in
Section 2.9 would continue to be true and correct;
(e) (i) with respect to the Company and its wholly owned Subsidiaries only,
except for the consummation of transactions described in Section 4.1(e) of the
Company Disclosure Schedule in accordance with the terms described therein, and
except for acquisitions by the Company which do not in the aggregate consist of
more than $20,000,000 of consideration paid by the Company, acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof, (ii) incur any indebtedness
for borrowed money or issue any debt securities, except for short-term, working
capital and commercial paper borrowings by CCC and its Subsidiaries incurred in
the ordinary course of business consistent with past practice, or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person or, except for loans or advances made by CCC and
its Subsidiaries in the ordinary course of business consistent with past
practice, make any loans or advances, (iii) enter into or amend any material
contract or agreement without the consent of MergerCo which shall not be
unreasonably withheld, except by CCC and its Subsidiaries in the ordinary course
of business, (iv) with respect to the Company and its wholly owned Subsidiaries
only, authorize any capital expenditures or purchase of fixed assets, (v) enter
into or amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 4.1(e), (vi) with respect to the
Company and its wholly owned Subsidiaries only, acquire any investment assets
from the date of this Agreement without first providing all material details
regarding any such acquisition to MergerCo or (vii) with respect to the Company
and its wholly owned Subsidiaries only, acquire any investment assets after the
date the proxy statement referred to in Section 5.2 is first mailed to the
Company's stockholders in the aggregate in excess of $5,000,000;
(f) except for payments required to be made pursuant to Section 4.3 or made
pursuant to Section 4.8, (i) increase the compensation payable or to become
payable to its officers or employees, except for increases in salary or wages of
employees of the Company or its Subsidiaries who are not officers of the Company
in the ordinary course of business in accordance with past practice, (ii)
increase the amount otherwise payable pursuant to any Company Plan as a result
of the Merger or otherwise, (iii) grant any severance or termination pay (other
than pursuant to existing agreements or arrangements disclosed in Section 4.1(f)
of the Company Disclosure Schedule) to, or enter into any employment or
severance agreement with any director, officer or other employee of the Company
or any of its wholly owned Subsidiaries or (iv) with respect to the Company and
its wholly owned Subsidiaries, establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, take any action to change in any
material respect accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of any statute of limitations;
(i) without the prior consent of Parent, which shall not be unreasonably
withheld, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports filed prior to the
date of this Agreement or the September 30, 1997 Balance Sheet, in the case of
the Company, and the CCC SEC Reports filed prior to the date of this Agreement,
in the case of CCC and its Subsidiaries, or incurred in the ordinary course of
business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 4.2 Notice of Acquisition Proposal.
(a) Immediately after the earlier of (i) the date the Company or any of its
Subsidiaries enters into any confidentiality agreement with any person or entity
in connection with an Acquisition Proposal (as defined below) and (ii) the date
the Company receives an Acquisition Proposal which includes a definitive price,
the Company agrees to notify MergerCo of entering into such confidentiality
agreement or the receipt of such Acquisition Proposal or any modification of or
amendment to such Acquisition Proposal. Such notice to MergerCo shall be made
orally and in writing, and shall indicate whether the Company has provided, is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company. An "Acquisition Proposal" shall be
any inquiries or proposals regarding any merger, sale of substantial assets,
reorganization, recapitalization, sale of shares of capital stock (including
without limitation by way of a tender offer) or similar transactions involving
the Company or any Subsidiaries of the Company other than the Merger and the
Asset Disposition.
(b) Solicitation of Acquisition Proposals. Notwithstanding anything in this
Agreement to the contrary, any officer or director of the Company may, in
accordance with such officer's or director's fiduciary duty to stockholders of
the Company under applicable law, solicit, respond to inquiries from, negotiate
with, enter into confidentiality agreements with, and/or grant access to
nonpublic information regarding the Company or any of its Subsidiaries to any
Third Party (as defined in Section 7.1) in connection with the creation of an
Acquisition Proposal.
SECTION 4.3 Actions With Respect To Company Plans.
(a) The Company shall take all reasonable action prior to the Effective
Time towards the goal of ensuring that all of the amounts payable at any time on
or after the date hereof by the Company in connection with (I) the WRC Deferred
Benefit Plan, as approved by the Company's Board of Directors and adopted by the
sole shareholder of the Company on or about September 24, 1993, (II) the WRC
Voluntary Deferred Compensation Plan, as approved by the Company's Board of
Directors and adopted by the sole shareholder of the Company on or about
September 24, 1993, and (III) the WRC Directors' Deferred Compensation Plan, as
approved by the Company's Board of Directors on or about August 8, 1996
(collectively, the "Deferral Plans"), will be deductible in the Company's 1997
taxable year for federal income tax purposes, which actions shall include (but
not be limited to) the following:
(i) on or prior to December 30, 1997, (a) the Company's Board of
Directors shall take all necessary and/or appropriate steps to amend each
of the Deferral Plans (which steps shall include securing the prior written
consent to such amendments of all participants in the Deferral Plans) so
that each Deferral Plan requires payment to each participant therein of the
entire amount in such participant's Deferred Retirement Benefit Account or
Deferred Compensation Account (as defined in the Deferral Plans), as the
case may be, no later than December 30, 1997, (b) all such amounts shall be
paid to such participants in full in cash (subject to required
withholding), and (c) each Deferral Plan shall be terminated;
(ii) on or prior to December 29, 1997, the employment of each of
Xxxxxx Xxxxx and Xxxxxx Xxxxxxx with the Company and its Subsidiaries shall
terminate, and the Company and its Subsidiaries shall take all other steps
deemed necessary or appropriate by MergerCo to ensure that neither Xx.
Xxxxx nor Xx. Xxxxxxx is an employee of the Company or its Subsidiaries,
within the meaning of Treasury Regulation Section 1.162- 27(c)(2), or
otherwise provides services in any capacity to the Company or any
Subsidiary, at any time after December 29, 1997, which steps shall include
but not be limited to (i) securing the written resignation of Xx. Xxxxx as
Chief Executive Officer and President of the Company and of each Subsidiary
in which he serves in such capacity and from any other office that he holds
in the Company or any Subsidiary, all of which such resignations shall be
effective on or prior to December 29, 1997, (ii) securing the written
resignation of Xx. Xxxxxxx as Corporate Secretary of the Company and of
each Subsidiary in which she serves in such capacity and from any other
office that she holds in the Company or any Subsidiary, all of which such
resignations shall be effective on or prior to December 29, 1997, and (iii)
appointing effective upon the resignation of Xx. Xxxxx or Xx. Xxxxxxx, as
the case may be, as the new Chief Executive Officer, President, Corporate
Secretary or other officer of the Company and of each Subsidiary in which
either Xx. Xxxxx or Xx. Xxxxxxx held such office one or more individuals,
each of whose total compensation from the Company and its Subsidiaries for
each of 1997 and 1998 will be less than $1,000,000 (notwithstanding the
foregoing, Xx. Xxxxx may serve from and after the termination of his
employment as an independent director of the Company provided that he does
not provide any services to the Company or any Subsidiary in the nature of
services that would customarily be provided by an executive officer or any
other employee of the Company or any Subsidiary);
(iii) if the Closing shall not have occurred prior to January 31,
1998, then on or prior to January 31, 1998, the Company shall deliver to
each person who was a participant in one or more Deferral Plans at any time
during calendar year 1997, an Internal Revenue Service Form W-2 (or such
other Internal Revenue Service document as shall be appropriate) which
reflects the aggregate amount paid in 1997 to such person under the
Deferral Plans and the aggregate amount of all Acceleration Payments paid
in 1997 to such person; and
(b) Prior to the Effective Time, (a) the Company's Board of Directors must
take all necessary and/or appropriate steps to amend the WRC 1993 Incentive
Compensation Plan, as approved by the Company's Board of Directors and adopted
by the sole shareholder of the Company on or about September 24, 1993 (the
"Incentive Plan") to provide for payment in cash prior to the Effective Time of
all amounts to which the participants are entitled thereunder, (b) all such
amounts shall be paid in full in cash (subject to the required withholding), and
(c) the Incentive Plan shall be terminated.
SECTION 4.4 Voting. The Company covenants and agrees that during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, neither the Company nor any
of its wholly-owned Subsidiaries, without the prior written consent of MergerCo,
(i) shall vote any shares of Cross Timbers Oil Company or CCC in favor of, or
give any written consent with respect to, (a) any amendment of the charter or
by-laws of Cross Timbers Oil Company or CCC or (b) any merger of, sale of all or
substantially all of the assets of, or any similar transaction with respect to
Cross Timbers Oil Company or CCC or (ii) shall give any consent with respect to
its interest in the Partnership.
SECTION 4.5 Fairness Opinion. The Company covenants and agrees to use its
best efforts to obtain the fairness opinion referred to in Section 6.1(d).
SECTION 4.6 Partnership Debt. The Company covenants and agrees to use its
reasonable efforts to assist MergerCo to cause the Partnership to have no
indebtedness as of the Effective Time, if so requested by MergerCo.
SECTION 4.7 CCC Board Seats. The Company covenants and agrees to use its
reasonable efforts in accordance with its rights under the Stockholders
Agreement to cause four designees of MergerCo to be validly appointed as of the
Effective Time to the Board of Directors of CCC in place of the Company's four
designees to such Board.
SECTION 4.8 Acceleration Payments. Notwithstanding any covenant in this
Article IV, in addition to any payments required to be made by the Company
pursuant to Section 4.3, the Company may pay, on or prior to December 30, 1997,
to the participants in the Deferral Plans an aggregate amount of up to
$7,500,000 (the "Acceleration Payments") as an incentive for participants in the
Deferral Plan to agree to permit the Company to accelerate the payment to them
of certain amounts under such Deferral Plan.
SECTION 4.9 Indemnity Agreements. Notwithstanding any covenant in this
Article IV, the Company may enter into an Indemnification Agreement, in the form
of Exhibit C hereto, with each officer and director of the Company.
SECTION 4.10 Lease. The Company agrees not to amend, extend or renew its
lease for office space in White Plains, New York except for an extension on a
month to month basis on terms reasonably acceptable to Parent.
SECTION 4.11 Contributions. Notwithstanding any covenant in this Article
IV, the Company may contribute up to $2,000,000 in the aggregate to Hanover
Accessories, Inc. and any other company acquired by the Company after September
30, 1997.
SECTION 4.12 Trust Assets. Prior to the Effective Time, the assets (the
"Trust Assets") of the Company and its Subsidiaries set forth on Exhibit E
hereto plus up to $1,000,000 in cash will be permitted to be granted to a
Trustee (the "Liquidating Trustee") for the benefit of the stockholders of the
Company immediately prior to the Effective Time. The Liquidating Trustee will
have the obligation of disposing of the assets and remitting the proceeds
thereof to the beneficiaries of the trust in accordance with each such
stockholder's proportionate common equity interest in the Company. The terms of
the trust, and the transfer of the assets thereto shall be pursuant to terms
mutually agreed upon by Parent and Company, to be negotiated by Parent and
Company in good faith. In the event that (i) the Company and Parent are not able
to reach an agreement with respect to the terms of the trust and the transfer of
the assets thereto or (ii) the Company determines that it is not practicable to
establish the trust prior to the Effective Time, the Company shall be permitted
to sell the Trust Assets, pursuant to an agreement that Parent reasonably
determines will not subject the Company to any additional liabilities or
obligations, prior to the Effective Time; provided, that no such sale of Trust
Assets shall be to an "affiliate" or "associate" of the Company as such terms
are defined in the Securities Exchange Act of 1934, as amended.
SECTION 4.13 Tax Returns. The Company agrees to make all necessary filings,
on or prior to March 15, 1998, to extend the period for filing its 1997 federal
and state, if any, Tax Returns. The Company agrees not to file any federal or
state income Tax Return for 1997 prior to the termination of this Agreement in
accordance with its terms.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR Act; Etc. As promptly as practicable after the date of the
execution of this Agreement, the Company and Parent shall file notifications
under and in accordance with the HSR Act. The Company and Parent shall respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") for additional information or documentation and shall
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other governmental authority (foreign or domestic)
in connection with antitrust matters.
SECTION 5.2 Proxy Statement.
(a) As soon as practicable following the date of this Agreement, the
Company shall prepare and file the Proxy Statement, reasonably acceptable to
Parent, with the SEC and shall use its best efforts to have the Proxy Statement
cleared by the SEC as promptly as practicable, and, in addition, shall also take
any action required to be taken under applicable law in connection with the
consummation of the transactions contemplated by this Agreement. Parent and the
Company shall promptly furnish to each other all information, and take such
other actions, as may reasonably be requested in connection with any action by
any of them in connection with the provisions of this Section 5.2.
(b) Prior to the date of approval of the Merger by Company's stockholders,
each of Parent, MergerCo, Merger Sub, the Company and WRV shall correct promptly
any information provided by it to be used specifically in the Proxy Statement
that shall have become false or misleading in any material respect, and, the
Company shall take all steps necessary to file with the SEC and have cleared by
the SEC any amendment or supplement to the Proxy Statement as so corrected to be
disseminated to the stockholders of Company to the extent required by applicable
law. Without limiting the generality of the foregoing, the Company shall notify
MergerCo promptly of the receipt of the comments of the SEC and of any request
by the SEC for amendments or supplements to the Proxy Statement, or for
additional information, and shall supply MergerCo with copies of all written
correspondence and details of all oral correspondence between the Company or its
representatives, on the one hand, and the SEC or members of its staff, on the
other hand, with respect to the Proxy Statement. Whenever any event occurs which
is required to be described in an amendment or a supplement to the Proxy
Statement, the Company shall, upon learning of such event, promptly prepare,
file and clear with the SEC and mail to the stockholders of Company such
amendment or supplement; provided, however, that, prior to such mailing, (i) the
Company shall consult with MergerCo with respect to such amendment or
supplement, (ii) the Company shall afford MergerCo reasonable opportunity to
comment thereon and (iii) each such amendment or supplement shall be reasonably
satisfactory to MergerCo.
SECTION 5.3 Stockholders Meeting. The Company shall call and hold the
Company Stockholders Meeting and provide the Proxy Statement to its stockholders
in connection therewith as promptly as practicable and in accordance with
applicable laws for the purpose of voting upon the approval of the Merger and
the adoption of the Merger Agreement, the Asset Disposition, and if the Company
transfers Trust Assets to the Liquidating Trustee as described in Section 4.12,
such transfer to the Liquidating Trustee. Unless the Board of Directors of the
Company determines in good faith after consultation with and based upon the
written advice of their respective outside legal counsel, that to do so would
have a significant possibility of constituting a breach of their fiduciary
duties to stockholders under applicable law, the Company shall (i) recommend
approval of the transactions contemplated by this Agreement by the stockholders
of the Company and include in the Proxy Statement such recommendation and (ii)
use all reasonable efforts to solicit from stockholders of the Company proxies
in favor of adoption of this Agreement and approval of the transactions
contemplated hereby, and shall take all other action necessary or advisable to
secure the vote or consent of stockholders to obtain such approvals.
SECTION 5.4 Access to Information. The Company shall (and shall cause each
of its wholly owned Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of MergerCo reasonable access
during normal business hours, during the period prior to the Effective Time, to
all of the properties, books, contracts, commitments and records of the Company
and its wholly owned Subsidiaries and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to MergerCo all
information concerning its business, properties and personnel of the Company and
its Subsidiaries as MergerCo or its representatives may reasonably request, and
shall make available to MergerCo or its representatives the appropriate
individuals (including attorneys, accountants and other professionals) for such
discussion of the business, properties and personnel of the Company and its
Subsidiaries as MergerCo or its representatives may reasonably request;
provided, however, that any such access shall be conducted in such a manner as
not to interfere unreasonably with the business or operation of the Company or
any of its Subsidiaries. Without in any way limiting the foregoing, the Company
shall afford or, with respect to CCC and its subsidiaries, use reasonable
efforts to afford, MergerCo and its representatives access, reasonably
acceptable to MergerCo, to (i) all board of directors minutes of, and all
information and reports provided to the board of directors of, CCC and each of
its Subsidiaries, (ii) all of the management of CCC and each of its Subsidiaries
to discuss financial and accounting matters, (iii) all information and reports
provided to any of the Company and its wholly owned Subsidiaries, provided,
however, the Company need not make such information available to MergerCo if the
directors of the Company determine, based on written advice of counsel, that
providing such information to MergerCo would have a significant possibility of
subjecting the directors of the Company to liability for breach of their
fiduciary duties under applicable law, (iv) the employees of the Company and its
wholly-owned Subsidiaries and any advisors and consultants responsible for
preparing the Company's tax returns and (v) the Company and its advisors,
including without limitation Ernst & Young, the Company's independent
accountants, regarding the Company's expected tax liabilities (or credits) for
the year ending December 31, 1997.
SECTION 5.5 Consents; Approvals. The Company, WRV, Parent, MergerCo and
Merger Sub shall each use all reasonable efforts to obtain all consents and
approvals, and the Company, WRV, Parent, MergerCo and Merger Sub shall make all
filings (including, without limitation, all filings with federal, state and
local governmental or regulatory agencies), required to be made by it in
connection with the authorization, execution and delivery of this Agreement by
the Company, WRV, Parent, MergerCo and Merger Sub and the consummation by them
of the transactions contemplated by each hereby, in each case as promptly as
practicable. The Company, WRV, Parent, MergerCo and Merger Sub shall furnish
promptly all information required to be included in the Proxy Statement or for
any application or other filing to be made pursuant to the rules and regulations
of any federal, state or local governmental body in connection with the
transactions contemplated by this Agreement.
SECTION 5.6 Notification of Certain Matters. The Company shall give prompt
notice to MergerCo, and Parent and MergerCo shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
by such party contained in this Agreement to become materially untrue or
inaccurate, or (ii) any failure of the Company, WRV, Parent, MergerCo or Merger
Sub, as the case may be, materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.7 Further Action. Upon the terms and subject to the conditions
hereof each of the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
SECTION 5.8 Public Announcements. MergerCo, Parent, Merger Sub, WRV and the
Company shall consult with each other before issuing any press release with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which shall not be unreasonably withheld; provided, however, that a party
may, without the prior consent of the other party, after timely providing the
other party with the text of such release or statement and consulting with the
other party with respect thereto, issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of Nasdaq.
SECTION 5.9 Conveyance Taxes. MergerCo, Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed at or before the Effective
Time.
SECTION 5.10 Maintenance of Assets. For the benefit of the Company's
officers and directors, Parent agrees that, unless the Indemnity Agreement is
assumed by Parent in accordance with Section 9 thereof, for a period of at least
two years following the Effective Time, the Surviving Corporation will remain in
existence and continue to hold net assets worth at least $50,000,000.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger and the Subsidiary
Merger shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) Stockholder Approval. This Agreement, the transactions contemplated
hereby, including the Merger, and the Asset Disposition shall have been approved
and adopted by the requisite vote of the stockholders of the Company;
(b) HSR Act. The waiting period applicable to the consummation of the
Merger and the Subsidiary Merger under the HSR Act shall have expired or been
terminated;
(c) No Injunctions or Restraints; Illegality. No statute, rule, regulation,
executive order, decree, ruling, temporary restraining order, preliminary or
permanent injunction or other order shall have been enacted, entered,
promulgated, enforced or issued by any court or governmental authority of
competent jurisdiction or shall otherwise be in effect which prohibits,
restrains, enjoins or restricts the consummation of the Merger or the Subsidiary
Merger;
(d) Fairness Opinion. The Company shall have received a written opinion,
dated as of the date the proxy statement referred to in Section 5.2 is furnished
to the Company's stockholders, from a nationally recognized investment banking
firm, addressed to the Company and its board of directors, that the transactions
contemplated by this Agreement, including, without limitation, the Merger and
the Asset Disposition, are fair to the stockholders of the Company from a
financial point of view.
(e) Merger and Subsidiary Merger. Each of the Merger and Subsidiary Merger
shall be consummated simultaneously at the Effective Time.
SECTION 6.2 Additional Conditions to Obligations of Parent, MergerCo and
Merger Sub. The obligations of Parent and MergerCo to effect the Merger and the
obligations of Merger Sub to effect the Subsidiary Merger are also subject to
the satisfaction of the following conditions in all material respects (other
than Section 6.2(a) which must be satisfied in all respects):
(a) Representations and Warranties. The representations and warranties of
the Company contained in Section 2.14 hereof shall be true and correct in all
respects at and as of the Effective Time as if made at and as of such time, with
the same force and effect as if made at and as of the Effective Time, and
Parent, MergerCo and Merger Sub shall have received a certificate to such effect
signed by the chief executive officer and the chief financial officer of the
Company;
(b) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement other than those described in Section
6.2(a) shall be true and correct in all respects at and as of the Effective Time
as if made at and as of such time, with the same force and effect as if made at
and as of the Effective Time, except for (x) changes specifically contemplated
by this Agreement and (y) those representations and warranties which address
matters only as of a particular date (which shall have been true and correct as
of such date), and except to the extent the failure of such representations and
warranties to be true and correct at and as of the Effective Time would not, or
would not be likely to, individually or in the aggregate diminish the value of
the Company and its Subsidiaries taken as a whole by more than $25 million, and
Parent, MergerCo and Merger Sub shall have received a certificate to such effect
signed by the chief executive officer and the chief financial officer of the
Company.
(c) Agreements and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Effective
Time, and MergerCo and Merger Sub shall have received a certificate to such
effect signed by the chief executive officer and the chief financial officer of
the Company, and the Company shall have performed or complied with the
provisions of Section 4.3 at or prior to the dates specified in Section 4.3, and
MergerCo and Merger Sub shall have received a certificate to such effect signed
by the chief executive officer and the chief financial officer of the Company.
(d) No Company Material Adverse Change. There shall not have occurred any
event or change in circumstances involving the Company or any of its
Subsidiaries (including without limitation a decrease in the Public Trading
Price from the Historic Public Trading Price of the capital stock of Cross
Timbers Oil Company, CCC or Northwest Airlines Corp.), that, when taken together
with all other such events or changes in circumstances, MergerCo reasonably
determines will, or is reasonably likely to, diminish the value of the Company
and its Subsidiaries taken as a whole by more than $25 million (other than to
the extent the Merger Price has been decreased for such change pursuant to
Section 1.11) or is reasonably likely to prevent the consummation of the
transactions contemplated by the Merger Agreement or the Subsidiary Merger.
(e) Consents. All consents and approvals from all federal, state and local
governmental agencies and other third parties reasonably required by Parent,
MergerCo or Merger Sub to consummate the transactions contemplated hereby shall
have been received.
(f) No Appraisal Rights. Holders of no more than seven percent (7%) of the
Company Common Stock shall be entitled to assert appraisal rights.
(g) Asset Disposition. The Company shall have consummated the Asset
Disposition in a manner reasonably satisfactory to Parent and MergerCo.
(h) Opinion of Counsel. The Company shall have furnished Parent, MergerCo
and Merger Sub with the opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.,
counsel for the Company, in substantially the form attached hereto as Exhibit D.
(i) Board of CCC. Four designees designated by MergerCo (if designated by
MergerCo) shall have been validly appointed to the Board of Directors of CCC in
place of the Company's four designees to such Board, which such Board shall
consist of not more than seven directors.
(j) Pricing Certificate. Parent shall have received a certificate,
reasonably acceptable to Parent, signed by the chief executive officer and chief
financial officer of the Company detailing the calculation of the amounts
necessary for each clause in Section 1.11 to calculate the Merger Price.
(k) CCC Acquisition. Neither CCC nor any of its Subsidiaries shall have
acquired, or shall have agreed to acquire, (by merger, consolidation or
acquisition of stock or assets) any material corporation, partnership or other
business organization or division thereof outside of the computer software or
data service industries.
SECTION 6.3 Additional Conditions to Obligation of the Company and WRV. The
obligations of the Company to effect the Merger and WRV to effect the Subsidiary
Merger are also subject to the satisfaction of the following conditions in all
material respects:
(a) Representations and Warranties. The representations and warranties of
MergerCo and Merger Sub contained in this Agreement shall be true and correct in
all respects at and as of the Effective Time, as if made at and as of such time,
except for (i) changes specifically contemplated by this Agreement, and (ii)
those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date) with
the same force and effect as if made at and as of the Effective Time, and the
Company shall have received a certificate to such effect signed by the chief
executive officer and the chief financial officer of MergerCo and Merger Sub;
and
(b) Agreements and Covenants. MergerCo and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Effective Time, and the Company shall have received a certificate to such effect
signed by the chief executive officer of MergerCo and Merger Sub;
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, notwithstanding approval thereof by the stockholders of
the Company:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent, MergerCo and the Company; or
(b) by Parent, MergerCo, Merger Sub, the Company or WRV if each of the
Merger and the Subsidiary Merger shall not have been consummated by April 30,
1998, which date may be extended by the Company for up to forty-five days with
the written consent of Parent, not to be unreasonably withheld, if the failure
to consummate the Merger is the result of delays in the review of the Proxy
Statement by the SEC, which delay is not the result of a material act or
omission of the Company (provided that the right to terminate this Agreement
under this Section 7.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date); or
(c) by Parent, MergerCo, Merger Sub, the Company or WRV if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
the SEC shall have issued a nonappealable final order, decree or ruling or taken
any other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger or the Subsidiary Merger (provided that the
right to terminate this Agreement under this Section 7.1(c) shall not be
available to any party who has not complied with its obligations under Section
5.5 and such noncompliance materially contributed to the issuance of any such
order, decree or ruling or the taking of such action); or
(d) by Parent, MergerCo or Merger Sub, if the requisite vote of the
stockholders of the Company shall not have been obtained at a duly held meeting
of such stockholders or any adjournment thereof by April 30, 1998, which date
may be extended by the Company for up to forty-five days with the written
consent of Parent, not to be unreasonably withheld, if the failure to hold such
meeting is the result of delays in the review of the Proxy Statement by the SEC,
which delay is not the result of a material act or omission of the Company; or
(e) by Parent, MergerCo, Merger Sub, the Company or WRV, if (i) the Board
of Directors of the Company shall have withdrawn, modified or changed its
approval or recommendation of this Agreement or the Merger in a manner adverse
to Parent or MergerCo, (ii) the Board of Directors of the Company shall have
recommended to the stockholders of the Company an Alternative Transaction (as
defined below); or (iii) a tender offer or exchange offer for 25% or more of the
outstanding shares of Company Common Stock is commenced (other than by Parent or
MergerCo or an affiliate of Parent or MergerCo) and the Board of Directors of
the Company recommends that the stockholders of the Company tender their shares
in such tender or exchange offer; provided, that, the Company shall not be
entitled to exercise any termination rights under this Section 7.1(e) unless the
Board of Directors of the Company determines in good faith upon written advice
of outside legal counsel that a failure to take any of the actions referred to
in (i), (ii) or (iii) above would have a significant possibility of constituting
a breach of their fiduciary duties to stockholders under applicable law.
As used herein, "Alternative Transaction" means any of (i) a transaction or
series of transactions pursuant to which any person (or group of persons) other
than Parent or MergerCo or their designated affiliates (a "Third Party")
directly or indirectly acquires or would acquire shares of Company Common Stock,
or other securities exchangeable for or convertible into shares of Company
Common Stock, in excess of 25% of the shares of Company Common Stock outstanding
as of the date hereof, whether from the Company or pursuant to a tender offer or
exchange offer or otherwise, (ii) any acquisition or proposed acquisition of the
Company or any of its Subsidiaries by a merger, acquisition of assets,
acquisition of stock or other business combination (whether or not the Company
or any of its significant Subsidiaries is the entity surviving any such merger
or business combination) or (iii) any other transaction pursuant to which any
Third Party acquires or would acquire control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of the Company and any
entity surviving any merger or business combination including any of them) of
the Company or any of its Subsidiaries having a fair market value equal to more
than 25% of the fair market value of all the assets of the Company immediately
prior to such transaction.
SECTION 7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and there shall be no further obligation on the part of any party hereto or any
of its affiliates, directors, officers or stockholders except (i) as set forth
in Section 7.3 hereof, and (ii) nothing herein shall relieve any party from
liability for any breach hereof occurring prior to termination.
SECTION 7.3 Expenses Upon Termination.
(a) The Company shall pay Parent the Parent's, MergerCo's and Merger Sub's
(including their affiliates) out-of-pocket expenses up to a maximum amount of
$1.5 million upon the termination of this Agreement by Parent, MergerCo, Merger
Sub, the Company or WRV pursuant to Section 7.1(b) (unless the failure to
consummate the Merger was solely as a result of a breach by Parent or MergerCo
of its obligations under this Agreement), Section 7.1(c) (only if the failure of
the Company to comply with its obligations under Section 5.5 materially
contributed to the issuance of the applicable order, decree or ruling or taking
of action), Section 7.1(d) or Section 7.1(e).
(b) Parent shall pay the Company the Company's out-of-pocket expenses up to
a maximum amount of $1.5 million upon the termination of this Agreement by
Parent, MergerCo or the Company pursuant to Section 7.1(b) (only if the failure
to consummate the Merger was solely as a result of a breach by Parent, MergerCo
or Merger Sub of its obligations under this Agreement) or 7.1(c) (only if the
failure of Parent, MergerCo or Merger Sub to comply with its obligations under
Section 5.5 materially contributed to the issuance of the applicable order,
decree or ruling or taking of action).
(c) The amounts payable pursuant to Section 7.3(a) or 7.3(b), as the case
may be, shall be paid within one business day after the termination of this
Agreement by Parent, MergerCo, Merger Sub, the Company or WRV pursuant to
Section 7.1(b), Section 7.1(c), Section 7.1(d) or Section 7.1(e).
(d) The payment of expenses pursuant to this Section 7.3 shall not be an
exclusive remedy in the event of a breach of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the consummation of the transactions contemplated hereby, but
shall terminate at the Closing, except for such agreements which expressly by
their terms survive the Closing.
SECTION 8.2 Investigations; Disclosure. Subject to Section 8.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. Any disclosure made with reference to one or more sections of
the Company Disclosure Schedule shall be deemed disclosed only with respect to
such section.
SECTION 8.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
of receipt, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent, MergerCo or Merger Sub, to such party at:
c/o Harvard Private Capital Group, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Xxxxx X. Xxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(b) If to the Company or WRV:
White River Corporation
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
President and Chief Executive Officer
Xxxxxxx X. X. Xxxxxx
Chief Financial Officer
With a copy to:
Xxxxxxxxx X. Xxx, Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECTION 8.4 Definitions. For purposes of this Agreement, the term:
(a) "Affiliates" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "Beneficial Owner" with respect to any shares of Company Common Stock
means a person who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares;
(c) "Business Day" means any day other than a day on which banks in The
Commonwealth of Massachusetts or New York City are required or authorized to be
closed;
(d) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "Generally Accepted Accounting Principles" shall mean United States
generally accepted accounting principles;
(f) "Historic Public Trading Price" means:
(i) with respect to a security which is listed on a recognized
securities exchange or the Nasdaq National Market System ("NMS"), the
average of the last sales prices (or, if no sale occurred on such date, at
the last "bid" price thereon) for each business day during the period
beginning on September 30, 1997 and ending on (and including) November 6,
1997; and
(ii) with respect to a security which is traded over-the-counter
(other than on the NMS), the average of the last "bid" prices for each
business day during the period beginning on September 30, 1997 and ending
on (and including) November 6, 1997.
(g) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act);
(h) "Public Trading Price" means:
(i) with respect to a security which is listed on a recognized
securities exchange or the NMS, the average of the last sales prices (or,
if no sale occurred on such date, at the last "bid" price thereon) for each
business day during the five business days ending on the day before the
satisfaction of all of the conditions in Section 6.2, other than Section
6.2(d), and of Sections 6.1(a) and (b); and
(ii) with respect to a security which is traded over-the-counter
(other than on the NMS), the average of the last "bid" prices for each
business day during the five business days ending on the day before the
satisfaction of all of the conditions in Section 6.2, other than Section
6.2(d), and of Sections 6.1(a) and (b).
(i) "Rights Agreement" means the Rights Agreement dated December 14, 1993
between the Company and First Chicago Trust Company of New York, as Rights
Agent; and
(j) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation or any other person means any of (i) any corporation, partnership,
joint venture or other legal entity of which the Company or the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity as well as (ii) CCC and its
Subsidiaries in the case of the Company.
(k) "wholly owned Subsidiary" shall mean, with respect to the Company, all
of the Company's Subsidiaries other than CCC and CCC's Subsidiaries.
SECTION 8.5 Definitions. The following terms are defined in the Sections
hereof listed below:
"Acceleration Payments" Section 4.8
"Acquisition Proposal" Section 4.2
"Agreement" Preamble
"Alternative Transaction" Section 7.1(e)
"Antitrust Division" Section 5.1
"Applicable Merger Price" Section 1.7(b)
"Asset Disposition" Recitals
"Benefit Costs" Section 2.11
"CCC" Section 2.2
"CCC Common Stock" Section 2.3(b)
"CCC SEC Reports" Section 2.7(a)
"CCC Series C Preferred Stock" Section 2.3(b)
"CCC Series D Preferred Stock" Section 2.3(b)
"CCC Series E Preferred Stock" Section 2.3(b)
"Certificate" Section 1.7(b)
"Certificate of Merger" Section 1.2
"Code" Section 1.7(d)
"Common Stock Merger Price" Section 1.11(a)
"Company" Preamble
"Company Common Stock" Recitals
"Company Deposit" Section 1.7(a)
"Company Disclosure Schedule" Section 2.3(a)
"Company Intangible Property Rights" Section 2.18(a)
"Company Permits" Section 2.6(b)
"Company Plans" Section 2.11
"Company SEC Reports" Section 2.7(a)
"Company Series A Preferred Stock" Recitals
"Company Series B Preferred Stock" Section 2.3(a)
"Company Stock" Recitals
"Company Stockholders Meeting" Section 2.13
"Deferral Plans" Section 4.3
"DGCL" Recitals
"Dissenting Shares" Section 1.7(e)
"Effective Time" Section 1.2
"Environmental Laws" Section 2.17
"ERISA" Section 2.11
"Exchange Act" Section 2.5(a)
"Exchange Agent" Section 1.7(a)
"Exchange Fund" Section 1.7(a)
"Excluded Assets" Recitals
"Excluded Liabilities" Recitals
"FTC" Section 5.1
"HSR Act" Section 2.5(d)
"Incentive Plan" Section 4.3
"IRS" Section 2.11
"Laws" Section 2.5(c)
"Liens" Section 2.3(a)
"Material Adverse Effect" Section 1.13
"Merger" Recitals
"MergerCo" Preamble
"Merger Price" Section 1.11(a)
"NWA Preferred" Section 2.7(c)
"Options" Section 2.7(c)
"Parent" Preamble
"PBGC" Section 2.11
"Proxy Statement" Section 2.13
"Purchasing LLC" Recitals
"SEC" Section 2.7(a)
"Securities Act" Section 2.3(a)
"September 30, 1997 Balance Sheet" Section 2.9
"September 30 Cash Amount" Section 2.7(c)
"Series A Merger Price" Section 1.7(b)
"Share" Recitals
"Statement of Assets" Section 1.11(b)
"Stockholders Agreement" Section 4.1(a)
"Surviving Corporation" Section 1.1(a)
"Tax" or "Taxes" Section 2.16(a)
"Tax Returns" Section 2.16(a)
"Third Party" Section 7.1(e)
SECTION 8.6 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
SECTION 8.7 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 8.8 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.9 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
SECTION 8.10 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
SECTION 8.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto by operation of law or otherwise, without the prior written consent of
the other parties, and any attempt to make any such assignment shall be null and
void.
SECTION 8.12 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, except as
specifically set forth in Section 5.10.
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
SECTION 8.15 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.16 Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the Company
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Company Disclosure Schedule
identifies the exception with particularity. Without limiting the generality of
the foregoing, the mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The parties hereto intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party hereto has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
SECTION 8.17 Expenses. Except as otherwise expressly provided herein,
Parent, MergerCo and the Company shall each pay all of their respective costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including without limitation, legal, accounting fees and
disbursements.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the Company, WRV, Parent, MergerCo and Merger Sub have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
WHITE RIVER CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Title: President & CEO
WHITE RIVER VENTURES, INC.
By: /s/ Xxxxxx X. Xxxxx
Title: President & CEO
DEMETER HOLDINGS CORPORATION
By: /s/ Xxxx X. Xxxxx
Title: Authorized Signatory
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
WRC MERGER CORP.
By: /s/ Xxxx X. Xxxxx
Title: Authorized Signatory
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
WRV MERGER CORP.
By: /s/ Xxxx X. Xxxxx
Title: Authorized Signatory
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
EXHIBIT A - EXCLUDED ASSETS
Hanover Accessories, Inc.
The following subsidiaries of the Company unless dissolved or merged out of
existence prior to the Effective Time: White River Partners, Inc., White River
Reinsurance Holdings, Ltd., White River Life Reinsurance, Ltd., and WR
Associates LLC.
An aggregate of $3.3 million of term notes of Hanover Accessories, Inc. held
by White River Partners, Inc. unless canceled without payment or otherwise paid
by Hanover Accessories, Inc.
An aggregate of $3.3 million of term notes of White River Partners, Inc. held
by White River Enterprises, Inc. unless canceled without payment or otherwise
paid by White River Partners, Inc.
EXHIBIT B
White River Corporation
Statement of Net Assets to be Sold
September 30, 1997
Statement of Net Assets to be Sold............................................2
Notes to Statement of Net Assets to be Sold...................................3
White River Corporation
Statement of Net Assets to be Sold***
September 30, 1997
Dollars in thousands
Assets
Cash and cash equivalents $ 191,164
Investment securities, at market value (adjusted cost: $33,577) 90,340
Other investments, at adjusted cost (fair value: $44,304) 21,848
Other assets 367
-----------
Total assets $ 303,719
Liabilities
Accrued expenses $ 3,468
Deferred income tax liability 18,218
Employee benefit liabilities 22,422
-----------
Total liabilities $ 44,108
-----------
Net assets to be sold $ 259,611
===========
The accompanying notes are an integral part of this
statement of net assets to be sold.
*** Note: This Statement of Net Assets to be Sold ("Statement of Assets")
is solely for the purpose of determining the consideration to be given
to the stockholders of White River pursuant to the Agreement and Plan
of Merger, dated as of December 11, 1997. Please note that this
Statement of Assets does not constitute all of the assets and
liabilities of White River which are set forth in White River's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
White River Corporation
Notes to Statement of Net Assets
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying statement of net assets to be sold includes the accounts of
White River Corporation ("White River" or the "Company"), exclusive of its
interests in and balances related to wholly owned subsidiaries or the accounts
of CCC Information Services Group, Inc. ("CCC") of which White River owns 36% of
the total outstanding shares at September 30, 1997. The Statement of Net Assets
to be Sold has been prepared in accordance with generally accepted accounting
principles ("GAAP") and in connection with the proposed sale of certain net
assets and is not intended to be a complete presentation of White River
Corporation's assets and liabilities. In addition, the Company has included the
deferred tax liability associated with the difference between the book and tax
basis of the net assets to be sold. Such liaiblity would transfer to the
acquirer only if the tax basis in such assets were to carryforward. The
Statement of Net Assets to be Sold includes all adjustments considered necessary
by management to fairly present the financial condition of the Company.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities as well as the disclosure of contingent assets and
liabilities as of the date of the financial statements. Actual results could
differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents as of September 30, 1997 consist primarily of
interest-bearing deposits with maturities of six days or less. The majority of
such deposits are held by major banking institutions.
Investments
Investments classified by White River as investment securities include certain
common shares, trust units and debt securities that are not restricted by
contract or governmental statute or regulation as to resale and which have
established fair market values. Investment securities as of September 30, 1997
include White River's interest in Cross Timbers common stock due to White
River's demand registration rights relating to such securities. White River
considers its investment securities to be available for sale.
Securities classified by White River as other investments are carried at
adjusted cost, which reflects such securities' carrying value immediately
preceding the adoption of SFAS No. 115, White River's internal valuation
techniques are intended to provide good faith estimates of the fair values of
the underlying securities for which objective market valuations are unavailable.
The actual amounts realized on disposition of these other investments may differ
significantly from such good faith estimates due to changes in facts and
circumstances which occur or become quantifiable subsequent to the time that
such estimates are made.
Incentive Compensation
White River ratably recognizes expense relating to its long-term incentive and
director compensation plans (see Notes 5, 6 and 7) over the applicable service
periods based upon projected future payments under these plans. For this
purpose, such projected future payments are determined using the current
end-of-period markets price of the Company's Common Stock.
Income taxes
The income taxes payable at September 30, 1997 is reduced by payments made to
the Internal Revenue Service by the Company on behalf of the Company and its
wholly owned subsidiaries.
The Company provides for deferred income taxes which reflect the tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. In
this context, the tax effect is measured using the statutory tax rate expected
to apply to taxable income in the periods in which the deferred tax liability or
asset is expected to be settled or realized. Furthermore, deferred tax assets
are recorded net of a valuation allowance if it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
NOTE 2. INVESTMENTS
Investment securities as of September 30, 1997 consisted of the following:
Adjusted Carrying
In thousands Cost Value
---------------------------------------- ------------- --------------
Cross Timbers Oil Company; common stock $ 30,780 $ 87,750
Other 2,797 2,590
------------- --------------
Total investment securities $ 33,577 $ 90,340
============= ==============
Other investments as of September 30, 1997 consisted of the following:
Adjusted Carrying
In thousands Cost Value
--------------------------------------- ------------- --------------
Xxxxxxx X. Xxxx & Associates - NWA
Partners, L.P.;
limited partnership interest $ 21,848 $ 21,848
------------- --------------
Total other investments $ 21,848 $ 21,848
============= ==============
As of September 30, 1997, the investment securities portfolio contained
unrealized gains of $56.8 million.
NOTE 3. ACCRUED EXPENSES
Accrued expenses as of September 30, 1997 consisted of the following:
In thousands
Accrued compensation $ 1,033
Income taxes payable 1,485
Accrued professional fees 917
Other 33
-------
Total accounts payable and accrued expenses $ 3,468
=======
NOTE 4. INCOME TAXES
Deferred income taxes reflect the tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
Significant components of the Company's deferred income tax assets and
liabilities as of September 30, 1997 measured using the Federal statutory tax
rate, are as follows:
In thousands
Deferred income tax assets related to:
Employee and director compensation accruals $ 8,209
Other 143
-------
Deferred income tax asset 8,352
-------
Deferred income tax liabilities related to:
Investments 26,570
-------
Deferred income tax liability 26,570
-------
Net deferred income tax liability $18,218
=======
NOTE 5. RETIREMENT PLANS
White River has established two non-qualified plans under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for the purpose of
providing deferred compensation benefits for certain management employees. The
White River Voluntary Deferred Compensation Plan (the "Deferred Compensation
Plan") and the White River Deferred Benefit Plan (together wth the Deferred
Compensation Plan, the "Retirement Plans") both became effective on December 31,
1993. The Retirement Plans are unfunded and the employees' right to receive
future payments thereunder represent an unsecured claim against the general
assets of White River. In the event that a change in control, as defined by the
Retirment Plans, occurs, the provisions of these plans require the White River
Board to cause the creation and funding by White River of a trust with cash
payments, shares of Common Stock, or a combination thereof sufficient to cover
the value of the plan's obligations. The recorded liabilities related to the
Retirement Plans totaled $15.3 million as of September 30, 1997.
Benefit payments made pursuant to the Retirement Plans will be made in cash or
shares of Common Stock (for certain balances) at the discretion of the
Compensation Committee of the White River Board (the "Compensation Committee").
NOTE 6. INCENTIVE COMPENSATION PLANS
The White River 1993 Incentive Compensation Plan (the "Incentive Plan") is a
non-qualified plan under ERISA and provides for granting to offices and key
employees of White River and its participating subsidiaries various types of
incentive awards including non-qualified and incentive stock options ("Stock
Options"), stock appreciation rights ("SARs"), and performance units
("Performance Units"). The Compensation Committee is responsible for the general
administration of the Incentive Plan. As of September 30, 1997, no Stock Options
or SARs have been awarded pursuant to the Incentive Plan.
Performance Units are conditional grants of a specified maximum number of shares
of Common Stock or equivalent amount of cash, payable at the end of a specified
period, subject to the achievement of specific financial goals and measures of
individual performance, as determined by the Compensation Committee. The
financial goal for full payment of Performance Units is a 15% annual return on
stockholders' equity ("XXX") measured as the change in book value per common and
common equivalent share (as adjusted for dividends paid, stock splits and other
adjustments necessary to reflect true economic value) over the applicable
performance period (the "Performance Target"). At an XXX of 15% or above,
Performance Units will become fully payable. At an XXX of less than 15%, the
percentage of Performance Units paid will be determined by the Compensation
Committee and may result in no payout at all.
NOTE 6. INCENTIVE COMPENSATION PLANS (continued)
A summary of Performance Unit award activity follows:
Number of
Performance Units
------------------
Outstanding as of December 31,1996 94,500
Awarded 7,500
Canceled (14,000)
------------------
Outstanding as of September 30, 1997 88,000
==================
The recorded liability related to the Incentive Plan totaled $2.0 million as of
September 30, 1997. All Performance Units outstanding as of September 30, 1997
expire on September 23, 1999.
NOTE 7. COMPENSATION OF DIRECTORS
At December 31, 1996, there were 99,865 shares outstanding related to
performance units granted to Directors (the "Director Performance Units"). Such
units vest based on the attainment of specific performance targets. On June 30,
1997, 64,865 performance units became fully vested and were transferred to the
Directors's Deferred Compensation Plan (see below). At September 30, 1997,
35,000 Director Performance Units remained outstanding. Such units would vest,
subject to the attainment of specific performance targets through September 23,
1999. The recorded liability related to the Director Performance Units was $0.8
million as of September 30, 1997.
Effective August 8, 1996, the White River Board adopted the White River
Directors' Deferred Compensation Plan (the "Directors Plan"). The Directors Plan
is similar to the Deferred Compensation Plan and allows Eligible Directors to
defer receipt of Directors' compensation. The Directors Plan will be unfunded
and the directors' right to receive future benefits thereunder will represent an
unsecured claim against the general assets of White River. As of September 30,
1997, the recorded liability related to the Directors Plan was $4.3 million.
NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments as of September
30, 1997 were as follows:
Carrying Fair
In thousands Value Value
------------ ----------
Financial assets:
Cash and cash equivalents $191,164 $191,164
Investment securities 90,340 90,340
Other investments 21,849 44,304
Other financial assets 301 301
============ ==========
Financial liabilities:
Other financial liaibilities $ 4,894 $ 4,894
============ ==========
The following methods and assumptions were used by White River to estimate the
fair value of each class of financial instruments for which it is practicable to
estimate such value:
Cash and Cash Equivalents. The carrying amount of these assets approximates or
equals their fair value.
Investment Securities and Other Investments. Fair values of investments
securities are based on quoted market prices which equal carrying value, and
fair values of other investments have been derived from quoted market values for
similar unrestricted securities or determined using internal appraisal
techniques and policies.
Other Financial Assets. This caption includes investment income receivable, and
certain other receivables. The carrying amount of these assets approximates
their fair value.
Other Financial Liaibilities. This caption includes payables on taxes due to
the federal and state governments, accruals for certain employee related
compensation and certain other payables. The carrying amount of these
liabilities approximates their fair value.
NOTE 9. COMMITMENTS AND CONTINGENCIES
The Company leases an office facility under the terms of a noncancelable
operating lease which expires on January 31, 1998. At September 30, 1997, future
minimum lease payments were as follows:
Dollars in thousands
Year ending December 31, Amount
--------------------------------------- --------------
1997 $ 52
1998 17
--------------
Total $ 69
==============
NOTE 10. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings in the ordinary course of
its business. The Company's management believes that the ultimate resolution of
these matters will not have a material effect on the Company's consolidated
financial position.
NOTE 11. SUBSEQUENT EVENT
On October 14, 1997, White River received a $26.3 million distribution on its
investment in the Xxxxxxx X. Xxxx & Associates - NWA Partners LP ("NWA
Partners"), which holds equity securities in Northwest Airlines Corporation
("NWA Corp."). The distribution represented White River's share of proceeds
arising primarily from the redemption of NWA Partners' investment in preferred
stock of NWA Corp., but also in part due to the sale of 0.7 million shares of
NWA Corp. common stock subject to a call option.
EXHIBIT C
INDEMNIFICATION AGREEMENT
This Agreement is made this ____ day of December, 1997, by and between
White River Corporation, a Delaware corporation (the "Company"), and
____________ ("Indemnitee").
WITNESSETH
WHEREAS, the By-laws of the Company, as of the date hereof, provides for
indemnification of officers and directors of the Company; and
WHEREAS, the Company is considering engaging in a business combination
transaction in which the ownership of the Company will be changed by merger; and
WHEREAS, the Company wished to create certainty as to the availability of
indemnification of its officers and directors prior to entering into such
business combination transaction; and
WHEREAS, the Company, in order to induce the Indemnitee to continue to
serve the Company, has agreed to provide the Indemnitee with the benefits
contemplated by this Agreement which benefits are intended to supplement any
benefits provided by the By-laws of the Company; and
WHEREAS, as a result of the provision of such benefits, the Indemnitee has
agreed to serve as [an officer][a director] of the Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continuing service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
(a) "Covered Amount" means any expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with a
Proceeding.
(b) "Excluded Claim" means payment made in connection with any claim:
(i) Based upon or attributable to Indemnitee gaining in fact any
personal profit or advantage to which Indemnitee is not
entitled; or
(ii) For the return by Indemnitee of any remuneration paid to
Indemnitee without the previous approval of the stockholders
of the Company which is illegal; or
(iii)For an accounting of profits in fact from the purchase or
sale by Indemnitee of securities of the Company within the
meaning of Section 16 of the Securities Exchange Act of
1934, as amended, or similar provisions of any state law; or
(iv) Resulting from Indemnitee's knowingly fraudulent, dishonest
or willful misconduct; or
(v) The payment of which the Company under this Agreement is not
permitted by applicable law to make.
(c) "Proceeding" means any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without
limitation, any action, suit or proceeding by or in the right of
the Company to procure a judgment in its favor).
2. Indemnification. The Company shall, to the fullest extent permitted by
applicable law as then in effect, indemnify Indemnitee if Indemnitee was or is
involved in any manner (including, without limitation, as a party or a witness)
or is threatened to be so involved in any Proceeding by reason of the fact that
he is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any employee benefit plan) against any Covered
Amounts, subject to the further provisions of this Agreement.
3. Excluded Coverage.
(a) The Company shall have no obligation to indemnify Indemnitee for
and hold him harmless from any Covered Amounts which have been
determined, by final adjudication by a court of competent
jurisdiction, to constitute an Excluded Claim.
(b) The Company shall have no obligation to indemnify Indemnitee and
hold Indemnitee harmless from any Covered Amounts to the extent
that Indemnitee is actually indemnified by the Company pursuant
to the Company's By-laws or otherwise indemnified.
4. Advancement of Expenses; Procedures; Presumptions and Effect of Certain
Proceedings; Remedies. In furtherance, but not in limitation of the foregoing
provisions, the following procedures, presumptions and remedies shall apply with
respect to advancement of expenses and the right to indemnification under this
Agreement:
(a) Advancement of Expenses. All reasonable expenses incurred by or
on behalf of the Indemnitee in connection with any Proceeding
shall be advanced to the Indemnitee by the Company within twenty
(20) days after the receipt by the Company of a statement or
statements from the Indemnitee requesting such advance or
advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements
shall reasonably evidence the expenses incurred by the Indemnitee
and, if required by law or requested by the Company at the time
of such advance, shall include or be accompanied by an
undertaking by or on behalf of the Indemnitee to repay the
amounts advanced if it should ultimately be determined that the
Indemnitee is not entitled to be indemnified against such
expenses pursuant to this Agreement.
(b) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Secretary of the Company a written
request, including such documentation and information as is
reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent Indemnitee
is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's
entitlement to indemnification shall be made not later than
one hundred twenty (120) days after receipt by the Company
of the written request for indemnification together with the
Supporting Documentation. The Secretary of the Company
shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors or its
designee in writing that the Indemnitee has requested
indemnification.
(ii) The Indemnitee's entitlement to indemnification under this
Agreement shall be determined in one of the following ways:
(A) by a majority vote of the Disinterested Directors (as
hereinafter defined), if they constitute a quorum of the
Board; (B) by a written opinion of Independent Counsel (as
hereinafter defined) if (x) a Change in Control (as
hereinafter defined) shall have occurred and the Indemnitee
so requests or (y) a quorum of the Board of Directors
consisting of Disinterested Directors is not attainable or,
even if attainable, a majority of such Disinterested
Directors so directs; (C) by the stockholders of the Company
(but only if a majority of the Disinterested Directors, if
they constitute a quorum of the Board of Directors, presents
the issue of entitlement to indemnification to the
stockholders for their determination); or (D) as provided in
Section 4(c).
(iii)In the event the determination of entitlement to
indemnification is to be made by Independent Counsel
pursuant to Section 4(b)(ii), a majority of the
Disinterested Directors shall select the Independent
Counsel, but only an Independent Counsel to which the
Indemnitee does not reasonably object; provided, however,
that if a Change in Control shall have occurred or if there
are no Disinterested Directors, the Indemnitee shall select
such Independent Counsel, but only an Independent Counsel to
which the Board of Directors does not reasonably object.
(c) Presumptions and Effect of Certain Proceedings. Except as
otherwise expressly provided in this Agreement, if a Change in
Control shall have occurred, the Indemnitee shall be presumed to
be entitled to indemnification under this Agreement upon
submission of a request for indemnification together with the
Supporting Documentation in accordance with Section 4(b)(i), and
thereafter the Company shall have the burden of proof to overcome
that presumption in reaching a contrary determination. In any
event, if the person or persons empowered under Section 4(b) to
determine entitlement to indemnification shall not have been
appointed or shall not have made a determination within one
hundred twenty (120) days after receipt by the Company of the
request therefor together with the Supporting Documentation, the
Indemnitee shall be deemed to be entitled to indemnification and
the Indemnitee shall be entitled to such indemnification unless
(A) the Indemnitee misrepresented or failed to disclose a
material fact in making the request for indemnification or in the
Supporting Documentation or (B) such indemnification is
prohibited by law. The termination of any Proceeding, or of any
claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, adversely affect the right of the
Indemnitee to indemnification or create a presumption that the
Indemnitee did not act in good faith and in a manner which the
Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal
Proceeding, that the Indemnitee had reasonable cause to believe
that the Indemnitee's conduct was unlawful.
(d) Remedies of Indemnitee.
(i) In the event that a determination is made, pursuant to
Section 4(b) that the Indemnitee is not entitled to
indemnification under this Agreement, (A) the Indemnitee
shall be entitled to seek an adjudication of his entitlement
to such indemnification either, at the Indemnitee's sole
option, in (x) an appropriate court of the State of Delaware
or any other court of competent jurisdiction or (y) an
arbitration to be conducted by a single arbitrator pursuant
to the rules of the American Arbitration Association; (B)
any such judicial Proceeding or arbitration shall be de novo
and the Indemnitee shall not be prejudiced by reason of such
adverse determination; and (c) if a Change in Control shall
have occurred, in any such judicial Proceeding or
arbitration the Company shall have the burden of proving
that the Indemnitee is not entitled to indemnification under
this Agreement.
(ii) If a determination shall have been made or deemed to have
been made, pursuant to Section 4(b) or (c), that the
Indemnitee is entitled to indemnification, the Company shall
be obligated to pay the amounts constituting such
indemnification within fifteen (15) business days after such
determination has been made or deemed to have been made and
shall be conclusively bound by such determination unless (A)
the Indemnitee misrepresented or failed to disclose a
material fact in making the request for indemnification or
in the Supporting Documentation or (B) such indemnification
is prohibited by law. (The events referred to in
subparagraph (A) and (B) are each referred to hereafter as a
"Disqualifying Event".) In the event that (x) advancement of
expenses is not timely made pursuant to Section 4(a) or (y)
payment of indemnification is not made within fifteen (15)
business days after a determination of entitlement to
indemnification has been made or deemed to have been made
pursuant to Section 4(b) or (c), the Indemnitee shall be
entitled to seek judicial enforcement of the Company's
obligation to pay to the Indemnitee such advancement of
expenses or indemnification. Notwithstanding the foregoing,
the Company may bring an action, in an appropriate court in
the State of Delaware or any other court of competent
jurisdiction, contesting the right of the Indemnitee to
receive indemnification hereunder due to the occurrence of a
Disqualifying Event; provided, however, that in any such
action the Company shall have the burden of proving the
occurrence of such Disqualifying Event.
(iii)The Company shall be precluded from asserting in any
judicial Proceeding or arbitration commenced pursuant to
this Section 4(d) that the procedures and presumptions of
this Agreement are not valid, binding and enforceable and
shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions
of this Agreement.
(iv) In the event that the Indemnitee, pursuant to this Section
4(d), seeks a judicial adjudication of or an award in
arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, the Indemnitee shall
be entitled to recover from the Company, and shall be
indemnified by the Company against, any expenses actually
and reasonably incurred by the Indemnitee if the Indemnitee
prevails in such judicial adjudication or arbitration. If it
shall be determined in such judicial adjudication or
arbitration that the Indemnitee is entitled to receive part
but not all of the indemnification or advancement of
expenses sought, the expenses incurred by the Indemnitee in
connection with such judicial adjudication or arbitration
shall be prorated accordingly.
(e) Definitions. For purposes of this Section 4:
(i) "Change in Control" means a change in control of the Company
of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 (the
"Act"), whether or not the Company is then subject to such
reporting requirement; provided that, without limitation,
such change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing thirty
(30) percent or more of the combined voting power of the
Company's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board
of Directors in office immediately prior to such
acquisition; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or
proxy contest, as a consequence of which members of the
Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the
Board of Directors thereafter; or (iii) during any period of
two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (including
for this purpose any new director whose election or
nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors
then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(ii) "Disinterested Director" means a director of the Company who
is not or was not a party to the Proceeding in respect of
which indemnification is sought by the Indemnitee.
(iii)"Independent Counsel" means a law firm or a member of a law
firm that neither presently is, nor in the past five years
has been, retained to represent: (A) the Company or the
Indemnitee in any matter material to either such party or
(B) any other party to the Proceeding giving rise to a claim
for indemnification under this Agreement. Notwithstanding
the foregoing, the term "Independent Counsel" shall not
include any person who, under the applicable standards of
professional conduct then prevailing under the law of the
State of Delaware, would have a conflict of interest in
representing either the Company or the Indemnitee in an
action to determine the Indemnitee's rights under this
Agreement.
5. Settlement. The Company shall have no obligation to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any Proceeding
effected without the Company's prior written consent. The Company shall not
settle any claim in any manner which would impose any fine or any obligation on
Indemnitee without Indemnitee's written consent. Neither the Company nor
Indemnitee shall unreasonably withhold their consent to any proposed settlement.
6. Rights Not Exclusive. The right of indemnification provided in this
Agreement shall not be exclusive of any other rights to which the Indemnitee may
otherwise be entitled, and the provisions of this Agreement shall inure to the
benefit of the heirs and legal representatives of the Indemnitee and shall be
applicable to Proceedings commenced or continuing after the execution of this
Agreement arising from acts or omissions occurring before or after such
execution and before any Change in Control becomes effective.
7. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
8. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
9. Assignment; Release. The Indemnitee hereby acknowledges and agrees that
the obligations and rights of the Company hereunder may be assumed at any time
on or after the date hereof by Demeter Holdings Corporation and by Indemnitee's
signature hereto, Indemnitee agrees that upon any such assumption, Indemnitee
will release and hold harmless the Company from and after such assumption from
any claim arising under this Agreement, provided that in the event that such
assumption shall occur within two years of a Change in Control, the assuming
party shall agree to hold net assets worth at least $50,000,000 for a period of
two years from the date such Change in Control becomes effective.
10. Amendment. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in a writing signed by each of the
parties hereto.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the day and year first above written.
WHITE RIVER CORPORATION
By: ________________________
Title:
----------------------------
"Indemnitee"
Attest:
By:_______________________
Title:
Witness
EXHIBIT D
1. Each of the Company and WRV is a corporation validly existing and in
good standing under the laws of the State of Delaware, has the corporate power
and authority to own, operate and lease its properties and to carry on its
business as now conducted.
2. Each of the Company and WRV has all requisite corporate power and
authority to execute, deliver and perform its respective obligations under the
Merger Agreement. The Merger Agreement has been duly authorized, executed and
delivered by each of the Company and WRV and constitutes the legal, valid and
binding obligation of each of the Company and WRV, enforceable against each in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, transfer, moratorium or other law
relating to or affecting creditors' rights generally and of general principles
of equity (regardless of whether such enforceability is conducted in a
proceeding at law or in equity).
3. None of the execution and delivery of the Merger Agreement by each of
the Company and WRV, the consummation of the Merger or the Subsidiary Merger or
the performance by each of the Company and WRV of its respective obligations
under the Merger Agreement will conflict with or constitute a violation under
the Certificate of Incorporation or by-laws of the Company or WRV, under any
law, rule or regulation applicable to the Company or WRV, or any judgment, order
or decree known to us of any court or governmental authority binding upon the
Company or WRV or either's properties or assets.
4. None of the execution and delivery of the Merger Agreement by each of
the Company and WRV, the consummation of the Merger or the Subsidiary Merger or
the performance by either of the Company or WRV of its respective obligations
under the Merger Agreement will conflict with, constitute a violation of or
result in a breach of or a default (or an event that, with notice or lapse of
time or both, would constitute a default) under, or cause or permit the
acceleration or modification of any rights or obligation under any agreement or
instrument listed in Section 2.5(a)(i) of the Company Disclosure Schedule or
listed as an exhibit to any Company SEC Reports.
5. No consent, approval, authorization, order, registration, qualification
or filing of or with any court or any regulatory, administrative or other
governmental body is required by the Company or WRV or with respect to their
respective assets or properties or otherwise for the consummation of the
transactions contemplated by the Merger Agreement that has not been obtained,
except for the filing of the Merger Certificates with respect to the Merger and
the Subsidiary Merger with the Secretary of State of the State of Delaware.
6. Upon the filing of the Merger Certificates with the Secretary of State
of the State of Delaware, each of the Merger and the Subsidiary Merger will be
effective under the laws of the State of Delaware, with the effects described in
the Merger Agreement.
We have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Proxy Statement, and
we do not pass upon and do not assume any responsibility for such statements or
information. In the course of the preparation by the Company of the Proxy
Statement, we have participated in discussions with officers and other
representatives of the Company and representatives of the independent public
accountants for the Company in which the business and affairs of the Company and
the contents of the Proxy Statement were discussed. On the basis of information
that we have gained in the course of our representation of the Company in
connection with the Company's preparation of the Proxy Statement and our
participation in the discussions referred to above, we believe that the Proxy
Statement, as of the date of the Proxy Statement and as of the time of the
approval of the stockholders of the Company required in connection with the
Merger, complied and complies as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder with respect to information concerning the Company and the Merger.
Based on such information and participation, we have no reason to believe that
the Proxy Statement, as of its date or the date hereof, contained or contains
any untrue statement of a material fact concerning the Company or the Merger or
omitted or omits to state any material fact concerning the Company or the Merger
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. We express no opinion, however, as to the
financial statements, including the notes and schedules thereto, or any other
financial or accounting information set forth, incorporated or referred to in
the Proxy Statement.
EXHIBIT E
20,777 common shares and options to purchase 25,972 common shares of Faneuil
ISG, Inc.
The Company's rights to any net proceeds from the Escrow Agreeement, dated July
31, 1996, by and among Precision CastParts Corp., those individuals and/or
holders of the capital stock of NewFlo Corporation, and Republic National Bank
of New York, as Escrow Agent.
The Company's rights to its share of any recovery in respect of any claims Rocky
Mountain Financial Corporation might have against governmental entities
regarding the loss of supervisory goodwill as a result of the passage of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989. The
Company's rights are derived in connection with a 1994 stock purchase agreement
for the sale of Rocky Mountain to Metropolitan Federal Bank.
The right to receive 75% of the reduction, if any, in tax liability resulting
from the Surviving Corporation taking the position, at the Surviving
Corporation's option and in its sole discretion, on any of its federal tax
returns that the basis in the Company's interest in the Partnership is such that
the Surviving Corporation's federal tax liability resulting from distributions
made at any time by the Partnership is less than it would have been had the
Surviving Corporation claimed no basis in its interest in the Partnership on its
federal tax returns in excess of its allocable share of the income reported by
the partnership for such year. Any amount payable as a consequence of such
reduction in tax liability shall be paid to the Liquidating Trust as a purchase
price adjustment.
