Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
XXXXXXX INDUSTRIES, INC.,
CS ACQUISITION CORP.,
and
STEEL PARTNERS II, L.P.
dated as of
September 26, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER...........................................................1
SECTION 1.1 THE MERGER.................................................1
SECTION 1.2 EFFECTIVE TIME.............................................1
SECTION 1.3 EFFECTS OF THE MERGER......................................2
SECTION 1.4 CONVERSION OF COMMON SHARES................................2
SECTION 1.5 INTENTIONALLY DELETED......................................2
SECTION 1.6 OPTIONS; STOCK PLANS.......................................2
SECTION 1.7 SHAREHOLDERS' MEETING......................................3
SECTION 1.8 CLOSING....................................................3
ARTICLE II THE SURVIVING CORPORATION...........................................4
SECTION 2.1 ARTICLES OF INCORPORATION..................................4
SECTION 2.2 BYLAWS.....................................................4
SECTION 2.3 DIRECTORS..................................................4
SECTION 2.4 OFFICERS...................................................4
ARTICLE III DISSENTING SHARES; PAYMENT FOR SHARES..............................4
SECTION 3.1 DISSENTING SHARES..........................................4
SECTION 3.2 PAYMENT FOR COMMON SHARES..................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES...............7
SECTION 4.2 CHARTER; BYLAWS AND RIGHTS AGREEMENT.......................7
SECTION 4.3 CAPITALIZATION.............................................7
SECTION 4.4 AUTHORITY..................................................9
SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS................10
SECTION 4.6 SEC REPORTS AND FINANCIAL STATEMENTS......................11
SECTION 4.7 ENVIRONMENTAL MATTERS.....................................12
SECTION 4.8 COMPLIANCE WITH APPLICABLE LAWS...........................13
SECTION 4.9 LITIGATION................................................14
SECTION 4.10 INFORMATION...............................................14
SECTION 4.11 CERTAIN APPROVALS.........................................14
SECTION 4.12 EMPLOYEE BENEFIT PLANS....................................14
SECTION 4.13 INTELLECTUAL PROPERTY.....................................16
SECTION 4.14 TAXES.....................................................17
SECTION 4.15 ABSENCE OF CERTAIN CHANGES................................19
SECTION 4.16 LABOR AND EMPLOYMENT MATTERS..............................20
SECTION 4.17 RIGHTS AGREEMENT..........................................22
SECTION 4.18 BROKERS...................................................22
SECTION 4.19 OPINION OF FINANCIAL ADVISOR..............................23
SECTION 4.20 MATERIAL CONTRACTS........................................23
SECTION 4.21 TITLE TO PROPERTIES.......................................23
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SECTION 4.22 ACCOUNTS RECEIVABLE.......................................24
SECTION 4.23 RESTRICTIONS ON BUSINESS ACTIVITIES.......................24
SECTION 4.24 REPRESENTATIONS COMPLETE..................................24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER..........24
SECTION 5.1 ORGANIZATION AND QUALIFICATION............................24
SECTION 5.2 AUTHORITY.................................................25
SECTION 5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS................25
SECTION 5.4 INFORMATION...............................................26
SECTION 5.5 FINANCING.................................................26
SECTION 5.6 STOCK OWNERSHIP...........................................26
SECTION 5.7 PURCHASER'S OPERATIONS....................................26
SECTION 5.8 REPRESENTATIONS COMPLETE..................................26
SECTION 5.9 SOLVENCY..................................................27
ARTICLE VI COVENANTS..........................................................27
SECTION 6.1 CONDUCT OF BUSINESS OF THE COMPANY........................27
SECTION 6.2 ACCESS TO INFORMATION.....................................30
SECTION 6.3 EFFORTS...................................................31
SECTION 6.4 PUBLIC ANNOUNCEMENTS......................................32
SECTION 6.5 EMPLOYEE BENEFIT ARRANGEMENTS.............................32
SECTION 6.6 INDEMNIFICATION...........................................33
SECTION 6.7 NOTIFICATION OF CERTAIN MATTERS...........................34
SECTION 6.8 RIGHTS AGREEMENT..........................................34
SECTION 6.9 STATE TAKEOVER LAWS.......................................34
SECTION 6.10 NO SOLICITATION...........................................34
SECTION 6.11 SHAREHOLDER LITIGATION....................................36
SECTION 6.12 RESIGNATIONS..............................................36
SECTION 6.13 TERMINATION OF CERTAIN INSURANCE POLICIES.................36
SECTION 6.14 SEVERANCE PAYMENTS........................................36
SECTION 6.15 DISMISSAL OF LAWSUIT......................................36
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER..........................36
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS....................36
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE PARENT...................37
SECTION 7.3 CONDITION TO OBLIGATIONS OF THE COMPANY...................38
SECTION 7.4 FRUSTRATION OF CONDITIONS.................................38
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER..................................38
SECTION 8.1 TERMINATION...............................................38
SECTION 8.2 EFFECT OF TERMINATION.....................................39
SECTION 8.3 FEES AND EXPENSES.........................................40
SECTION 8.4 AMENDMENT.................................................40
SECTION 8.5 EXTENSION; WAIVER.........................................41
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ARTICLE IX MISCELLANEOUS......................................................41
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.41
SECTION 9.2 ENTIRE AGREEMENT; ASSIGNMENT..............................41
SECTION 9.3 VALIDITY..................................................42
SECTION 9.4 NOTICES...................................................42
SECTION 9.5 GOVERNING LAW.............................................43
SECTION 9.6 DESCRIPTIVE HEADINGS......................................43
SECTION 9.7 COUNTERPARTS..............................................43
SECTION 9.8 PARTIES IN INTEREST.......................................43
SECTION 9.9 DEFINITIONS...............................................43
SECTION 9.10 SPECIFIC PERFORMANCE......................................46
EXHIBITS
Exhibit A Voting Agreement
SCHEDULES
SCHEDULE 4.1 ORGANIZATION AND QUALIFICATION OF SUBSIDIARIES
SCHEDULE 4.3(b) OUTSTANDING OPTIONS
SCHEDULE 4.3(d) RESTRICTED STOCK
SCHEDULE 4.3(h) INDEBTEDNESS
SCHEDULE 4.3(j) LIST OF SUBSIDIARIES; JOINT VENTURES; INDEMNITY AGREEMENTS
SCHEDULE 4.5(a) COMPANY'S REQUIRED FILINGS AND CONSENTS
SCHEDULE 4.6(a) SEC REPORTS
SCHEDULE 4.6(b) BALANCE SHEET INFORMATION
SCHEDULE 4.6(c) MATERIAL LIABILITIES
SCHEDULE 4.7 ENVIRONMENTAL MATTERS
SCHEDULE 4.9 LITIGATION
SCHEDULE 4.12(a) EMPLOYEE BENEFIT PLANS
SCHEDULE 4.12(c) QUALIFIED PLANS
SCHEDULE 4.12(e) MULTIEMPLOYER PLANS
SCHEDULE 4.12(f) RETIREE HEALTH AND WELFARE BENEFITS
SCHEDULE 4.12(h) PAYMENTS OR BENEFITS TO COMPANY EMPLOYEES
SCHEDULE 4.12(i) AMENDMENTS TO EMPLOYMENT AGREEMENTS OR STOCK OPTION AGREEMENTS
SCHEDULE 4.14(a) TAXES
SCHEDULE 4.15(f) ABSENCE OF CERTAIN CHANGES
SCHEDULE 4.16(a) LABOR AND EMPLOYMENT CLAIMS
SCHEDULE 4.16(d) OFFICER AND DIRECTOR INFORMATION
SCHEDULE 4.18 FEES AND EXPENSES
SCHEDULE 4.20 MATERIAL CONTRACTS
SCHEDULE 4.21 REAL PROPERTY
SCHEDULE 4.23 RESTRICTIONS ON BUSINESS ACTIVITIES
SCHEDULE 6.1 CONDUCT OF BUSINESS OF THE COMPANY
SCHEDULE 6.13 INSURANCE POLICIES
SCHEDULE 6.14 SEVERANCE EXPENSES
SCHEDULE 7.2(d) CONSENTS
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of September
26, 2006, by and among STEEL PARTNERS II, L.P., a Delaware limited partnership
(the "PARENT"), CS ACQUISITION CORP., a Missouri corporation and a subsidiary of
the Parent (the "PURCHASER"), and XXXXXXX INDUSTRIES, INC., a Missouri
corporation (the "COMPANY").
WHEREAS, the general partner of the Parent and the respective Boards of
Directors of the Purchaser and the Company have approved and adopted, and deem
it advisable and in the best interests of their respective limited partners and
shareholders to consummate, the merger of the Purchaser with and into the
Company, as set forth herein (the "MERGER"), in accordance with The General and
Business Corporation Law of Missouri (the "GBCL") and upon the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, and as a condition and inducement to the Parent's and the Purchaser's
willingness to enter into this Agreement, certain shareholders of the Company
(each, a "SHAREHOLDER") are each entering into a Voting Agreement (the "VOTING
AGREEMENT") in the form attached hereto as EXHIBIT A, pursuant to which each
such Shareholder has agreed, among other things, to grant the Parent a proxy
with respect to the voting of such Shares in favor of the Merger upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Parent, the Purchaser and the Company desire to make
certain representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties and agreements set forth herein, the Parent, the
Purchaser and the Company agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
Upon the terms and subject to the satisfaction or waiver of the
conditions hereof, and in accordance with the applicable provisions of the GBCL,
at the Effective Time the Purchaser will be merged with and into the Company.
Following the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the surviving corporation (the "SURVIVING
CORPORATION").
SECTION 1.2 EFFECTIVE TIME.
Subject to the provisions of this Agreement, on the Closing Date, the
parties hereto will consummate the Merger, in the manner required by the GBCL,
by delivering articles of merger to the Secretary of State of the State of
Missouri, and take such other and further actions as may be required by law to
cause the Merger to become effective. The time the Merger becomes effective is
referred to herein as the "EFFECTIVE TIME."
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SECTION 1.3 EFFECTS OF THE MERGER.
The Merger will have the effects set forth in the GBCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and the Purchaser will vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and the Purchaser will become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.4 CONVERSION OF COMMON SHARES.
At the Effective Time, by virtue of the Merger and without any action
on the part of the Parent, the Purchaser, the Company or any holders thereof,
each share of the Company's common stock, par value $.10 per share (the "COMMON
SHARES") and the one share of Non-Redeemable Common Stock, issued and
outstanding immediately prior to the Effective Time (other than (i) Dissenting
Shares and (ii) any Common Shares in the treasury of the Company or by any
wholly owned subsidiary of the Company, which Common Shares, by virtue of the
Merger and without any action on the part of the holder thereof, will be
cancelled and retired and will cease to exist with no payment being made with
respect thereto) will be cancelled and retired and will be converted into the
right to receive $12.50 in cash (the "MERGER PRICE"), payable to the holder
thereof, without interest thereon, upon surrender of the certificate formerly
representing such Common Share.
SECTION 1.5 INTENTIONALLY DELETED.
SECTION 1.6 OPTIONS; STOCK PLANS.
Prior to the Effective Time, the Board of Directors of the Company (the
"COMPANY BOARD") (or, if appropriate, any committee thereof) will adopt
appropriate resolutions and take all other actions necessary or desirable
(including effecting all necessary amendments to the Stock Plans and Options and
obtaining all applicable consents from optionees) to provide for the
cancellation, effective at the Effective Time, of all of the outstanding stock
options (the "OPTIONS") heretofore granted under any stock option or similar
plan of the Company (the "STOCK PLANS") or under any agreement, without any
payment therefor except as otherwise provided in this Section 1.6.
(a) Immediately prior to the Effective Time, each of the
Options (whether vested or unvested) which are listed in SCHEDULE
4.3(B) of the disclosure schedule delivered to the Parent by the
Company prior to the date hereof (the "COMPANY DISCLOSURE SCHEDULE"),
which list includes all outstanding Options, will be vested and
canceled, to the extent such Option remains outstanding as of
immediately prior to the Effective Time (and to the extent exercisable
will no longer be exercisable) and will entitle the holder thereof, in
cancellation and settlement therefor, to a payment, if any, in cash by
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the Company (less any applicable withholding taxes) equal to the
product of (i) the total number of Common Shares subject to such Option
(without regard to whether such Option was vested or unvested) and (ii)
the excess, if any, of the Merger Price over the exercise price per
Common Share subject to such Option (the "CASH ----- Payment");
provided that no such payment will be due until following such time
that the Company has delivered to the Parent a true and complete list
of the Options which remain outstanding as of immediately prior to the
Effective Time. If the exercise price per share of any Option equals or
exceeds the Merger Price, the Cash Payment therefor shall be zero.
Notwithstanding the foregoing, payment of the Cash Payment is subject
to written acknowledgment, in a form acceptable to the Surviving
Corporation, delivered within five (5) days after the date hereof and
conditioned on Closing, that no further payment is due to such holder
on account of any Option and all of such holder's rights under such
Options have terminated.
(b) The Company represents, warrants and covenants that, prior
to the Effective Time, the Company Board will take all necessary action
to terminate the 1995 Stock Option Plan and the 1997 Omnibus Incentive
Plan, and all other Stock Plans and any other plan, program or
arrangement, including under employment agreements, providing for the
issuance or grant of Options or any other interest in respect of the
Capital Stock of the Company or any subsidiary in each case effective
prior to the Effective Time.
(c) The Company and the Parent agree that the Cash Payments
are the sole payments that will be made with respect to or in relation
to the Options.
SECTION 1.7 SHAREHOLDERS' MEETING.
The Company, acting through the Company Board, will, in accordance with
applicable law:
(a) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "SPECIAL Meeting") as soon as
practicable following the execution of this Agreement for the purpose
of considering and taking action upon this Agreement;
(b) prepare, in consultation with the Parent, a proxy
statement (the "PROXY STATEMENT") to be mailed to its shareholders to
obtain the necessary approvals of the Merger and adoption of this
Agreement by its shareholders; and
(c) subject to Section 6.3(c), include in the Proxy Statement
the recommendation of the Company Board that shareholders of the
Company vote in favor of the approval of the Merger and adoption of
this Agreement.
SECTION 1.8 CLOSING.
The closing of the Merger (the "CLOSING") will take place at 10:00
a.m., on a date to be specified by the parties, which will be as soon as
practicable, but in no event later than the third business day, after
satisfaction or waiver of all of the conditions set forth in Article VII hereof
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(the "CLOSING DATE"), at the offices of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx &
Wolosky LLP, or at such other time, date or place as the parties may agree. The
parties will use commercially reasonable efforts to cause the Closing to occur
on or before October 31, 2006.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 ARTICLES OF INCORPORATION.
The Articles of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, will be the Articles of Incorporation
of the Surviving Corporation until thereafter amended in accordance with the
provisions thereof and hereof and applicable law; provided that the name of the
Surviving Corporation will be "Xxxxxxx Industries, Inc."
SECTION 2.2 BYLAWS.
Subject to the provisions of Section 6.6 of this Agreement, the Bylaws
of the Purchaser in effect at the Effective Time will be the Bylaws of the
Surviving Corporation until amended in accordance with the provisions thereof
and applicable law.
SECTION 2.3 DIRECTORS.
Subject to applicable law, the directors of the Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and will hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
SECTION 2.4 OFFICERS.
The officers of the Company immediately prior to the Effective Time
will be the initial officers of the Surviving Corporation.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1 DISSENTING SHARES.
Notwithstanding Section 1.4, Common Shares outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal for
such Common Shares in accordance with the GBCL ("DISSENTING SHARES") will not be
converted into a right to receive the Merger Price and the holder thereof will
be entitled only to such rights as are granted by the GBCL, unless such holder
fails to perfect or withdraws or otherwise loses such holder's right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses such holder's right to appraisal, such Common Shares will be treated as
if they had been converted as of the Effective Time into a right to receive the
Merger Price, and such Common Shares will not then be deemed to be Dissenting
Shares under this Agreement. The Company will give the Parent prompt notice of
any demands received by the Company for appraisal of Common Shares and any
4
objections to the Merger, and the Parent will have the right to conduct all
negotiations and proceedings with respect to such demands. The Company will not,
except with the prior written consent of the Parent, make any payment with
respect to, or settle or offer to settle, or otherwise negotiate, any such
demands.
SECTION 3.2 PAYMENT FOR COMMON SHARES.
(a) At Closing, the Parent or the Purchaser will deposit, or
cause to be deposited, in trust with such bank or trust company as is
mutually acceptable to the Parent and the Company (the "PAYING AGENT")
the aggregate Merger Price to which holders of Common Shares will be
entitled at the Effective Time pursuant to Section 1.4. On the Closing
Date, the Paying Agent will invest the funds deposited with it pursuant
to this Section in money market securities or similar type investments
as the Parent may direct. From and after the Effective Time, the Paying
Agent will effect the payment of the Merger Price in respect of
certificates (the "CERTIFICATES") that, prior to the Effective Time,
represented Common Shares entitled to payment of the Merger Price
pursuant to Section 1.4.
(b) Promptly after the Effective Time, the Paying Agent will
mail to each record holder of Certificates as of the Effective Time, a
form of letter of transmittal approved by the Parent which will specify
that delivery will be effected, and risk of loss and title to the
Certificates will pass, only upon proper delivery of the Certificates
to the Paying Agent and instructions for use in surrendering such
Certificates and receiving the Merger Price in respect thereof. Upon
the surrender of each such Certificate together with a properly
completed and executed letter of transmittal, the Paying Agent will pay
to the holder of such Certificate the Merger Price multiplied by the
number of Common Shares formerly represented by such Certificate, in
consideration therefor, and such Certificate will forthwith be
cancelled. Until so surrendered, each such Certificate (other than
Dissenting Shares or Certificates representing Common Shares held by
the Parent or the Purchaser, any wholly owned subsidiary of the Parent
or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company) will represent solely the right to receive
the aggregate Merger Price relating thereto. No interest or dividends
will be paid or accrued on the Merger Price. If the Merger Price (or
any portion thereof) is to be delivered to any person other than the
person in whose name the Certificate surrendered is registered, it will
be a condition to such right to receive such Merger Price that the
Certificate so surrendered be properly endorsed or otherwise be in
proper form for transfer and that the person surrendering such
Certificate will pay to the Paying Agent any transfer or other taxes
required by reason of the payment of the Merger Price to a person other
than the registered holder of the Certificate surrendered, or establish
to the satisfaction of the Paying Agent that such taxes have been paid
or are not applicable.
(c) Promptly after the Surviving Corporation's request
therefor made at any time following the date which is 180 days after
the Effective Time, the Paying Agent will deliver to the Surviving
Corporation all cash, Certificates and other documents in its
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possession relating to the transactions described in this Agreement,
and upon such delivery the Paying Agent's duties will terminate.
Thereafter, each holder of a Certificate may surrender such Certificate
to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in consideration therefor
the aggregate Merger Price relating thereto, without any interest or
dividends thereon. Notwithstanding the foregoing, none of the Parent,
the Purchaser, the Company or the Paying Agent will be liable to any
person in respect of any cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(d) After the Effective Time, there will be no transfers on
the stock transfer books of the Surviving Corporation of any Common
Shares which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent, they will be surrendered and
cancelled in return for the payment of the aggregate Merger Price
relating thereto, as provided in this Article III.
(e) In the event any Certificates shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate(s) to be lost, stolen or destroyed,
the Paying Agent will disburse the Merger Price payable in respect of
the Common Shares represented by such lost, stolen or destroyed
Certificates.
(f) The Purchaser shall be entitled to deduct and withhold, or
cause the Paying Agent to deduct and withhold, from the Merger Price
payable to a holder of Common Shares pursuant to the Merger any such
amounts as are required under the Internal Revenue Code of 1986, as
amended (the "CODE"), or any applicable provision of state, local or
foreign Tax law. To the extent that amounts are so withheld by the
Purchaser or Paying Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
Common Shares in respect of which such deduction and withholding was
made by the Purchaser.
(g) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of the Purchaser or the Company or
otherwise carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in
the name and on behalf of the Purchaser or the Company, all such deeds,
bills of sale, assignments and assurances and to take and do, in the
name and on behalf of the Purchaser or the Company, all such other
actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or otherwise
to carry out this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company makes these representations and warranties set forth in
this Article IV, except as set forth in the Company Disclosure Schedules, to the
Parent and the Purchaser. Items disclosed in one particular section of the
Company Disclosure Schedules shall be deemed to be constructively disclosed or
listed in other sections of the Company Disclosure Schedules to the extent that
it is reasonably apparent that the disclosure relates to such other sections.
The fact that any item of information is contained in the Company Disclosure
Schedules shall not be construed as an admission of liability under any
applicable law, or to mean that such information is material.
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Missouri. Except as set forth in
SCHEDULE 4.1 of the COMPANY DISCLOSURE SCHEDULE, each of the Company's
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
and each of its subsidiaries has the requisite corporate power and authority to
own, operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified or licensed to do business, and is in
good standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failure to have such power or
authority, or the failure to be so qualified, licensed or in good standing,
would not have a Material Adverse Effect on the Company. The term "MATERIAL
ADVERSE EFFECT ON THE COMPANY," as used in this Agreement, means any change in
or effect on the business, financial condition, results of operation or
prospects of the Company or any of its subsidiaries that could reasonably be
expected to have a material adverse effect on the Company and its subsidiaries
taken as a whole or could reasonably be expected to prevent or materially delay
consummation of the Merger; provided that the foregoing shall not include any
change or effect that results or arises from or relates to changes in (A)
general economic or market conditions, except to the extent they have a
disproportionate impact on the Company, or prevailing interest rates, (B)
conditions generally affecting the industry in which the Company or any of its
subsidiaries operates, or (C) laws, regulations or accounting standards,
principles or interpretations.
SECTION 4.2 CHARTER; BYLAWS AND RIGHTS AGREEMENT.
The Company has heretofore made available to the Parent and the
Purchaser a complete and correct copy of the articles of incorporation and the
bylaws or comparable organizational documents, each as amended as of the date of
this Agreement, of the Company and each of its subsidiaries and has made
available a complete and correct copy of the Rights Agreement, dated as of May
25, 2006 between the Company and Mellon Investor Services LLC, as Rights Agent
(as amended through the date hereof, the "RIGHTS AGREEMENT").
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SECTION 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
Seventeen Million (17,000,000) Common Shares, One (1) share of
Non-Redeemable Common Stock and Two Million Nine Hundred Ninety-Nine
Thousand Nine Hundred Ninety-Nine (2,999,999) shares of Capital Stock,
par value $.10 per share (the "CAPITAL STOCK"), of which Seven Hundred
Fifty Thousand (750,000) shares are designated as Series A Junior
Participating Preferred Stock, par value $.10 per share (the "PREFERRED
STOCK"). As of the close of business on the date of this Agreement,
6,343,375 Common Shares were issued and outstanding, all of which are
entitled to vote on this Agreement, and no Common Shares were held in
treasury. As of the close of business on the date of this Agreement
there were no shares of Capital Stock issued and outstanding. As of the
close of business on the date of this Agreement there were no shares of
Preferred Stock issued and outstanding. The Company has no shares
reserved for issuance, except that, as of the date of this Agreement,
there were 113,300 Common Shares reserved for issuance pursuant to
outstanding Options granted under the Stock Plans and there were Seven
Hundred Fifty Thousand shares of Preferred Stock reserved for issuance
upon exercise of the rights issued pursuant to the Rights Agreement
(the "Rights").
(b) SCHEDULE 4.3(B) of the COMPANY DISCLOSURE SCHEDULE sets
forth the holder of each outstanding Option and the number of shares,
exercise price and expiration date of each grant to such holder. Except
as set forth in SCHEDULE 4.3(B) of the COMPANY DISCLOSURE SCHEDULE,
since June 30, 2006, the Company has not granted any Options or issued
any shares of Capital Stock except pursuant to the exercise of Options
outstanding as of such date. All the outstanding Common Shares are, and
all Common Shares which may be issued pursuant to the exercise of
outstanding Options will be, when issued and paid for in accordance
with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable and are not subject to, nor were they
issued in violation of, any preemptive rights.
(c) There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into
securities having such rights) ("VOTING DEBT") of the Company or any of
its subsidiaries issued and outstanding.
(d) Except as set forth above or in SCHEDULE 4.3(D) of the
COMPANY DISCLOSURE SCHEDULES or for the Rights and except for the
transactions contemplated by this Agreement, there are no existing
options, warrants, calls, subscriptions 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 subsidiaries,
obligating the Company or any of its subsidiaries to issue, transfer or
sell or cause to be issued, transferred or sold, or providing for the
vesting of, any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests and neither the Company nor any of its subsidiaries is
obligated to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or
commitment.
(e) Except as contemplated by this Agreement or the Rights
Agreement, there are no outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Common Shares or the capital stock of the Company or any of
its subsidiaries.
8
(f) Except as contemplated by this Agreement or the Voting
Agreements, there are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the
voting of the Company's Common Shares.
(g) At and after the Effective Time, no holder of Options will
have any right to receive shares of capital stock of the Surviving
Corporation upon exercise of Options.
(h) Except as disclosed in SCHEDULE 4.3(H) of the COMPANY
DISCLOSURE SCHEDULE, no Indebtedness of the Company or its subsidiaries
contains any prohibition of, or prepayment penalty upon, the prepayment
of any of such Indebtedness. As used in this Section 4.3(h),
"Indebtedness" means (A) all indebtedness for borrowed money or for the
deferred purchase price of property or services including unpaid
installments of the purchase price for fixed assets purchased under
installment arrangements (other than current trade liabilities incurred
in the ordinary course of business and payable in accordance with
customary practices), (B) any other indebtedness that is evidenced by a
note, bond, debenture or similar instrument, (C) all obligations under
financing leases, (D) all obligations in respect of acceptances issues
or created, and (E) all liabilities secured by any lien on any
property.
(i) Except for the right of first refusal granted to the
Company with respect to the redeemable Common Shares pursuant to the
articles of incorporation of the Company, each of the outstanding
shares of capital stock of the Company and of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and 100% of such shares of the Company's subsidiaries
are owned by the Company or by a subsidiary of the Company in each case
free and clear of any lien, claim, option, charge, security interest,
limitation, encumbrance and restriction of any kind (any of the
foregoing being a "LIEN").
(j) Set forth in SCHEDULE 4.3(J) of the COMPANY DISCLOSURE
SCHEDULE is a complete and correct list of each subsidiary of the
Company and each joint venture or partnership in which the Company or
any of its subsidiaries has an interest (and the amounts and
percentages of any such interests) and each such subsidiary, joint
venture and partnership that has been closed or sold (i) in the
five-year period preceding the date hereof or (ii) to the actual
knowledge of the Company, in respect of which the Company or any of its
subsidiaries provided indemnities, for representations and warranties
(including as to environmental matters) or otherwise for which
liabilities remain outstanding as of the date of this Agreement.
SECTION 4.4 AUTHORITY.
The Company has all necessary corporate power and authority to execute
and deliver this Agreement 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 transactions contemplated hereby have been
duly and validly authorized and approved by the Company Board and no other
9
corporate proceedings on the part of the Company are necessary to authorize or
approve this Agreement or to consummate the transactions contemplated hereby and
thereby, other than the approval of this Agreement and the Merger by the
affirmative vote of the holders of two-thirds of the then outstanding Common
Shares entitled to vote thereon (the "REQUISITE VOTE"). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement by the Parent and
the Purchaser, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming (i) the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR ACT") are made and the
waiting periods thereunder have been terminated or have expired, (ii)
the filing of the articles of merger and other appropriate merger
documents, if any, as required by the GBCL, is made, and (iii) approval
of this Agreement by the Requisite Vote of the shareholders, none of
the execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (A)
conflict with or violate the articles of incorporation or bylaws of the
Company or the comparable organizational documents of any of its
subsidiaries, (B) except as set forth in SCHEDULE 4.5(A) of the COMPANY
DISCLOSURE SCHEDULE, result in a breach or violation of, a default
under or the triggering of any payment or the increase in any other
obligations pursuant to, any of the Company's existing Employee Benefit
Arrangements (as hereinafter defined) or any grant or award made under
any of the Employee Benefit Arrangements, (C) to the actual knowledge
of the Company, conflict with or violate any statute, ordinance, rule,
regulation, order, judgment, decree, permit or license applicable to
the Company or any of its subsidiaries, or by which any of them or any
of their respective properties or assets may be bound or affected, or
(D) except as set forth in SCHEDULE 4.5(A) of the COMPANY DISCLOSURE
SCHEDULE, require the consent from or the giving of notice to a third
party pursuant to, result in a violation or breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in any loss of
any benefit, the triggering of any payment by, or the increase in any
other obligation of, the Company or any of its subsidiaries or the
creation of any Lien on any of the property or assets of the Company or
any of its subsidiaries (any of the foregoing referred to in clause
(B), (C) or this clause (D) being a "VIOLATION") pursuant to any
Material Contract.
(b) To the actual knowledge of the Company, none of the
execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing
with respect to any Governmental Entity (as hereinafter defined) or any
other third party being a "CONSENT"), any government or subdivision
thereof, or any administrative, governmental, legislative or regulatory
authority, agency, commission, tribunal, court or body, (a
10
"GOVERNMENTAL ENTITY"), except for (i) the filing of the articles of
merger pursuant to the GBCL, (ii) compliance with the HSR Act, or (iii)
those situations in which the failure to obtain such Consent, or to
make such filing or notification, would not, individually or in the
aggregate, be material to the operations of the Company or its
subsidiaries.
SECTION 4.6 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the Securities and Exchange
Commission (the "SEC") all forms, reports, schedules, registration
statements and definitive proxy statements required to be filed by it
with the SEC since January 1, 2003 (as amended, restated or superseded
since the time of their filing and prior to the date hereof,
collectively, the "SEC REPORTS"). Except as set forth in SCHEDULE
4.6(A) of the COMPANY DISCLOSURE SCHEDULE, the SEC Reports (including,
but not limited to, any financial statements or schedules included or
incorporated by reference therein), complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), or the Securities Act of 1933, as
amended, including the rules and regulations promulgated thereunder
(the "SECURITIES Act") applicable, as the case may be, to such SEC
Reports and the Xxxxxxxx-Xxxxx Act of 2002, and none of the SEC
Reports, including those filed after January 19, 2006, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(b) Except as set forth in SCHEDULE 4.6(B) of the COMPANY
DISCLOSURE SCHEDULE the (i) audited consolidated balance sheets as of
October 31, 2005 (the "BALANCE SHEET DATE" and the balance sheet as of
such date, the "BALANCE SHEET") and October 31, 2004 and the audited
consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended October 31, 2005
(including the related notes and schedules thereto) of the Company and
(ii) the unaudited consolidated balance sheet as of August 31, 2006 and
the unaudited consolidated statements of operations, shareholders'
equity and cash flows for the ten-month period ended August 31, 2006 of
the Company delivered to the Parent were prepared from, are in
accordance with and accurately reflect in all material respects, the
Company's books and records as of the times and for the periods
referred to therein, present fairly in all material respects the
consolidated financial position and the consolidated results of
operations and cash flows of the Company and its subsidiaries as of the
dates or for the periods presented therein and were prepared in
accordance with United States generally accepted accounting principles
("GAAP") consistently applied during the periods involved (except as
set forth in the notes contained therein and subject, in the case of
unaudited statements, to recurring audit adjustments normal in nature
and amount). The financial statements referred to in clauses (i) and
(ii) hereof are referred to herein as the "COMPANY FINANCIALS."
(c) Except as reserved against in the unaudited consolidated
balance sheet as of August 31, 2006 or as set forth in SCHEDULE 4.6(C)
of the COMPANY DISCLOSURE SCHEDULE, as of the date hereof, neither the
11
Company nor any of its subsidiaries have any material liabilities or
obligations (absolute, accrued, fixed, contingent or otherwise), other
than liabilities incurred in the ordinary course of business consistent
with past practice since August 31, 2006.
SECTION 4.7 ENVIRONMENTAL MATTERS.
To the actual knowledge of the senior officers and directors of the
Company, except as set forth in SCHEDULE 4.7 of the COMPANY DISCLOSURE SCHEDULE:
(a) The Company and its subsidiaries have complied and
currently comply with all Environmental Laws;
(b) Neither the Company nor any of its subsidiaries is the
subject of any federal, state, local or foreign investigation, decree,
order or judgment and neither the Company nor any of its subsidiaries
has received any written notice or claim, or entered into any
negotiations or agreements with any person, relating to compliance with
or to any liability, investigation or remedial action under any
Environmental Laws;
(c) Neither the Company nor any of its subsidiaries has
manufactured, treated, stored, disposed of, arranged for or permitted
the disposal of, generated, handled or released any Hazardous Substance
in a manner that is in violation of any Environmental Law or owned or
operated any property or facility in a manner in violation of any
Environmental Law that has given or would reasonably be expected to
give rise to any liability, including any liability for response costs,
corrective action costs, personal injury, property damage, natural
resources damages or attorney fees pursuant to any Environmental Laws;
(d) No Hazardous Substances or other conditions have been
released or otherwise come to be located at any property or facility
owned, operated or used by on behalf of the Company or any of its
subsidiaries in a manner that is in violation of any Environmental Law
or has given or will give rise to liability under Environmental Laws or
against any person whose liability the Company or any of its
subsidiaries retained or assumed either contractually or by operation
of law;
(e) The Company and each of its subsidiaries holds and is in
compliance with all permits required to conduct its business and
operations under all applicable Environmental Laws;
(f) Neither the Company nor any of its subsidiaries has
received any written Environmental Claim against it, nor has any such
Environmental Claim been threatened in writing;
(g) Neither the Company nor any of its subsidiaries has failed
to timely file all reports and notifications required to be filed with
respect to all of its property and facilities or has failed to generate
and maintain all required records and data under all applicable
Environmental Laws; and
12
(h) Neither the Company nor any of its subsidiaries has
entered into any contract wherein it has continuing liability or
responsibility relating to environmental matters with respect to any
real property that is no longer owned or leased by any of them.
"ENVIRONMENTAL CLAIM" means any claim, demand, action, suit, complaint,
proceeding, directive, investigation, lien, demand letter or notice of
noncompliance, violation or liability by any person asserting liability or
potential liability (including liability or potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties) arising
out of, based on or resulting from (x) the presence, discharge, emission,
release or threatened release of any Hazardous Substance at any location; (y)
circumstances forming the basis of any violation or alleged violation of any
Environmental Law or any permit issued under any Environmental Law; or (z)
otherwise relating to obligations or liabilities under any Environmental Law.
"ENVIRONMENTAL LAWS" means any and all applicable federal, state or
local statutes, regulations, ordinances, guidelines, codes, decrees, permits or
other legally enforceable requirement of any foreign government, the United
States, or any state, local, municipal or other governmental entity, regulating,
relating to or imposing liability or standards of conduct concerning protection
of the environment (including indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or plant or animal species) or
human health as affected by the environment or Hazardous Substances (including
employee health and safety).
"HAZARDOUS SUBSTANCE" means all explosive or radioactive substances,
materials or wastes, hazardous or toxic substances, materials or wastes,
asbestos, asbestos-containing materials, mold, pollutants and contaminants
(including petroleum or any fraction thereof) and all other substances,
materials or wastes, whether or not defined as such, that are regulated pursuant
to or that could result in liability under any applicable Environmental Law.
Notwithstanding any of the representations and warranties contained elsewhere in
this Agreement, all environmental matters are governed exclusively by this
Section 4.7.
SECTION 4.8 COMPLIANCE WITH APPLICABLE LAWS.
(a) The Company and its subsidiaries hold all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities (the "Company Permits") required in order to own
their assets and to conduct their respective businesses as currently
conducted, except where the failure to hold such Company Permits would
not, individually or in the aggregate, be material to the operations of
the Company or its subsidiaries, and are in compliance with all Company
Permits, except where the failure to comply would not, individually or
in the aggregate, be material to the operations of the Company or its
subsidiaries. The operations of the Company and its subsidiaries have
been conducted in compliance with all material applicable laws,
ordinances and regulations of any Governmental Entity, except
violations which are not, individually or in the aggregate, material to
the operations of the Company or its subsidiaries.
13
(b) This Section 4.8 does not relate to (i) environmental
matters, which are instead the subject of Section 4.7, (ii) employee
benefits matters, which are instead the subject of Section 4.12, or
(iii) tax matters, which are instead the subject of Section 4.14.
SECTION 4.9 LITIGATION.
Except as set forth in SCHEDULE 4.9 of the COMPANY DISCLOSURE SCHEDULE,
there is no suit, claim, action, proceeding or investigation ("LITIGATION")
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries which, if adversely determined, would be reasonably
expected to result in a liability to the Company in excess of Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate. Except as set forth in SCHEDULE
4.9 of the COMPANY DISCLOSURE SCHEDULE, neither the Company nor any of its
subsidiaries is subject to any material outstanding order, writ, injunction or
decree. Except as disclosed in SCHEDULE 4.9 of the COMPANY DISCLOSURE SCHEDULE,
there is no litigation that the Company or its subsidiaries have pending against
other parties.
SECTION 4.10 INFORMATION.
None of the information supplied or to be supplied by the Company for
inclusion in (i) the Proxy Statement or (ii) any other document to be filed with
any Governmental Entity in connection with the transactions contemplated by this
Agreement (the "OTHER FILINGS") will, at the respective times filed with any
Governmental Entity and, in addition, in the case of the Proxy Statement, at the
date it or any amendment or supplement is mailed to shareholders, at the time of
the Special Meeting and at Closing, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by the Parent or the Purchaser specifically for
inclusion in the Proxy Statement.
SECTION 4.11 CERTAIN APPROVALS.
The Company Board has taken any and all necessary and appropriate
action to render the provisions of Sections 351.407 and 351.459 of the GBCL
inapplicable to the Merger and the transactions contemplated by this Agreement.
No other state takeover statute or similar domestic or foreign statute or
regulation applies or purports to apply to the Merger or the transactions
contemplated by this Agreement.
SECTION 4.12 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.12(A) of the COMPANY DISCLOSURE SCHEDULE
includes a complete list of all material employee benefit plans,
programs, agreements and other arrangements providing benefits to any
former or current employee, officer or director of the Company or any
of its subsidiaries or any beneficiary or dependent thereof, whether
covering one person or more than one person, sponsored or maintained by
the Company or any of its subsidiaries or to which the Company or any
of its subsidiaries contributes or is obligated to contribute for the
benefit of U.S. employees of the Company and its subsidiaries ("LISTED
14
PLANS"). Without limiting the generality of the foregoing, the term
"Listed Plans" includes all employee welfare benefit plans within the
meaning of Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder
("ERISA") and all employee pension benefit plans within the meaning of
Section 3(2) of ERISA and all other material employee benefit,
employment, bonus, incentive, profit sharing, thrift, compensation,
restricted stock, retirement, savings, deferred compensation, stock
purchase, stock option, termination, severance, change in control,
fringe benefit and other similar plans, programs, agreements or
arrangements.
(b) With respect to each Listed Plan, the Company has made
available to the Parent a true, correct and complete copy of: (i) each
writing constituting a part of such Listed Plan, including, without
limitation, all plan documents, benefit schedules, trust agreements,
and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if
any; (iii) the current summary plan description (and any material
modification to such description), if any; (iv) the most recent annual
financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue
Service (the "IRS"), if any.
(c) SCHEDULE 4.12(C) of the COMPANY DISCLOSURE SCHEDULE
identifies each Listed Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code, and the Treasury
Regulations thereunder ("QUALIFIED PLANS"). The IRS has issued a
favorable determination letter (or, with respect to standardized
prototype plans, an opinion letter) with respect to each Qualified Plan
that has not been revoked, and, to the Company's knowledge, there are
no existing circumstances nor any events that have occurred that could
reasonably be expected to adversely affect the qualified status of any
Qualified Plan or the related trust. No Listed Plan is intended to meet
the requirements of Section 501(c)(9) of the Code. No Listed Plan is
subject to Title IV or Section 302 of ERISA.
(d) Each Listed Plan has been operated and administered in all
material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code. With respect to each
Listed Plan, no event has occurred and there exists no condition or set
of circumstances in connection with which the Company could be subject
to any liability that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Except as set forth in SCHEDULE 4.12(E) of the COMPANY
DISCLOSURE SCHEDULE, neither the Company nor any of its subsidiaries
contributes to or has ever contributed to any multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA ("MULTIEMPLOYER PLAN"). With
respect to each Multiemployer Plan in which the Company, any subsidiary
or any ERISA Affiliate participates or has participated, (i) none of
the Company, any of its subsidiaries or any ERISA Affiliate has
withdrawn, partially withdrawn, or received any notice of any claim or
demand for withdrawal liability or partial withdrawal liability; (ii)
none of the Company nor any of its subsidiaries or any ERISA Affiliate
has received any notice that any such plan is in reorganization, that
increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, or that any such plan is
or may become insolvent; (iii) none of the Company, any of its
subsidiaries or any ERISA Affiliate has failed to make any required
15
contributions; (iv) to the Company's knowledge, no such plan is a party
to any pending merger or asset or liability transfer; (v) to the
Company's knowledge, there are no PBGC proceedings against or affecting
any such plan; and (vi) none of the Company, any of its subsidiaries or
any ERISA Affiliate has any withdrawal liability by reason of a sale of
assets pursuant to Section 4204 of ERISA. With respect to each
Multiemployer Plan, as of its last valuation date, the amount of
potential withdrawal liability of the Company, any of its subsidiaries
and any ERISA Affiliates would not reasonably be expected to have a
Material Adverse Effect on the Company. To the best knowledge of the
Company, nothing has occurred or is expected to occur that would
materially increase the amount of the total potential withdrawal
liability for any such plan over the amount shown in the Company
Disclosure Schedule.
(f) Except as set forth in SCHEDULE 4.12(F) of the COMPANY'S
DISCLOSURE SCHEDULE, neither the Company nor any of its subsidiaries
has any liability for life, health, medical or other welfare benefits
to former employees or beneficiaries or dependents thereof, except for
health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA or applicable state law at no expense to
the Company and its subsidiaries.
(g) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary
course), lawsuits, arbitrations or other alternate dispute resolution
proceedings which have been asserted or instituted against the Listed
Plans, any fiduciaries thereof with respect to their duties to the
Listed Plans or the assets of any of the trusts under any of the Listed
Plans which could reasonably be expected to result in any liability of
the Company or any of its subsidiaries to any Listed Plan participant
or beneficiary, the PBGC, the Department of Treasury, the Department of
Labor or any Multiemployer Plan.
(h) Other than as disclosed in SCHEDULE 4.12(H) of the COMPANY
DISCLOSURE SCHEDULE, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other act required to be
taken in connection with the transactions contemplated hereby) result
in, cause the accelerated vesting or delivery of, or increase the
amount or value of, any payment or benefit to any employee of the
Company or any of its subsidiaries, or to fund any "rabbi" trust or
similar trust.
(i) Except as set forth in SCHEDULE 4.12(I) of the COMPANY
DISCLOSURE SCHEDULE, no employment agreement or stock option agreement
between the Company and any of its executive officers has been amended
subsequent to January 1, 2006.
16
SECTION 4.13 INTELLECTUAL PROPERTY.
(a) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company, the Company owns or possesses adequate licenses or other valid
rights to use all Intellectual Property used in connection with the
business of the Company as it has been or is currently conducted. As
used herein "INTELLECTUAL PROPERTY" means all patents, patent
applications, patent disclosures, assumed names, trade names,
trademarks, trademark registrations and trademark applications, service
marks, service xxxx registrations and service xxxx applications,
certification marks, certification xxxx registrations and certification
xxxx applications, copyrights, copyright registrations and copyright
registration applications, databases and database rights, internet
websites and domain names and applications pertaining thereto, computer
software (and related documentation), trade secrets ("TRADE SECRETS"),
know-how, industrial property, technology and other proprietary rights,
both domestic and foreign, which are owned by, used or held for use by
the Company and its subsidiaries.
(b) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company, none of the licenses which are part of the Intellectual
Property is subject to termination or cancellation or change in its
terms or provisions as a result of this Agreement or the transactions
provided for in this Agreement.
(c) To the knowledge of the Company, no Person or entity is
infringing, or has misappropriated, any Intellectual Property owned by
the Company or any of its subsidiaries.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company, no claims with respect to the Intellectual Property have been
asserted or, to the best knowledge of the Company, are threatened by
any Person nor does the Company know of any valid grounds for any
claims (i) to the effect that the manufacture, sale or use of any
product or process or the furnishing of any service as previously used,
now used or offered or proposed for use or sale by the Company
infringes on any copyright, trade secret, patent, trade name or other
intellectual property right of any Person, (ii) against the use by the
Company or any of its subsidiaries of any Intellectual Property, or
(iii) challenging the ownership, validity or effectiveness of any
Intellectual Property owned by the Company or any of its subsidiaries.
Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, all granted
and issued patents and all registered trademarks and service marks and
all copyrights held by the Company or any of its subsidiaries are
valid, enforceable and subsisting. The Company has taken all actions
reasonably necessary to protect and enforce its rights in the
Intellectual Property.
SECTION 4.14 TAXES.
(a) The Company and each of its subsidiaries has duly filed
(or has had duly filed on its behalf) or will duly file or cause to be
duly filed all material federal, state, local and foreign income and
17
other Tax Returns (as hereinafter defined) required to be filed by it
(including, but not limited to, Tax Returns relating to estimated
Taxes), and has duly paid or caused to be paid all Taxes (as
hereinafter defined) shown to be due on such Tax Returns in respect of
the periods covered by such Tax Returns and has paid or made adequate
provision according to GAAP in the Company's financial statements for
payment of all Taxes in respect of all taxable periods or portions
thereof ending on or before the date hereof. All such Tax Returns were
correct and complete in all material respects and were prepared in
substantial compliance with all applicable laws and regulations.
SCHEDULE 4.14(A) of the COMPANY DISCLOSURE Schedule lists (i) all
estimated Tax payments made by the Company and each of its subsidiaries
for federal, state and local tax purposes with respect to the current
tax year, (ii) the periods through which the Tax Returns required to be
filed by the Company or its subsidiaries have been examined by the IRS
or other appropriate taxing authority, or the periods during which the
opportunity for any assessments to be made by the IRS or, to the
Company's knowledge, other appropriate taxing authority has expired,
and (iii) all notices indicating an intent to open an audit or review,
or notice of deficiency or proposed adjustment for any amount of Tax
proposed, asserted, or assessed by any taxing authority against the
Company or its subsidiaries. All material deficiencies and assessments
asserted in writing as a result of such examinations or other audits by
federal, state, local or foreign taxing authorities have been paid,
fully settled or adequately provided for according to GAAP in the
Company's financial statements, and no issue or claim has been asserted
or threatened in writing for Taxes by any taxing authority for any
prior period, other than those heretofore paid or adequately provided
for according to GAAP in the Company's financial statements. Except as
set forth in SCHEDULE 4.14(A) of the COMPANY DISCLOSURE SCHEDULE, there
are no outstanding agreements or waivers or requests for agreements or
waivers, extending the statutory period of limitation applicable to any
material Tax Return of the Company or any of its subsidiaries. There
are no liens for amounts of Taxes on the assets of the Company nor any
of its subsidiaries except for statutory liens for current Taxes not
yet due and payable. Except as set forth in SCHEDULE 4.14(A) of the
COMPANY DISCLOSURE SCHEDULE, neither the Company nor any of its
subsidiaries is a party to any agreement, contract or arrangement that
could result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the
Code or that would not be deductible pursuant to the terms of Section
162(a)(l), 162(m) or 162(n) of the Code. Except as set forth in
SCHEDULE 4.14(A) of the COMPANY DISCLOSURE SCHEDULE, neither the
Company nor any of its subsidiaries is a party to a Tax sharing or Tax
indemnity agreement or any other agreement of a similar nature that
remains in effect. Each of the Company and its subsidiaries have
withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(b) For purposes of this Agreement, the term "TAX" or "TAXES"
means all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
use, value-added, transfer, license, payroll, withholding, export,
import, and customs duties, capital stock and franchise taxes, imposed
by the United States or any state, local or foreign government or
subdivision or agency thereof, including any interest, penalties or
additions thereto. For purposes of this Agreement, the term "TAX
RETURN" means any report, return or other information or document
required to be supplied to a taxing authority in connection with Taxes.
18
SECTION 4.15 ABSENCE OF CERTAIN CHANGES.
Since August 31, 2006 through the date hereof (i) there has not been
any Material Adverse Effect on the Company or any event, development or
circumstance which could reasonably be expected to have a Material Adverse
Effect on the Company; (ii) the businesses of the Company and its subsidiaries
have been conducted in the ordinary course and in a manner consistent with past
practice, and (iii) without limiting the generality of the foregoing, the
Company and its subsidiaries have not:
(a) incurred any liabilities or obligations (absolute,
accrued, contingent or otherwise) which exceed $250,000 in the
aggregate, except in the ordinary course of business, consistent with
past practice;
(b) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities and obligations
reflected or reserved against in the Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the
Balance Sheet Date;
(c) permitted or allowed any of their properties or assets
(real, personal or mixed, tangible or intangible) to be subjected to
any Lien, except for liens for current taxes not yet due;
(d) cancelled any debts or waived any claims or rights of
material value;
(e) sold, transferred, or otherwise disposed of any of their
material properties or assets (real, personal or mixed, tangible or
intangible), except in the ordinary course of business, consistent with
past practice;
(f) except as disclosed in SCHEDULE 4.15(F) of the COMPANY
DISCLOSURE SCHEDULE, granted any increase in the compensation or
benefits of any director, officer, employee or consultant of the
Company (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the
compensation or benefits payable or to become payable to any director,
officer, employee or consultant of the Company or hired or terminated
any salaried employee with an annual salary in excess of $100,000;
provided, however, that with respect to any increase in compensation or
benefits of any non-officer employee or any increase in the
compensation or benefits payable or to become payable to any
non-officer employee, the Company may grant such increases as are in
the ordinary course of business, consistent with past practice;
(g) made any change in severance policy or practices;
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(h) declared, paid or set aside for payment any dividend
(other than the dividend paid on September 15, 2006 in the amount of
$315,000) or other distribution (whether in cash, stock or property) in
respect of their respective capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock
or other securities of the Company;
(i) (i) made any changes in any of the accounting methods used
by it materially affecting its assets, liabilities, provisions or
business, except for such changes required by GAAP; or (ii) made or
changed any election relating to Taxes, adopted or changed any
accounting method relating to Taxes, entered into any closing agreement
relating to Taxes, filed any amended Tax Return, settled or consented
to any claim or assessment relating to Taxes, incurred any obligation
to make any payment of, or in respect of, any Taxes, except in the
ordinary course of business, or agreed to extend or waive the statutory
period of limitations for the assessment or collection of Taxes; or
(iii) made any changes in its reserve policies, collect and hold
policy, billing and cash receipts practices or purchasing and payment
practices;
(j) paid, loaned, modified or advanced any amount to, or sold,
transferred or leased any material properties or assets (real, personal
or mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of their respective officers, directors or
shareholders or any affiliate or associate of any of their officers,
directors or shareholders except for directors' fees, expense
reimbursements in the ordinary course and compensation to officers at
rates not inconsistent with the Company's past practice;
(k) suffered any impairment of any material Intellectual
Property or any material adverse change in any material Intellectual
Property licensed from a third party, in each case, other than in the
ordinary course of business consistent with past practice, or disposed
of or disclosed (except as necessary in the conduct of its business) to
a third party any Trade Secrets owned by the Company;
(l) granted, issued, accelerated, paid, accrued or agreed to
pay or make any accrual or arrangement for payments or benefits
pursuant to, or adopted or amended, any Company Employee Plans except
those made in the ordinary course of business consistent with past
practice; or
(m) agreed, whether in writing or otherwise, to take any
action described in this Section 4.15.
SECTION 4.16 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth in SCHEDULE 4.16(A) of the COMPANY
DISCLOSURE SCHEDULE, there are no actions, suits, claims, charges,
labor disputes, grievances or controversies pending, or to the
Company's knowledge, threatened involving the Company or any of its
subsidiaries and any of their employees or former employees. To the
Company's knowledge, no Governmental Entity responsible for the
enforcement of labor or employment laws intends to conduct an
20
investigation with respect to or relating to the Company or any of its
subsidiaries and no such investigation is in progress. To the Company's
knowledge, no employee of the Company or any of its subsidiaries has
violated any employment contract, nondisclosure agreement or
noncompetition agreement by which such employee is bound due to such
employee being employed by the Company or any of its subsidiaries and
disclosing to the Company or any of its subsidiaries or using Trade
Secrets of any other person. To the Company's knowledge, there has
been: (i) no labor union organizing or attempting to organize any
employee of the Company or any of its subsidiaries into one or more
collective bargaining units; and (ii) no labor dispute, strike, work
slowdown, work stoppage or lock out or other collective labor action by
or with respect to any employees of the Company or any of its
subsidiaries pending, or, to the Company's knowledge, threatened
against or affecting the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries is a party to, or bound by, any
collective bargaining agreement or other agreement with any labor
organization applicable to the employees of the Company or any of its
subsidiaries and no such agreement is currently being negotiated.
(b) To the Company's knowledge, the Company and its
subsidiaries (i) are in compliance in all material respects with all
applicable Laws respecting employment and employment practices, terms
and conditions of employment, health and safety and wages and hours,
and is not engaged in any unfair labor practice, (ii) have withheld all
amounts required by Law or by agreement to be withheld from the wages,
salaries and other payments to employees, (iii) are not liable in any
material respect for any arrears of wages or any Taxes or any penalty
for failure to comply with any of the foregoing and (iv) are not liable
for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations
for employees (other than routine payments to be made in the ordinary
course of business and consistent with past practice).
(c) To the Company's knowledge, no employee of the Company or
any of its subsidiaries has provided or is providing information to any
law enforcement agency regarding the commission or possible commission
of any crime or the violation or possible violation of any applicable
Law involving the Company or any of its subsidiaries. To the Company's
knowledge, neither the Company, nor any of its subsidiaries nor any
officer, employee, contractor, subcontractor or agent of the Company or
any of its subsidiaries has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of
the Company or any of its subsidiaries in the terms and conditions of
employment because of any act of such employee described in 18 U.S.C.
Section 1514A(a).
(d) SCHEDULE 4.16(D) of the COMPANY DISCLOSURE SCHEDULE
contains a true and complete list of (i) the names of all elected and
appointed officers of the Company and its subsidiaries, together with
such person's position or function, annual base salary and incentives
or bonus arrangement and (ii) the number of Common Shares owned
beneficially or of record, or both, by each such person and the family
relationships, if any, among such persons. As of the date hereof, no
21
key employee, director or officer of the Company or any of its
subsidiaries has given notice to the Company, nor, is the Company
otherwise aware of any information that would lead it to reasonably
believe, that any such person will or may cease to be engaged by the
Company or its subsidiaries for any reason prior to the Effective Time.
Except as set forth in SCHEDULE 4.16(D) of the COMPANY DISCLOSURE
SCHEDULE, no key employee, director or officer of the Company or any of
its subsidiaries will have a right of termination or payment under any
employment or other agreement as a result of consummation of the
transactions contemplated by this Agreement.
(e) Since October 31, 2005, neither the Company nor any of its
subsidiaries has effectuated (i) a "plant closing" as defined in the
Worker Adjustment and Retraining Notification Act ("WARN ACT"),
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company or (ii)
a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company; nor has the Company been
affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any state,
local or foreign law or regulation similar to the WARN Act. To the
Company's knowledge, none of the Company's or its subsidiaries'
employees has suffered an "employment loss" (as defined in the WARN
Act) in the ninety (90) days prior to the date of this Agreement.
SECTION 4.17 RIGHTS AGREEMENT.
The Company and the Company Board have taken all necessary action to
amend the Rights Agreement (without redeeming the Rights) so that (a) neither
the execution or delivery of this Agreement or the Voting Agreements nor the
consummation of the Merger will (i) cause any Rights issued pursuant to the
Rights Agreement to become exercisable or to separate from the stock
certificates to which they are attached, (ii) cause the Parent, the Purchaser or
any of their Affiliates or Associates to be an Acquiring Person (as each such
term is defined in the Rights Agreement) or (iii) trigger other provisions of
the Rights Agreement, including giving rise to a Distribution Date or a
Triggering Event (as each such term is defined in the Rights Agreement), and (b)
the Rights Agreement will expire immediately prior to the Effective Time. Copies
of all such amendments to the Rights Agreement have been previously provided to
the Parent.
SECTION 4.18 BROKERS.
Except for the engagement of Xxxxxx X. Xxxx Advisors LLC, none of the
Company, any of its subsidiaries, or any of their respective officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. The Company has previously delivered to the
Parent a copy of the Company's engagement letter with Xxxxxx X. Xxxx Advisors
LLC. SCHEDULE 4.18 of the COMPANY DISCLOSURE SCHEDULE sets forth a good faith
estimate of the amount of any brokerage fees, commissions or finders' fees,
investment banking fees, legal fees, accounting fees, tax consultant fees,
transfer agent and paying agent fees and proxy costs payable in connection with
the transactions contemplated hereby, including expenses related to the
Company's sale process, as of August 31, 2006 and an estimate of such additional
fees and costs to be payable at the Closing.
22
SECTION 4.19 OPINION OF FINANCIAL ADVISOR.
The Company has received the written opinion of Xxxxxx X. Xxxx Advisors
LLC, its financial advisor, to the effect that, as of the date hereof, the
consideration to be received in the Merger by the Company's shareholders is fair
to the Company's shareholders from a financial point of view.
SECTION 4.20 MATERIAL CONTRACTS.
Except as set forth in SCHEDULE 4.20 of the COMPANY DISCLOSURE
SCHEDULE, neither the Company nor any of its subsidiaries is party to, nor is
the Company or any of its subsidiaries (or their respective assets) bound by,
any contract, indenture, lease or other agreement which, individually or in the
aggregate, is material to the Company and the subsidiaries taken as a whole.
Except as set forth in SCHEDULE 4.20 of the COMPANY DISCLOSURE SCHEDULE, there
are no (i) contracts, indentures, leases or other agreements between the Company
or any subsidiary, on the one hand, and any current or former director, officer,
employee or 5% or greater shareholder of the Company or any of their affiliates
or family members, on the other, or (ii) any material non-competition agreement
or any other agreement or obligation which purports to limit in any respect the
manner in which, or the localities in which, the business of the Company and its
subsidiaries, is or would be conducted. All contracts, indentures, leases and
agreements listed on SCHEDULE 4.20 of the COMPANY DISCLOSURE SCHEDULE (the
"MATERIAL CONTRACTS") are valid and binding, in full force and effect in
accordance with their terms and enforceable against the Company, and to the
Company's knowledge against the other parties thereto, in accordance with their
respective terms. There is not under any Material Contract any existing default,
or event, which after notice or lapse of time, or both, would constitute a
default, by the Company or any of its subsidiaries, or to the Company's
knowledge, any other party.
SECTION 4.21 TITLE TO PROPERTIES.
SCHEDULE 4.21 of the COMPANY DISCLOSURE SCHEDULE sets forth a complete
list of all real property owned in fee by the Company and its subsidiaries and
sets forth all real property leased by the Company and its subsidiaries as
lessee as of the date hereof (such owned and leased real property, including all
improvements thereon, referred to collectively as the "COMPANY REAL PROPERTY").
The Company has heretofore furnished to the Parent true and correct copies of
all leases, subleases and other agreements concerning the real property leased
by the Company or any of its subsidiaries (the "COMPANY LEASES"). All such
material Company Leases are valid and binding and are in full force and effect
and enforceable by the Company or its subsidiaries in accordance with their
respective terms. Neither the Company, nor any of its subsidiaries nor, to the
knowledge of the Company, any other party to any Company Lease is in any
material respect in breach of or in default under any of the Company Leases. The
Company Real Property set forth in SCHEDULE 4.21 of the COMPANY DISCLOSURE
SCHEDULE comprises all of the real property currently necessary for and/or used
in the operations of the business of the Company and its subsidiaries. The
Company and its subsidiaries have good and valid title to all of the owned
Company Real Property. The Company Real Property is free of Liens, except for:
(a) liens with respect to Taxes either not due or being diligently contested in
23
appropriate proceedings; (b) mechanics', materialmen's or similar statutory
liens for amounts not yet due or being diligently contested in appropriate
proceedings; and (c) other exceptions with respect to title to Company Real
Property (including easements of public record) that do not and would not
interfere with the current and intended use of such Company Real Property except
as would not otherwise, individually or in the aggregate, be material to the
operations of the Company or its subsidiaries (clauses, (a), (b), and (c) being
referred to herein as "Permitted Liens"); and the consummation of the
transactions contemplated hereby will not create any Lien (other than Permitted
Liens) on any of the Company Real Property.
SECTION 4.22 ACCOUNTS RECEIVABLE.
Subject to any reserves set forth in the Company Financials, the
accounts receivable shown in the Company Financials represent bona fide claims
against debtors for sales and other charges, and are not subject to discount
except for normal cash and immaterial trade discounts.
SECTION 4.23 RESTRICTIONS ON BUSINESS ACTIVITIES.
Except as set forth in SCHEDULE 4.23 of the COMPANY DISCLOSURE
SCHEDULE, there is no, judgment, injunction, order or decree binding upon the
Company or its subsidiaries which has or could reasonably be expected to have
the effect of prohibiting or impairing any current business practice of the
Company or its subsidiaries, any acquisition of property by the Company or its
subsidiaries or the conduct of business by the Company or its subsidiaries as
currently conducted. Except as set forth in SCHEDULE 4.23 of the COMPANY
DISCLOSURE SCHEDULE or except as would not, individually or in the aggregate, be
material to the operations of the Company or its subsidiaries, there is no
agreement binding upon the Company or its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
current business practice of the Company or its subsidiaries, any acquisition of
property by the Company or its subsidiaries or the conduct of business by the
Company or its subsidiaries as currently conducted.
SECTION 4.24 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by the Company herein or
in any Schedule hereto, including the Company Disclosure Schedule, or in any
certificate furnished by the Company pursuant to this Agreement, when all such
documents are read together in their entirety, contains any untrue statement of
a material fact, or omits to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
The Parent and the Purchaser hereby represent and warrant to the
Company as follows:
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SECTION 5.1 ORGANIZATION AND QUALIFICATION.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the state of Missouri. The Parent is a limited
partnership duly organized, validly existing and in good standing under the laws
of Delaware. Each of the Parent and the Purchaser has the requisite limited
partnership and corporate power, respectively, and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on the Parent. The term "MATERIAL ADVERSE EFFECT ON THE
Parent", as used in this Agreement, means any change in or effect on the
business, financial condition, results of operation or prospects of the Parent
or any of its subsidiaries that would reasonably be expected to have a material
adverse effect on the Parent and its subsidiaries taken as a whole or could
reasonably be expected to prevent or materially delay consummation of the
Merger; provided that the foregoing shall not include any change or effect that
results or arises from or relates to changes in (A) general economic or market
conditions, except to the extent they have a disproportionate impact on the
Parent, or prevailing interest rates, (B) conditions generally affecting the
industry in which the Parent operates, or (C) laws, regulations or accounting
standards, principles or interpretations.
SECTION 5.2 AUTHORITY.
Each of the Parent and the Purchaser has all necessary limited
partnership and corporate power, respectively, and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Parent and the Purchaser and
the consummation by the Parent and the Purchaser, to the extent the Parent or
the Purchaser is a party thereto, of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of the
Purchaser and by the Parent as sole shareholder of the Purchaser, and no other
corporate proceedings on the part of the Parent or the Purchaser are necessary
to authorize or approve this Agreement or to consummate the transactions
contemplated hereby or thereby (to the extent the Parent or the Purchaser is a
party thereto). This Agreement has been duly executed and delivered by each of
the Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of each of the Parent and the Purchaser enforceable against each of
them in accordance with its terms.
SECTION 5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming (i) the filings required under the HSR Act are
made and the waiting periods thereunder have terminated or have expired
and (ii) the filing of the articles of merger and other appropriate
merger documents, if any, as required by the GBCL, is made, none of the
execution and delivery of this Agreement by the Parent or the
Purchaser, the consummation by the Parent or the Purchaser of the
transactions contemplated hereby or compliance by the Parent or the
Purchaser with any of the provisions hereof will (i) conflict with or
violate the organizational documents of the Parent or the Purchaser,
(ii) conflict with or violate any statute, ordinance, rule, regulation,
25
order, judgment, decree, permit or license applicable to the Parent or
the Purchaser or any of their subsidiaries, or by which any of them or
any of their respective properties or assets may be bound or affected,
or (iii) result in a violation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Parent or the Purchaser or
any of their subsidiaries is a party or by which the Parent or the
Purchaser or any of their subsidiaries or any of their respective
properties or assets may be bound or affected.
(b) None of the execution and delivery of this Agreement by
the Parent and the Purchaser, the consummation by the Parent and the
Purchaser of the transactions contemplated hereby or compliance by the
Parent and the Purchaser with any of the provisions hereof will require
any Consent of any Governmental Entity, except for (i) the filing of
articles of merger pursuant to the GBCL and (ii) compliance with the
HSR Act.
SECTION 5.4 INFORMATION.
None of the information supplied or to be supplied by the Parent and
the Purchaser for inclusion in (i) the Proxy Statement or (ii) the Other Filings
will, at the respective times filed with any Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to shareholders, at the time of the Special Meeting and at
Closing, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.5 FINANCING.
The Parent and the Purchaser collectively will have at Closing and the
Parent will make available to the Purchaser sufficient funds to enable the
Purchaser to pay (i) the aggregate Merger Price for all Common Shares pursuant
to Section 1.4, on a fully diluted basis, and (ii) the aggregate Cash Payments
for all Options pursuant to Section 1.6(b), and to pay all fees and expenses
related to the transactions contemplated by this Agreement payable by them.
SECTION 5.6 STOCK OWNERSHIP.
As of the date hereof, none of the Parent, the Purchaser or American
Industrial Partners or any of their respective "affiliates" or "associates" (as
those terms are defined under Rule 12b-2 under the Exchange Act) beneficially
own any Common Shares.
SECTION 5.7 PURCHASER'S OPERATIONS.
The Purchaser was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not engaged in any business
activities or conducted any operations other than in connection with such
transactions.
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SECTION 5.8 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by the Parent or the
Purchaser herein or in any certificate furnished by the Parent or the Purchaser
pursuant to this Agreement, when all such documents are read together in their
entirety, contains any untrue statement of a material fact, or omits to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
SECTION 5.9 SOLVENCY.
Immediately after the Closing, the Parent will not (i) be insolvent
(either because its financial condition is such that the sum of its debts is
greater than the fair value of its assets or because the fair salable value of
its assets is less than the amount required to pay its probable liability on its
existing debts as they mature and a reasonable amount of all contingent
liabilities), (ii) have unreasonably small capital with which to engage in its
business, or (iii) have incurred debts beyond its ability to pay as they become
due.
ARTICLE VI
COVENANTS
SECTION 6.1 CONDUCT OF BUSINESS OF THE COMPANY.
Except as permitted or required by this Agreement or otherwise with the
prior written consent of the Parent, during the period from the date of this
Agreement to the Effective Time, the Company will, and will cause each of its
subsidiaries to, conduct its operations only in the ordinary and usual course of
business consistent with past practice and will use all reasonable efforts, and
will cause each of its subsidiaries to use all reasonable efforts, to preserve
intact the business organization of the Company and each of its subsidiaries, to
keep available the services of its and their present officers and employees, and
to preserve the good will of those having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
permitted or required by this Agreement or as set forth in SCHEDULE 6.1 of the
COMPANY DISCLOSURE SCHEDULE, the Company will not, and will not permit any of
its subsidiaries to, prior to the Effective Time, without the prior written
consent of the Parent, which will not be unreasonably withheld, conditioned or
delayed:
(a) adopt any amendment to its articles of incorporation or
bylaws or comparable organizational documents or the Rights Agreement
or adopt a plan of merger, consolidation, reorganization, dissolution
or liquidation;
(b) sell, pledge or encumber any stock owned by it in any of
its subsidiaries;
(c) (i) issue, reissue or sell, or authorize the issuance,
reissuance or sale of (A) additional shares of capital stock of any
class or Voting Debt, or securities convertible into capital stock of
any class or Voting Debt, or any rights, warrants or options to acquire
any convertible securities or capital stock, other than the issuance of
Common Shares, in accordance with the terms of the instruments
governing such issuance on the date hereof, pursuant to the exercise of
Options outstanding on the date hereof, or (B) any other securities in
respect of, in lieu of, or in substitution for, Common Shares or any
other capital stock of any class or Voting Debt outstanding on the date
27
hereof or (ii) make any other changes in its capital structure (other
than incurrence of indebtedness in the amount of up to Five Million
Dollars ($5,000,000) in the aggregate under existing revolving credit
facilities);
(d) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any
combination thereof) in respect of any class or series of its capital
stock other than between any of the Company and its subsidiaries;
(e) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other
securities;
(f) except as set forth in SCHEDULE 6.1 of the COMPANY
DISCLOSURE SCHEDULE, increase in any manner the wages, salaries, bonus,
compensation or other benefits of any of its officers or employees or
enter into, establish, amend or terminate any employment, consulting,
retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock
option or other equity, pension, retirement, vacation, severance,
termination, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in
respect of, any shareholder, officer, director, other employee, agent,
consultant or affiliate other than as required pursuant to the terms of
agreements in effect on the date of this Agreement, or enter into or
engage in any agreement, arrangement or transaction with any of its
directors, officers, employees or affiliates except current
compensation and benefits in the ordinary course of business,
consistent with past practice;
(g) acquire, mortgage, encumber, sell, pledge, lease, license
or dispose of any assets (including Intellectual Property or resource
rights), except in the ordinary course of business consistent with past
practice;
(h) (i) incur, assume or prepay any long-term debt or incur or
assume any short-term debt, except that the Company and its
subsidiaries may incur or prepay debt, without prepayment penalty, in
the ordinary course of business in amounts and for purposes consistent
with past practice under existing lines of credit, but in any event
such incurrences, assumptions or prepayments may not exceed Five
Million Dollars ($5,000,000) in the aggregate, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any third party
except in the ordinary course of business consistent with past
practice, (iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), except in the
ordinary course of business consistent with past practice and in
accordance with their terms, (iv) make any loans, advances or capital
contributions to, or investments in, any other person or entity, except
for loans, advances, capital contributions or investments in the
ordinary course, consistent with past practice (in an amount not to
exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate),
or between any wholly owned subsidiary of the Company and the Company
or another wholly owned subsidiary of the Company, (v) authorize or
make capital expenditures in excess of Five Hundred Thousand Dollars
($500,000), (vi) accelerate or delay collection of notes or accounts
28
receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of
business consistent with past practice, or (vii) change any method or
principle of accounting in a manner that is inconsistent with past
practice except to the extent required by GAAP as advised by the
Company's regular independent accountants;
(i) commence, settle or compromise any suit or claim or
threatened suit or claim where the amount involved is greater than Two
Hundred Fifty Thousand Dollars ($250,000);
(j) other than in the ordinary course of business consistent
with past practice, (i) modify, amend or terminate any material
contract, (ii) waive, release, relinquish or assign any material
contract (or any of the rights of the Company or any of its
subsidiaries thereunder), right or claim, or (iii) cancel, forgive or
make any changes to the terms or collateral of any indebtedness owed to
the Company or any of its subsidiaries; provided, however, that neither
the Company nor any of its subsidiaries may under any circumstance
waive or release any of its rights under any confidentiality or
non-competition agreement to which it is a party;
(k) file any income Tax Return (other than in the ordinary
course in a manner consistent with past practice), make any Tax
election not required by law, settle or compromise any Tax liability or
file any amended Tax Return or claim for refund;
(l) permit any insurance policy naming it as a beneficiary or
a loss payable payee to be canceled or terminated, except in the
ordinary course of business consistent with past practice;
(m) acquire (by merger, consolidation, acquisition of stock or
assets, combination or other similar transaction) any corporation,
partnership or other business organization or division or assets
thereof;
(n) enter into any material contract or agreement other than
in the ordinary course of business consistent with past practice;
(o) except as may be required as a result of a change in law
or in GAAP, make any change in its methods of accounting, including Tax
accounting policies and procedures;
(p) adopt or amend any resolution or agreement concerning
indemnification of its directors, officers, employees or agents;
(q) transfer or license to any person or entity or otherwise
extend, amend, modify, permit to lapse or fail to preserve any of the
Intellectual Property material to the Company's or its subsidiaries'
business as presently conducted or proposed to be conducted, other than
nonexclusive licenses in the ordinary course of business consistent
with past practice, or disclose to any person who has not entered into
a confidentiality agreement any Trade Secrets;
29
(r) fail to maintain its books, accounts and records in the
usual manner on a basis consistent with that heretofore employed;
(s) establish any subsidiary or enter into any new line of
business;
(t) make any changes to its current investment strategy,
policy or practices;
(u) discharge any obligations (including accounts payable)
other than in the ordinary course of business consistent with past
practice, or delay the making of any capital expenditures from the
Company's current capital expenditure schedule;
(v) close or materially reduce the Company's or any
subsidiary's activities, or other in the ordinary course of business
consistent with past practices, effect any layoff or other
Company-initiated personnel reduction or change, at any of the
Company's or any subsidiary's facilities;
(w) except as specifically permitted pursuant to Section 6.10,
take, or agree to commit to take, or fail to take any action that would
result or is reasonably likely to result in any of the conditions to
the Merger set forth in Article VII not being satisfied, or would make
any representation or warranty of the Company contained herein
inaccurate in any material respect at, or as of any time prior to, the
Effective Time, or that would impair the ability of the Company to
consummate the Merger in accordance with the terms hereof or materially
delay such consummation; or
(x) authorize, or agree in writing or otherwise to take any of
the foregoing actions prohibited under this Section 6.1.
SECTION 6.2 ACCESS TO INFORMATION.
(a) From the date of this Agreement until the Effective Time,
the Company will, and will cause its subsidiaries, and each of their
respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "COMPANY REPRESENTATIVES") to, give
the Parent and the Purchaser and their respective officers, employees,
counsel, advisors and representatives (collectively, the "PARENT
REPRESENTATIVES") access during normal business hours, to the offices
and other facilities and to the books and records of the Company and
its subsidiaries and will cause the Company Representatives and the
Company's subsidiaries to furnish the Parent, the Purchaser and the
Parent Representatives to the extent available with such financial and
operating data and such other information (with sensitivity to
competitive information and customer relationships) with respect to the
business and operations of the Company and its subsidiaries as the
Parent and the Purchaser may from time to time reasonably request
provided that the foregoing will not require the Company to permit any
inspection, or to disclose any information, which would result in the
disclosure of any trade secrets of third parties or violate any
obligation of the Company with respect to confidentiality if such
disclosure would reasonably be expected to result in liability to the
Company, and provided that the Company shall use its reasonable best
efforts to obtain the consent of any such third party to such
inspection or disclosure. The Company will furnish promptly to the
30
Parent and the Purchaser a copy of each report, schedule, registration
statement and other document released publicly to the Company's
shareholders by it or its subsidiaries during such period. The Company
will cause its independent auditors to allow the Parent, the Purchaser
and the Parent Representatives to review the work papers of such
auditors relating to the Company and its subsidiaries. No review
pursuant to this Section 6.2 will affect any representation or warranty
given by the Company.
(b) Nothing in Section 6.2(a) shall require the Company or any
of its subsidiaries to provide such access or to disclose such
information where such access or disclosure would violate the rights of
the Company's customers, jeopardize the attorney-client privilege of
the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of
this Agreement. The Company will make appropriate disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(c) Notwithstanding anything to the contrary in Section 6.2(a)
or elsewhere in this Agreement, neither the Parent, the Purchaser nor
their representatives shall be entitled to conduct any additional
environmental testing, sampling or investigation of soils, waters,
sediments or discharges.
(d) Each of the Parent and the Purchaser will hold and will
cause its consultants and advisors to hold in strict confidence
pursuant to the terms of that certain Confidentiality Agreement dated
June 20, 2006 between Steel Partners Ltd. and the Company (the
"CONFIDENTIALITY AGREEMENT") all documents and information concerning
the Company furnished to the Parent or the Purchaser in connection with
the transactions contemplated by this Agreement.
SECTION 6.3 EFFORTS.
(a) Subject to the terms and conditions provided herein, each
of the Company, the Parent and the Purchaser will, and the Company will
cause each of its subsidiaries to, cooperate and use their respective
reasonable best efforts to take, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including but not limited to cooperation in the preparation
and filing of the Proxy Statement, any required filings or requests for
additional information under the HSR Act, and any amendments to any
thereof. In addition, if at any time prior to the Effective Time any
event or circumstance relating to either the Company or the Parent or
the Purchaser or any of their respective subsidiaries should be
discovered by the Company or the Parent, as the case may be, which
should be set forth in an amendment to, the discovering party will
promptly inform the other party of such event or circumstance.
(b) Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with, and waivers of
any Violations that may be caused by, the consummation of the
transactions contemplated by this Agreement.
31
(c) Neither the Company nor the Company Board nor any
committee thereof will withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to the Parent or the Purchaser,
the recommendation of the Company Board of this Agreement or the
Merger, or approve or recommend, or propose publicly to approve or
recommend, an Acquisition Transaction (as defined in Section 6.10),
except in connection with the Company's termination of this Agreement
pursuant to Section 8.1(d). Nothing contained in this Section 6.3(c)
prohibits the Company from making any required disclosure to the
Company's shareholders if the Company Board determines in good faith by
a vote of a majority of the members of the full Company Board, based on
the advice of outside counsel, that a failure to so disclose would be
inconsistent with its obligations under applicable law. Any withdrawal,
modification or change of the recommendation of the Company Board of
this Agreement or the Merger will not change the approval of the
Company Board for purpose of causing any state takeover statute or
other law or the Rights Agreement or the Rights to be inapplicable to
this Agreement, the Merger and the transactions contemplated hereby.
(d) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use their respective reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes
of this Agreement, the parties hereto will take or cause to be taken
all such necessary action, including, without limitation, the execution
and delivery of such further instruments and documents as may be
reasonably requested by the other party for such purposes or otherwise
to consummate and make effective the transactions contemplated hereby.
SECTION 6.4 PUBLIC ANNOUNCEMENTS.
The Company, on the one hand, and the Parent and the Purchaser, on the
other hand, agree to consult promptly with each other prior to issuing any press
release or otherwise making any public statement with respect to the Merger and
the other transactions contemplated hereby, agree to provide to the other party
for review a copy of any such press release or statement, and will not issue any
such press release or make any such public statement prior to such consultation
and review, unless required by applicable law or any listing agreement with a
securities exchange.
SECTION 6.5 EMPLOYEE BENEFIT ARRANGEMENTS.
(a) The Parent shall to the extent practicable either maintain
and provide to the Company's employees the employee benefits and
programs of the Company as substantially in effect as of the date
hereof or cause the Surviving Corporation to provide employee benefits
and programs to the Company's employees that, in the aggregate, are
substantially comparable to those of the Parent. The Company shall
provide the Parent with such information as the Parent may reasonably
32
request regarding the Company's employee benefits and programs in order
to assist Purchaser in complying with its obligations under this
Section 6.5(a). Nothing in this Section 6.5(a) shall be construed to
prohibit or restrict the Parent or the Surviving Corporation from
amending, suspending or terminating any of its employee benefit plans
or programs at any time. Nothing in this Section 6.5 or elsewhere in
this Agreement shall be construed to create a right in any employee to
employment with the Parent, the Surviving Company or any of their
subsidiaries and the employment of each such employee shall be "at
will" employment, except to the extent otherwise provided in a written
employment agreement. The Parent shall use commercially reasonable
efforts to maintain in effect through December 31, 2006 the existing
health plans of the Company.
(b) For purposes of determining eligibility to participate,
vesting and accrual or entitlement to benefits where length of service
is relevant under any employee benefit plan of the Parent or the
Surviving Corporation ("PARENT PLAN"), the Employees will receive
service credit for service with the Company and any of its subsidiaries
to the same extent such service credit was granted under the Listed
Plans, subject to offsets for previously accrued benefits and to no
duplication of benefits (except that no such credit will be applied for
benefit accrual or entitlement purposes under defined benefit pension
plans). Such employees also will be given credit for any deductible or
co-payment amounts paid in respect of the plan year in which the
Effective Time occurs, to the extent that, following the Effective
Time, they participate in any Parent Plan for which deductibles or
co-payments are required. The Parent agrees that it also will cause
each Parent Plan to waive (i) any pre-existing condition restriction
which was waived under the terms of any analogous plan immediately
prior to the Effective Time or (ii) waiting period limitation which
would otherwise be applicable to an Employee on or after the Effective
Time to the extent such Employee had satisfied any similar waiting
period limitation under an analogous plan prior to the Effective Time.
SECTION 6.6 INDEMNIFICATION.
(a) The Parent agrees that, and agrees to cause the Surviving
Corporation to honor, all rights to indemnification now existing in
favor of any director, officer, or employee of the Company and its
subsidiaries (the "INDEMNIFIED PARTIES") as provided in their
respective charters or bylaws or by contract will survive the Merger
and will continue in full force and effect for a period of not less
than six years from the Effective Time.
(b) The Company shall purchase prepaid insurance policies with
a claims period of at least six years with respect to directors' and
officers' liability insurance in amount and scope at least as favorable
as the Company's existing policies for claims arising from facts or
events that occurred on or prior to the Effective Time, provided that
aggregate premium payments for such policies do not exceed $50,000.
(c) In the event the Parent or the Purchaser or any of their
successors or assigns, (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of
33
such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and
in each such case, to the extent necessary to effectuate the purposes
of this Section 6.6, proper provision will be made so that the
successors and assigns of the Parent and the Purchaser assume the
obligations set forth in this Section 6.6.
SECTION 6.7 NOTIFICATION OF CERTAIN MATTERS.
The Parent and the Company (the one required to give notice hereunder
being referred to herein as the "notifying party") will each promptly notify the
other of (a) the occurrence or non-occurrence of any fact or event which would
be reasonably likely (i) to cause any representation or warranty of the
notifying party contained in this Agreement to be untrue or inaccurate in any
material respect if made at any time from the date hereof to the Effective Time
or (ii) to cause any covenant or agreement of the notifying party, or any
condition to the obligations of the party to be notified, under this Agreement
not to be complied with or satisfied in any material respect and (b) any failure
of the notifying party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification will modify the
representations or warranties of any party or the conditions to the obligations
of any party hereunder. Each of the Company, the Parent and the Purchaser will
give prompt notice to the other parties hereof of any notice or other
communication (a) from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement and (b) from any Governmental Entity in connection with the
transactions contemplated by this Agreement.
SECTION 6.8 RIGHTS AGREEMENT.
The Company covenants and agrees that it will not (a) redeem the
Rights, (b) amend the Rights Agreement or (c) take any action which would allow
any Person (as defined in the Rights Agreement) other than the Parent or the
Purchaser to acquire beneficial ownership of 20% or more of the Common Shares
without causing a "Distribution Date" or a "Triggering Event" to occur pursuant
to the terms of the Rights Agreement.
SECTION 6.9 STATE TAKEOVER LAWS.
The Company will, upon the request of the Purchaser, take all
reasonable steps to assist in any challenge by the Purchaser to the validity or
applicability to the transactions contemplated by this Agreement, including the
Merger, of any state takeover law.
SECTION 6.10 NO SOLICITATION.
(a) The Company, its affiliates and their respective officers,
directors, employees, representatives and agents will immediately cease
any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition or exchange of all
or any material portion of the assets of, or any equity interest in,
the Company or any of its subsidiaries or any business combination with
the Company or any of its subsidiaries. Except as otherwise provided in
Section 6.10(b), the Company agrees that, prior to the Effective Time,
34
it will not, and will not authorize or permit any of its subsidiaries
or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit,
initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any
proposal with respect to any merger, liquidation, recapitalization,
consolidation or other business combination involving the Company or
any of its subsidiaries or acquisition of any capital stock or any
material portion of the assets of the Company or its subsidiaries, or
any combination of the foregoing (an "ACQUISITION TRANSACTION"), or
negotiate, explore or otherwise engage in discussions with any person
(other than the Purchaser, the Parent or their respective directors,
officers, employees, agents and representatives) with respect to any
Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate
the Merger or any other transactions contemplated by this Agreement.
(b) Notwithstanding the provisions of Section 6.10(a), prior
to the Effective Time, the Company may furnish information, pursuant to
a customary confidentiality agreement with terms not more favorable to
such third party than the Confidentiality Agreement, to, and negotiate
or otherwise engage in discussions with, any party who delivers a bona
fide written proposal for an Acquisition Transaction for which all
necessary financing is then, in the judgment of the Company Board,
readily obtainable, if (i) the Company Board determines in good faith
by a vote of a majority of the members of the full Company Board that
failing to take such action would create a reasonable likelihood of a
breach of the fiduciary duties of the Company Board (after consultation
and receipt of advice from its outside legal counsel to such effect)
and such a proposal is (based on advice from Xxxxxx X. Xxxx Advisors
LLC) more favorable to the Company's shareholders from a financial
point of view than the transactions contemplated by this Agreement as
the same has been proposed to be amended by the Parent pursuant to
Section 6.10(b) and (ii) there has been no violation of any of the
restrictions in Section 6.10(a) in connection with the Company's
receipt of such proposal. An Acquisition Transaction meeting the
requirements set forth in this Section 6.10(b), the proposal for which
has been received by the Company without violation of any of the
restrictions of Section 6.10(a), is referred to herein as a "Superior
Transaction."
(c) From and after the execution of this Agreement, the
Company will promptly (and in any event within twenty-four (24) hours
after receipt) advise the Parent in writing of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations or proposals
relating to an Acquisition Transaction, identify the offeror and
furnish to the Parent a copy of any such proposal or inquiry, if it is
in writing, relating to an Acquisition Transaction. The Company will
promptly advise the Parent of any material development relating to such
proposal, including the results of any substantive discussions or
negotiations with respect thereto. Notwithstanding anything in this
Agreement to the contrary, prior to the approval of an Acquisition
Transaction by the Company Board, the Company will give the Parent
sufficient notice of the material terms and conditions of any such
Acquisition Transaction, and negotiate in good faith with the Parent
for a period of not less than five (5) business days after the Parent's
receipt of a copy of a written proposal or a written summary of an oral
proposal setting forth or describing such Acquisition Transaction to
35
make such adjustments in the terms and conditions of this Agreement as
would enable the Company to proceed with the transactions contemplated
herein, after taking into account any adjustment or modification of the
terms of this Agreement proposed by the Parent (and any adjustment or
modification of the terms of such proposed Acquisition Transaction),
after which, notwithstanding Section 6.10(a), the Company may terminate
this Agreement in accordance with Section 8.1(d) and enter into an
agreement with another party relating to an Acquisition Transaction.
SECTION 6.11 SHAREHOLDER LITIGATION.
The Company will consult with the Parent and keep the Parent informed
about the defense of any stockholder litigation against the Company and/or its
officers or directors relating to the transactions contemplated by this
Agreement. The Company will not settle any such litigation without the Parent's
prior written consent.
SECTION 6.12 RESIGNATIONS
Each of the members of the Company Board will resign as of the
Effective Time.
SECTION 6.13 TERMINATION OF CERTAIN INSURANCE POLICIES.
The Company shall arrange for the cancellation, on the Closing Date
immediately prior to the Effective Time, of the four life insurance policies
listed in SCHEDULE 6.13 of the Company Disclosure Schedule.
SECTION 6.14 SEVERANCE PAYMENTS.
On or before the Closing Date (but in any event no later than
immediately prior to the Effective Time), the Company shall make all severance
payments arising as a result of the transactions contemplated by this Agreement,
a good faith estimate of which is set forth in SCHEDULE 6.14 of the COMPANY
DISCLOSURE SCHEDULE.
SECTION 6.15 DISMISSAL OF LAWSUIT.
As a condition and inducement to the Company's willingness to enter
into this Agreement upon the terms contained herein, within five (5) days after
the execution of this Agreement, the Parent and the Purchaser will cause that
certain action against the Company entitled AIP IV, LLC d/b/a American
Industrial Partners against Xxxxxxx Industries, Inc. now pending in the Supreme
Court of the State of New York to be dismissed with prejudice.
36
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligations of the Parent, the Purchaser and the Company
to consummate the Merger are subject to the satisfaction, at or before the
Closing, of each of the following conditions:
(a) SHAREHOLDER APPROVAL. The Agreement has been approved by
the Requisite Vote of the shareholders of the Company.
(b) INJUNCTIONS; ILLEGALITY. The consummation of the Merger is
not restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any
Governmental Entity (provided that each of the parties has used
reasonable best efforts to prevent the entry of any such injunction or
other order and to appeal any injunction or other order that may be
entered), and there has been no statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental
Entity which prevents the consummation of the Merger. (c) HSR ACT. Any
waiting period (and any extension thereof) under the HSR Act applicable
to the Merger has expired or terminated.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE PARENT.
The obligations of the Parent to consummate the Merger are subject to
the fulfillment at or before the Closing, of the following additional
conditions:
(a) COMPANY REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects (except
that where any statement in a representation or warranty expressly
includes a "material adverse effect", "material" or other materiality
qualifier, such representation or warranty shall be true and correct in
all respects) as of the date hereof and as of the Closing Date as if
made on and as of the Closing Date, except those representations and
warranties that speak of an earlier date, which shall be true and
correct as of such earlier date (it being understood that, for purposes
of determining the accuracy of such representations and warranties, any
update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded).
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed and complied with all the covenants and agreements in all
material respects and satisfied in all material respects all the
conditions required by this Agreement to be performed or complied with
or satisfied by the Company at or prior to the Effective Time.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no
change, condition, event, or development that has or could reasonably
be expected to have, a Material Adverse Effect on the Company since the
date of this Agreement.
(d) CONSENTS. The Consents set forth in SCHEDULE 7.2(D) of the
COMPANY DISCLOSURE SCHEDULE shall have been obtained and shall be in
full force and effect.
37
(e) RIGHTS AGREEMENT. The Rights Agreement has been terminated
and has no further legal force or effect.
SECTION 7.3 CONDITION TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the Merger are subject to
the satisfaction at or before Closing, of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
PURCHASER. The representations and warranties of the Parent and the
Purchaser set forth in this Agreement shall be true and correct in all
material respects (except that where any statement in a representation
or warranty expressly includes a "material adverse effect", "material"
or other materiality qualifier, such representation or warranty shall
be true and correct in all respects) as of the date hereof and as of
the Closing Date as if made on and as of the Closing Date, except those
representations and warranties that speak of an earlier date, which
shall be true and correct as of such earlier date.
(b) PERFORMANCE BY THE PARENT AND THE PURCHASER. The Parent
and the Purchaser shall have performed and complied with all the
covenants and agreements in all material respects and satisfied in all
material respects all the conditions required by this Agreement to be
performed or complied with or satisfied by each such party at or prior
to the Effective Time.
SECTION 7.4 FRUSTRATION OF CONDITIONS.
Neither the Parent nor the Company may rely on the failure of any
condition set forth in this Article VII to be satisfied if such failure was
caused by such party's failure to comply with or perform any of its covenants or
obligations set forth in this Agreement
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1 TERMINATION.
This Agreement may be terminated and the Merger contemplated hereby may
be abandoned at any time prior to the Closing, notwithstanding any approval
thereof by the shareholders of the Company (with any termination by the Parent
also being an effective termination by the Purchaser):
(a) by the mutual written consent of the Company and the
Parent;
(b) by the Company, on the one hand, or the Parent, on the
other hand, if the transactions contemplated by this Agreement have not
been consummated on or before six months from the date of this
Agreement, unless such date is extended by the mutual written consent
of the Company and the Parent provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1(b) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement results in the failure of the Merger to be
consummated by such time;
38
(c) by the Parent or the Company if (i) any court or other
Governmental Entity has issued an order, decree, judgment or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree or ruling or other action
has become final and nonappealable or (ii) the vote of the Company's
shareholders shall have been taken at a meeting duly convened therefor
or at any adjournment or postponement thereof, and such vote shall be
insufficient to approve the Merger and this Agreement;
(d) by the Company if the Company has complied with its
obligations under Section 6.10 and the Company indicates its intention
to enter into a definitive agreement with a third party for a Superior
Transaction;
(e) by the Parent, if the Company breaches any of its
covenants in Sections 6.3(c), 6.8 or 6.10 or if the Company Board has
(i) withdrawn or modified in a manner adverse to the Purchaser its
approval or recommendation of this Agreement or the Merger, (ii)
approved or recommended another Acquisition Transaction, or (iii)
resolved to effect any of the foregoing (and such resolution is made
public);
(f) by the Parent, if the Company shall have breached in any
material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement (except that where any
statement in a representation or warranty expressly includes a
"material adverse effect," "material" or other materiality qualifier,
such representation or warranty shall be true and correct in all
respects), which breach or failure to perform is incapable of being
cured or has not been cured within 45 days after the giving of written
notice to the Company; or
(g) by the Company, if the Parent shall have breached in any
material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement (except that where any
statement in a representation or warranty expressly includes a
"material adverse effect," "material" or other materiality qualifier,
such representation or warranty shall be true and correct in all
respects), which breach or failure to perform is incapable of being
cured or has not been cured within 45 days after the giving of written
notice to Purchaser.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the other
party in accordance with Section 9.4 hereof.
SECTION 8.2 EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section
8.1, this Agreement will forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers, employees or
shareholders, other than the provisions of this Section 8.2, Section 8.3 and
Article IX, which will survive any such termination. Nothing contained in this
Article VIII relieves any party from liability for any breach of this Agreement.
39
SECTION 8.3 FEES AND EXPENSES.
(a) Whether or not the Merger is consummated, except as
otherwise specifically provided herein, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated by
this Agreement will be paid by the party incurring such expenses;
PROVIDED that the Parent shall be responsible for all filing fees in
connection with (i) the filings required by the HSR Act and (ii) any
other filings with Governmental Entities required to effect the Merger.
(b) In the event that this Agreement is terminated pursuant to
Sections 8.1(d) or 8.1(e), the Company shall promptly, but in no event
later than, in the case of termination by the Company, upon delivery of
the notice of termination, or in the case of termination by the Parent,
two days after such termination, pay to the Parent Three Million Five
Hundred Thousand Dollars ($3,500,000). In the event that this Agreement
is terminated pursuant to Section 8.1(c)(ii) and the Company enters
into and completes a Superior Transaction, within six (6) months of the
date of termination of this Agreement, the Company shall promptly, upon
the closing of the Superior Transaction, pay to the Parent Three
Million Five Hundred Thousand Dollars ($3,500,000). In the event that
this Agreement is terminated pursuant to Section 8.1(f), the Company
shall promptly, but in no event later than, in the case of termination
by the Company, upon delivery of the notice of termination, or in the
case of termination by the Parent, two days after such termination,
reimburse the Parent for reasonably documented out-of-pocket fees and
expenses of the Parent and the Purchaser (including reasonable printing
fees, filing fees and reasonable fees and expenses of its legal and
financial advisors) related to this Agreement, the Voting Agreement,
the transactions contemplated hereby and thereby and any related
financing up to a maximum of One Million Dollars ($1,000,000).
(c) In the event that this Agreement is terminated pursuant to
Section 8.1(g), the Parent shall promptly, but in no event later than
two days after such termination, reimburse the Company for reasonably
documented out-of-pocket fees and expenses of the Company (including
reasonable printing fees, filing fees and reasonable fees and expenses
of its legal and financial advisors) related to this Agreement and the
transactions contemplated hereby up to a maximum of One Million Dollars
($1,000,000).
(d) Notwithstanding anything otherwise contained in this
Agreement, the fees and reimbursement of expenses (as applicable)
provided for in Section 8.3(b) and Section 8.3(c) will be the sole and
exclusive remedy available to the Parent and the Purchaser, or the
Company, respectively, upon termination of this Agreement pursuant to
Section 8.1.
(e) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof will be entitled to
recover from the other party the reasonable costs and expenses
(including reasonable attorneys' and expert witness fees) incurred in
connection with such action.
40
SECTION 8.4 AMENDMENT.
This Agreement may be amended by the Company, the Parent and the
Purchaser, provided that any amendment after approval of this Agreement by the
shareholders of the Company may not decrease the Merger Price or adversely
affect the rights of the Company's shareholders hereunder without the approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of all the parties.
SECTION 8.5 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto may (a)
extend the time for the performance of any of the obligations or other acts of
any other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein by any other party or in any document, certificate
or writing delivered pursuant hereto by any other party or (c) waive compliance
with any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any party to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations, warranties and covenants made in this Agreement do
not survive beyond the Effective Time. Notwithstanding the foregoing, the
agreements set forth in Articles II and III and Sections 1.3, 6.3(d), 6.5, 6.6
and 9.8 will survive the Effective Time indefinitely (except to the extent a
shorter period of time is explicitly specified therein). Any and all breaches of
the non-surviving representations, warranties and covenants will be deemed
waived as of the Effective Time.
SECTION 9.2 ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including the documents, schedules and
instruments referred to herein) and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties, including
without limitation that certain letter agreement dated September 18,
2006 among the Parent, the Company and American Industrial Partners and
that certain letter agreement dated July 11, 2006 between the Company
and American Industrial Partners.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of each other party, except that the Parent may assign its
rights and the Purchaser may assign its rights, interest and
obligations to any affiliate or direct or indirect subsidiary of the
Parent and the Parent may transfer the stock of the Purchaser without
the consent of the Company provided that (i) no such assignment will
relieve the Parent or the Company of any liability for any breach by
such assignee, and (ii) neither the Parent nor the Purchaser may assign
their rights, interest and obligations prior to the Effective Time (but
the assignment may occur simultaneously at the Effective Time). Subject
41
to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 9.3 VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
in any jurisdiction will not affect the validity or enforceability of any other
provision of this Agreement, each of which will remain in full force and effect
or the validity or enforceability of such provisions in any other jurisdiction.
SECTION 9.4 NOTICES.
All notices, requests, claims, demands and other communications
hereunder must be in writing and will be deemed to have been duly given when
delivered in person, by overnight courier or facsimile to the respective parties
as follows:
If to the Parent or the Purchaser:
Parent Corp.
Purchaser (c/o Parent Corp.)
Steel Partners II, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxxx
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: 212-451-2222
If to the Company:
Xxxxxxx Industries, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile: 000-000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address will be effective only upon
receipt thereof.
SECTION 9.5 GOVERNING LAW.
This Agreement will be governed by and construed in accordance with the
laws of the State of Missouri, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
SECTION 9.6 DESCRIPTIVE HEADINGS.
The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
SECTION 9.7 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, by
facsimile, each of which will be deemed to be an original, but all of which will
constitute one and the same agreement.
SECTION 9.8 PARTIES IN INTEREST.
This Agreement will be binding upon and inure solely to the benefit of
each party hereto and their successors and permitted assigns, and, except with
respect to Section 6.6, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.9 DEFINITIONS.
(a) CERTAIN DEFINED TERMS. As used in this Agreement:
(i) the term "affiliate", as applied to any Person,
means any other person directly or indirectly controlling,
controlled by, or under common control with, that Person. For
the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies
of that Person, whether through the ownership of voting
securities, by contract or otherwise;
43
(ii) the term "Person" or "person" includes
individuals, corporations, partnerships, trusts, other
entities and groups (which term includes a "group" as such
term is defined in Section 13(d)(3) of the Exchange Act); and
(iii) the term "subsidiary" or "subsidiaries" means,
with respect to the Parent, the Company or any other person,
any corporation, partnership, joint venture or other legal
entity of which the Parent, the Company or such other person,
as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or
other equity interests the holders of which are generally
entitled to 50% or more of the vote for the election of the
board of directors or other governing body of such corporation
or other entity or 50% or more of the profits of such
corporation or other entity.
(b) CROSS-REFERENCE TABLE. The following terms are defined in
the corresponding Sections of this Agreement:
Defined Term Section Reference
------------ -----------------
Acquisition Transaction Section 6.10(a)
Agreement Preamble
Balance Sheet Section 4.6(b)
Balance Sheet Date Section 4.6(b)
Capital Stock Section 4.3(a)
Cash Payment Section 1.6(a)
Certificates Section 3.2(a)
Closing Section 1.8
Closing Date Section 1.8
Code Section 3.2(f)
Common Shares Section 1.4
Company Preamble
Company Board Section 1.6
Company Disclosure Schedule Section 1.6(a)
Company Financials Section 4.6(b)
Company Leases Section 4.21
Company Permits Section 4.8(a)
Company Real Property Section 4.21
Company Representatives Section 6.2(a)
Confidentiality Agreement Section 6.2(d)
Consent Section 4.5(b)
44
Dissenting Shares Section 3.1
Effective Time Section 1.2
Environmental Claim Section 4.7
Environmental Laws Section 4.7
ERISA Section 4.12(a)
Exchange Act Section 4.6(a)
GAAP Section 4.6(b)
GBCL Preamble
Governmental Entity Section 4.5(b)
Hazardous Substance Section 4.7
HSR Act Section 4.5(a)
Indebtedness Section 4.3(h)
Indemnified Parties Section 6.6(a)
Intellectual Property Section 4.13(a)
IRS Section 4.12(b)
Lien Section 4.3(i)
Listed Plans Section 4.12(a)
Litigation Section 4.9
Material Adverse Effect on the Company Section 4.1
Material Adverse Effect on the Parent Section 5.1
Material Contracts Section 4.20
Merger Preamble
Merger Price Section 1.4
Multiemployer Plan Section 4.12(e)
Notifying Party Section 6.7
Options Section 1.6
Other Filings Section 4.10
Parent Preamble
Parent Plan Section 6.5(b)
Parent Representatives Section 6.2(a)
Paying Agent Section 3.2(a)
Permitted Liens Section 4.21
Preferred Stock Section 4.3(a)
Proxy Statement Section 1.7(b)
Purchaser Preamble
Qualified Plans Section 4.12(c)
Requisite Vote Section 4.4
Rights Section 4.3(a)
45
Rights Agreement Section 4.2
SEC Section 4.6(a)
SEC Reports Section 4.6(a)
Securities Act Section 4.6(a)
Shareholder Preamble
Voting Agreement Preamble
Special Meeting Section 1.7(a)
Stock Plans Section 1.6
Superior Transaction Section 6.10(b)
Surviving Corporation Section 1.1
Tax Section 4.14(b)
Tax Return Section 4.14(b)
Taxes Section 4.14(b)
Trade Secrets Section 4.13(a)
Violation Section 4.5(a)
Voting Agreement Preamble
Voting Debt Section 4.3(c)
WARN Act Section 4.16(e)
SECTION 9.10 SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
[SIGNATURE PAGES FOLLOW.]
46
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
STEEL PARTNERS, II L.P.
By: Steel Partners, L.L.C., its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
CS ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
-----------------------------------------
Title: President
----------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
XXXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxx Xxxxxxx
-----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
