AGREEMENT AND PLAN OF MERGER
Among
DURA AUTOMOTIVE SYSTEMS, INC.
and
WINDOWS ACQUISITION CORPORATION
and
EXCEL INDUSTRIES, INC.
TABLE OF CONTENTS
Page
ARTICLE 1.
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 Articles and Bylaws. . . . . . . . . . . . .2
SECTION 1.5 Conversion of Securities . . . . . . . . . .2
SECTION 1.6 Parent to Make Certificates Available. . . .6
SECTION 1.7 Dividends; Transfer Taxes; Withholding . . .7
SECTION 1.8 No Fractional Securities . . . . . . . . . .8
SECTION 1.9 Return of Exchange Fund. . . . . . . . . . .8
SECTION 1.10 Adjustment of Conversion Number. . . . . . .9
SECTION 1.11 No Further Ownership Rights in Company
Common Stock . . . . . . . . . . . . . . . .9
SECTION 1.12 Closing of Company Transfer Books. . . . . .9
SECTION 1.13 Lost Certificates. . . . . . . . . . . . . .9
SECTION 1.14 Legend . . . . . . . . . . . . . . . . . . .9
SECTION 1.15 Further Assurances . . . . . . . . . . . . 10
SECTION 1.16 Directors and Officers . . . . . . . . . . 10
SECTION 1.17 Closing. . . . . . . . . . . . . . . . . . 10
SECTION 1.18 Tax Treatment. . . . . . . . . . . . . . . 10
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . . . . . 11
SECTION 2.1 Organization, Standing and Power . . . . . 11
SECTION 2.2 Capital Structure. . . . . . . . . . . . . 11
SECTION 2.3 Authority. . . . . . . . . . . . . . . . . 12
SECTION 2.4 Consents and Approvals; No Violation . . . 13
SECTION 2.5 SEC Documents and Other Reports. . . . . . 13
SECTION 2.6 Registration Statement and Prospectus. . . 14
SECTION 2.7 Absence of Certain Changes or Events . . . 15
SECTION 2.8 Permits and Compliance . . . . . . . . . . 15
SECTION 2.9 Tax Matters. . . . . . . . . . . . . . . . 16
SECTION 2.10 Actions and Proceedings. . . . . . . . . . 17
SECTION 2.11 Certain Agreements . . . . . . . . . . . . 17
SECTION 2.12 ERISA. . . . . . . . . . . . . . . . . . . 17
SECTION 2.13 Compliance with Certain Laws . . . . . . . 18
SECTION 2.14 Liabilities. . . . . . . . . . . . . . . . 18
SECTION 2.15 Labor Matters. . . . . . . . . . . . . . . 19
SECTION 2.16 Intellectual Property. . . . . . . . . . . 19
SECTION 2.17 Environmental Matters. . . . . . . . . . . 19
SECTION 2.18 Operations of Sub. . . . . . . . . . . . . 21
SECTION 2.19 Financing. . . . . . . . . . . . . . . . . 21
SECTION 2.20 Brokers. . . . . . . . . . . . . . . . . . 21
SECTION 2.21 Required Vote of Shareholders . . . . . . 21
SECTION 2.22 Ownership of Shares. . . . . . . . . . . . 21
SECTION 2.23 State Takeover Statutes and Shareholder
Rights Plan. . . . . . . . . . . . . . . . 21
SECTION 2.24 Investigations; Litigation . . . . . . . . 21
SECTION 2.25 Contracts and Commitments. . . . . . . . . 22
SECTION 2.26 Real Estate Leases . . . . . . . . . . . . 23
SECTION 2.27 Real Property. . . . . . . . . . . . . . . 23
SECTION 2.28 Opinion of Financial Advisor . . . . . . . 24
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . 24
SECTION 3.1 Organization, Standing and Power . . . . . 24
SECTION 3.2 Capital Structure. . . . . . . . . . . . . 24
SECTION 3.3 Authority. . . . . . . . . . . . . . . . . 25
SECTION 3.4 Consents and Approvals: No Violation . . . 25
SECTION 3.5 SEC Documents and Other Reports. . . . . . 26
SECTION 3.6 Absence of Certain Changes or Events . . . 27
SECTION 3.7 Registration Statement and Joint Proxy
Statement. . . . . . . . . . . . . . . . . 28
SECTION 3.8 Permits and Compliance . . . . . . . . . . 28
SECTION 3.9 Tax Matters. . . . . . . . . . . . . . . . 29
SECTION 3.10 Actions and Proceedings. . . . . . . . . . 30
SECTION 3.11 Certain Agreements . . . . . . . . . . . . 30
SECTION 3.12 ERISA. . . . . . . . . . . . . . . . . . . 30
SECTION 3.13 Compliance with Certain Laws . . . . . . . 31
SECTION 3.14 Liabilities. . . . . . . . . . . . . . . . 31
SECTION 3.15 Labor Matters. . . . . . . . . . . . . . . 32
SECTION 3.16 Intellectual Property. . . . . . . . . . . 32
SECTION 3.17 Environmental Matters. . . . . . . . . . . 32
SECTION 3.18 Required Vote of Company Shareholders. . . 33
SECTION 3.19 Brokers. . . . . . . . . . . . . . . . . . 33
SECTION 3.20 State Takeover Statutes and Shareholder
Rights Plan. . . . . . . . . . . . . . . . 34
SECTION 3.21 Investigations; Litigation . . . . . . . . 34
SECTION 3.22 Contracts and Commitments. . . . . . . . . 35
SECTION 3.23 Real Estate Leases . . . . . . . . . . . . 36
SECTION 3.24 Real Property. . . . . . . . . . . . . . . 36
SECTION 3.25 Opinion of Financial Advisor . . . . . . . 36
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . 36
SECTION 4.1 Conduct of Business Pending the Merger . . 36
SECTION 4.2 No Solicitation. . . . . . . . . . . . . . 41
SECTION 4.3 Third Party Standstill Agreements. . . . . 41
ARTICLE 5.
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . 42
SECTION 5.1 Shareholder Meetings . . . . . . . . . . . 42
SECTION 5.2 Preparation of the Registration Statement
and the Joint Proxy Statement. . . . . . . 42
SECTION 5.3 Access to Information. . . . . . . . . . . 43
SECTION 5.4 Fees and Expenses. . . . . . . . . . . . . 43
SECTION 5.5 Reasonable Good Faith Efforts. . . . . . . 43
SECTION 5.6 Securities Filings . . . . . . . . . . . . 44
SECTION 5.7 Indemnification. . . . . . . . . . . . . . 44
SECTION 5.8 Employee Benefits. . . . . . . . . . . . . 45
SECTION 5.9 State Takeover Laws. . . . . . . . . . . . 45
SECTION 5.10 Notification of Certain Matters. . . . . . 45
SECTION 5.11 Designation of Directors . . . . . . . . . 45
SECTION 5.12 Letters of Parent's and the Company's
Accountants. . . . . . . . . . . . . . . . 46
SECTION 5.13 Amendment of Rights Agreement. . . . . . . 46
SECTION 5.14 Financing. . . . . . . . . . . . . . . . . 46
ARTICLE 6.
CONDITIONS PRECEDENT TO THE MERGER . . . . . . . . . . . . . 46
SECTION 6.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . 46
SECTION 6.2 Conditions to Obligation of the Company to
Effect the Merger. . . . . . . . . . . . . 48
SECTION 6.3 Conditions to Obligations of Parent and
Sub to Effect the Merger . . . . . . . . . 48
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . 49
SECTION 7.1 Termination. . . . . . . . . . . . . . . . 49
SECTION 7.2 Effect of Termination. . . . . . . . . . . 51
SECTION 7.3 Amendment. . . . . . . . . . . . . . . . . 52
SECTION 7.4 Waiver . . . . . . . . . . . . . . . . . . 52
SECTION 7.5 Fees on Termination. . . . . . . . . . . . 52
ARTICLE 8.
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1 Non-Survival of Representations,
Warranties and Agreements. . . . . . . . . 55
SECTION 8.2 Notices. . . . . . . . . . . . . . . . . . 55
SECTION 8.3 Interpretation . . . . . . . . . . . . . . 56
SECTION 8.4 Counterparts . . . . . . . . . . . . . . . 56
SECTION 8.5 Entire Agreement; No Third-Party
Beneficiaries. . . . . . . . . . . . . . . 56
SECTION 8.6 Governing Law. . . . . . . . . . . . . . . 57
SECTION 8.7 Assignment . . . . . . . . . . . . . . . . 57
SECTION 8.8 Severability . . . . . . . . . . . . . . . 57
SECTION 8.9 Enforcement of this Agreement. . . . . . . 57
SECTION 8.10 Litigation Costs . . . . . . . . . . . . . 57
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January __, 1999 (this
"Agreement"), among DURA AUTOMOTIVE SYSTEMS, INC., a Delaware
corporation ("Parent"), WINDOWS ACQUISITION CORPORATION, an Indiana
corporation and a wholly-owned subsidiary of Parent ("Sub"), and
EXCEL INDUSTRIES, INC., an Indiana corporation (the "Company") (Sub
and the Company being hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub
and the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding
share of Common Stock, no par value, of the Company ("Company
Common Stock") will be converted, at the option of the holder
thereof, into either (i) cash in the amount of $25.50 per share of
Company Common Stock, (ii) 0.8 shares of Parent Class A Common
Stock, par value $0.01 per share ("Parent Common Stock") or (iii)
a combination thereof as hereinafter provided;
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies, is
in the best interests of corporation and is in the best interests
of their respective shareholders; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization pursuant to Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE 1.
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions hereof and in accordance with Indiana law, the Company
shall be merged with and into Sub at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate
existence of the Company shall cease and Sub shall continue as the
surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all of the rights and obligations of the
Company in accordance with Indiana law.
SECTION 1.2 Effective Time. The merger shall become effective
when the articles of merger (the "Articles of Merger"), executed in
accordance with the relevant provisions of Indiana law, are duly
filed with the Secretary of State of the State of Indiana (the
"Secretary"). Upon issuance of a certificate of merger by the
Secretary in accordance with the relevant provisions of Indiana
law, the Merger shall be effected (the time of such issuance of a
certificate of merger being referred to as the "Effective Time").
The filing of the Articles of Merger by the Company and the Sub
shall be made on the date of the Closing (as defined in Section
1.17), or as promptly thereafter as practicable.
SECTION 1.3 Effects of the Merger. The effect of the merger
shall be as provided by Indiana law.
SECTION 1.4 Articles and Bylaws. At the Effective Time, the
Articles of Incorporation of Sub, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law, except the name of the
Surviving Corporation shall be "Excel Industries, Inc." At the
Effective Time, the Bylaws of Sub, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein
or by the Articles of Incorporation of the Surviving Corporation or
by applicable law.
SECTION 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of
Sub, the Company or the holders of any securities of the
Constituent Corporations:
(a) Each issued and outstanding share of common stock, no par
value, of Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving
Corporation and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in
the treasury of the Company or by any wholly-owned Subsidiary
of the Company shall be canceled and no capital stock of
Parent or other consideration shall be delivered in exchange
therefor.
(c) (i) Subject to the provisions of Sections 1.8 and 1.10
hereof, each share of Company Common Stock (and each related
preferred stock purchase right) issued and outstanding
immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 1.5(b)) shall be
converted, at the option of the holder thereof, into the right
to receive either (A) $25.50 in cash (the "Cash
Consideration"), (B) 0.8 (such number being the "Conversion
Number") validly issued, fully paid and nonassessable shares
of Parent Common Stock or (C) a combination of cash and Parent
Common Stock, determined in accordance with Sections
1.5(c)(iv), (v) and (vi) below (collectively, the "Merger
Consideration"). All such shares of Company Common Stock (and
such preferred stock purchase rights), when so converted,
shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a certificate
formerly representing any such shares shall cease to have any
rights with respect thereto, except the right to receive any
dividends and other distributions in accordance with Section
1.7, certificates representing the shares of Parent Common
Stock into which such shares are converted and any cash,
without interest, in lieu of fractional shares to be issued or
paid pursuant to Section 1.8, or the Cash Consideration, in
consideration therefor upon the surrender of such certificate
in accordance with Section 1.6.
(ii) Subject to the election and allocation procedures set
forth in this Section 1.5, each holder of record of shares of
Company Common Stock as of the record date for the meeting of
shareholders of the Company referred to in Section 5.1 will with
respect to all or a portion of such shares be entitled to (A)
elect to receive certificates evidencing such number of whole
shares of Parent Common Stock into which such number of shares
of Company Common Stock would be converted in accordance with
the Conversion Number (a "Securities Election"), (B) elect to
receive the Cash Consideration multiplied by such number of
shares of Company Common Stock (a "Cash Election"), or (C)
indicate that such holder has no preference as to the receipt of
cash or shares of Parent Common Stock in exchange for such
shares of Company Common Stock (a "Non-Election"). All such
elections shall be made on a form designed for that purpose and
mutually acceptable to the Company and Parent (a "Form of
Election") and mailed to holders of record of shares of Company
Common Stock as of the record date for the meeting of
shareholders of the Company referred to in Section 5.1. Holders
of record of shares of Company Common Stock who hold such shares
as nominees, trustees or in other representative capacities
("Representatives") may submit multiple Forms of Election,
provided that such Representative certifies that each such Form
of Election covers all the shares of Company Common Stock held
by such Representative for a particular beneficial owner
entitled to so elect pursuant to the first sentence of this
Section 1.5(c)(ii). Elections shall be made by holders of
Company Common Stock by mailing to the Exchange Agent (as
defined in Section 1.6) properly completed and signed Forms of
Election. In order to be effective, a Form of Election must be
received by the Exchange Agent no later than the close of
business on the last business day prior to the Effective Time.
All elections may be revoked until the last business day prior
to the Effective Time. Parent shall have the discretion, which
it may delegate in whole or in part to the Exchange Agent, to
determine whether Forms of Election have been properly completed
and signed and properly and timely submitted or revoked and to
disregard immaterial defects in Forms of Election, and any good
faith decision of Parent or the Exchange Agent in such matters
shall be binding and conclusive. Neither Parent nor the
Exchange Agent shall be under any obligation to notify any
person of any defect in a Form of Election. Any holder of
shares of Company Common Stock who fails to make an election and
any holder who fails to submit to the Exchange Agent a properly
completed and signed and properly and timely submitted Form of
Election shall be deemed to have made a Non-Election.
(iii) The aggregate number of shares of Company Common
Stock to be converted into the right to receive cash in the
Merger (the "Cash Election Number") shall be equal to 50.0% of
the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time, and the aggregate
number of shares of Company Common Stock to be converted into
the right to receive shares of Parent Common Stock in the Merger
(the "Securities Election Number") shall be equal to 50.0% of
the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time.
(iv) If the aggregate number of shares of Company Common
Stock with respect to which Cash Elections have been made (the
"Cash Election Shares") exceeds the Cash Election Number, all
shares of Company Common Stock with respect to which Securities
Elections have been made (the "Securities Election Shares") and
all shares of Company Common Stock with respect to which Non-
Elections have been made (the "Non-Election Shares") shall be
converted into the right to receive shares of Parent Common
Stock in accordance with Section 1.5(c)(i) above, and the Cash
Election Shares shall be converted into the right to receive
shares of Parent Common Stock and cash in the following manner:
each Cash Election Share shall be converted into the
right to receive (i) an amount in cash, without interest,
equal to the product of (x) the Cash Consideration and
(y) a fraction (the "Cash Fraction"), the numerator of
which shall be the Cash Election Number and the
denominator of which shall be the total number of Cash
Election Shares and (ii) a number of shares of Parent
Common Stock equal to the product of (x) the Conversion
Number and (y) a fraction equal to one minus the Cash
Fraction.
(v) If the aggregate number of Securities Election Shares
exceeds the Securities Election Number, all Cash Election Shares
and all Non-Election Shares shall be converted into the right to
receive cash in accordance with Section 1.5(c)(i) above, and all
Securities Election Shares shall be converted into the right to
receive shares of Parent Common Stock and cash in the following
manner:
each Securities Election Share shall be converted into
the right to receive (i) a number of shares of Parent
Common Stock equal to the product of (x) the Conversion
Number and (y) a fraction (the "Securities Fraction"),
the numerator of which shall be the Securities Election
Number and the denominator of which shall be the total
number of Securities Election Shares and (ii) an amount
in cash, without interest, equal to the product of (x)
the Cash Consideration and (y) a fraction equal to one
minus the Securities Fraction.
(vi) In the event that neither Section 1.5(c)(iv) nor
Section 1.5(c)(v) above is applicable, all Cash Election Shares
shall be converted into the right to receive cash in accordance
with Section 1.5(c)(i) above, all Securities Election Shares
shall be converted into the right to receive shares of Parent
Common Stock in accordance with Section 1.5(c)(i) above, and the
Non-Election Shares, if any, shall be converted into the right
to receive shares of Parent Common Stock, and cash in the
following manner:
each Non-Election Share shall be converted into the right
to receive (i) an amount in cash, without interest, equal
to the product of (x) the Cash Consideration and (y) a
fraction (the "Non-Election Fraction"), the numerator of
which shall be the excess of the Cash Election Number
over the total number of Cash Election Shares and the
denominator of which shall be the excess of (A) the
number of shares of Company Common Stock outstanding
immediately prior to the Effective Time over (B) the sum
of the total number of Cash Election Shares and the total
number of Securities Election Shares, and (ii) a number
of shares of Parent Common Stock equal to the product of
(x) the Conversion Number and (y) a fraction equal to one
minus the Non-Election Fraction.
(vii) The Exchange Agent shall make all computations
contemplated by this Section 1.5 and all such computations shall
be binding and conclusive on the holders of Company Common
Stock.
(d) Each unexpired and unexercised option to purchase shares
of Company Common Stock (a "Company Stock Option") under the
Company Stock Option Plans (as hereinafter defined)(excluding
Company Stock Options which as of the Effective Time have not
yet been granted under the Company Stock Option Plans) will be
assumed by Parent as hereinafter provided. Pursuant to Section
4.4 of each Company Stock Option Plan, each Company Stock Option
will be automatically converted into an option (the "Parent
Stock Option") to purchase a number of shares of Parent Common
Stock equal to the number of shares of Company Common Stock that
could have been purchased under such Company Stock Option
multiplied by the Conversion Number, at a price per share of
Parent Common Stock equal to the per share option exercise price
specified in the Company Stock Option divided by the Conversion
Number. Such Parent Stock Option shall otherwise be subject to
the same terms and conditions as such Company Stock Option. At
the Effective Time, (i) the Company Stock Option Plans shall be
amended so that all references in the Company Stock Option
Plans, the applicable stock option or other awards agreements
issued thereunder shall be deemed to refer to Parent; (ii)
Parent shall assume the Company Stock Option Plans and all of
the Company's obligations thereunder with respect to the Company
Stock Options; (iii) Parent shall issue to each holder of an
outstanding Company Stock Option a document evidencing the
foregoing assumption by Parent and (iv) the Company Stock Option
Plans shall be terminated. If required by law in addition to the
existing Parent Registration Statement on Form S-8 relating to
such Parent Stock Options, as soon as practicable following the
Effective Time of the Merger, Parent shall use its best efforts
to file a registration statement on Form S-8 with the Securities
and Exchange Commission (the "SEC") with respect to the Company
Stock Options that have been converted into Parent Stock
Options.
(e) As of the Effective Time (i) each outstanding warrant to
purchase shares of Company Common Stock (the "Company Warrants")
shall be converted into a warrant (an "Adjusted Company
Warrant") to (A) purchase the number of shares of Parent Common
Stock equal to one-half of the number of shares of Company
Common Stock subject to such Company Warrant multiplied by the
Conversion Number and (B) receive cash in an amount equal to
one-half of the number of shares of Company Common Stock subject
to such Company Warrant multiplied by the Cash Consideration,
(ii) all references in each such Company Warrant to the Company
shall be deemed to refer to Parent and (iii) Parent shall assume
the obligations of the Company under the Company Warrant. The
other terms of each Adjusted Company Warrant (including the
aggregate exercise price contained therein), and the agreements
under which they were issued, shall continue to apply in
accordance with their terms. The date of grant of each Adjusted
Company Warrant shall be the date on which the corresponding
Company Warrant was granted. Prior to the Effective Time, the
Company shall use its reasonable best efforts to obtain any
consents from holders of Company Warrants that are necessary to
give effect to the transactions contemplated by this Section
1.5(e).
(f) After the date hereof, the Company will not grant any
further awards under the Company's 1997 Long Term Incentive Plan
(the "LTIP"). Prior to the Effective Time, the Company will
take all action necessary to amend the LTIP to provide that the
LTIP shall be terminated as of the Effective Time and all
obligations shall be extinguished thereunder. The Company shall
amend the Excel Industries Inc. Stock Purchase Plan to provide
that (i) no participant contributions may be made thereto on and
after Xxxxx 00, 0000, (xx) no participant may increase his level
of contributions from the level in effect immediately prior to
the date hereof, and (iii) all purchases of Company Stock with
respect to contributions made prior such date shall be made as
soon as practicable, but in no event later than one day prior to
the Effective Time.
SECTION 1.6 Parent to Make Certificates Available.
(a) Exchange of Certificates. Parent shall authorize a
commercial bank reasonably acceptable to the Company (or such
other person or persons as shall be acceptable to Parent and the
Company) to act as Exchange Agent hereunder (the "Exchange
Agent"). As soon as practicable after the Effective Time, Parent
shall deposit with the Exchange Agent, in trust for the holders
of shares of Company Common Stock converted in the Merger, the
total Cash Consideration, certificates representing the shares
of Parent Common Stock issued pursuant to Section 1.5(c) in
exchange for outstanding certificates representing shares of
Company Common Stock and cash required to make payments in lieu
of any fractional shares pursuant to Section 1.8 (such total
Cash Consideration, cash and shares of Parent Common Stock,
together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund").
The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Cash Consideration and certificates representing the
Parent Common Stock contemplated to be delivered pursuant to
Section 1.5(c) out of the Exchange Fund. Except as contemplated
by Sections 1.6, 1.8 and 1.9, the Exchange Fund shall not be
used for any other purpose.
(b) Exchange Procedures. As soon as practicable after the
Effective Time, Parent shall use its reasonable best efforts to
cause the Exchange Agent to mail to each record holder of a
certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common
Stock converted in the Merger (the "Certificates") a letter of
transmittal (which shall be in customary form, shall specify
that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent, and shall contain
instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration and cash
in lieu of fractional shares). Upon surrender for cancellation
to the Exchange Agent of a Certificate, together with such
letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor
either (i) the Cash Consideration, or (ii) a certificate
representing that number of whole shares of Parent Common Stock
into which the shares represented by the surrendered Certificate
shall have been converted at the Effective Time pursuant to this
Article I, cash in lieu of any fractional share in accordance
with Section 1.8 and certain dividends and other distributions
in accordance with Section 1.7. Until surrendered as
contemplated by this Section 1.6 hereof, each Certificate shall
be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger
Consideration, which the holder thereof has the right to receive
in respect of such Certificate pursuant to the provisions of
this Article 1, certain dividends or other distributions in
accordance with Section 1.7 hereof and cash in lieu of any
fractional share of Parent Common Stock in accordance with
Section 1.8 hereof. No interest shall be paid or will accrue on
any cash payable to holders of Certificates pursuant to the
provisions of this Article 1.
SECTION 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the
Effective Time on Parent Common Stock, or are payable to the
holders of record thereof on or after the Effective Time, will be
paid to any person entitled by reason of the Merger to receive the
Merger Consideration and no certificates evidencing Parent Common
Stock, Cash Consideration or cash payment in lieu of fractional
shares will be paid to any such person pursuant to Section 1.8
until such person surrenders the related Certificate or
Certificates, as provided in Section 1.6. Following the surrender
of the Certificate, subject to the effect of applicable law, there
shall be paid to each record holder of a new certificate
representing whole shares of Parent Common Stock: (i) at the time
of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid
with respect to the shares of Parent Common Stock represented by
such new certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; (ii) at
the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions
payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to
such surrender and a payment date on or subsequent to such
surrender; and (iii) at the time of such surrender or as promptly
as practicable thereafter, the amount of any cash payable with
respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8. In no event shall the
person entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions. If any cash or certificate representing shares of
Parent Common Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such
shares of Parent Common Stock in a name other than that of the
registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code or under any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent or the
Exchange Agent.
SECTION 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall
be issued upon the surrender for exchange of Certificates pursuant
to this Article I, and no Parent dividend or other distribution or
stock split shall relate to any fractional share, and no fractional
share shall entitle the owner thereof to vote or to any other
rights of a security holder of Parent. In lieu of any such
fractional share, each holder of Company Common Stock who would
otherwise have been entitled to a fraction of a share of Parent
Common Stock upon surrender of Certificates for exchange pursuant
to this Article I will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying
(i) the closing price of the Parent Common Stock on the Nasdaq
Stock Market ("Nasdaq") on the date before the Effective Time by
(ii) the fractional interest to which such holder would otherwise
be entitled. As promptly as practicable after the determination of
the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify the Parent, and
the Parent shall deposit such amount with the Exchange Agent and
shall cause the Exchange Agent to forward payments to such holders
of fractional share interests subject to and in accordance with the
terms of Section 1.7 and this Section 1.8.
SECTION 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former
shareholders of the Company for one year after the Effective Time
shall be delivered to Parent, upon demand of Parent, and any such
former shareholders who have not theretofore complied with this
Article I shall thereafter look only to Parent for payment of their
claim for Cash Consideration, Parent Common Stock, any cash in lieu
of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock. Neither Parent
nor the Surviving Corporation shall be liable to any former holder
of Company Common Stock for any such Cash Consideration, shares of
Parent Common Stock, cash and dividends and distributions held in
the Exchange Fund which is delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
SECTION 1.10 Adjustment of Conversion Number. In the event of
any reclassification, stock split or stock dividend with respect to
Parent Common Stock or Company Common Stock, any change or
conversion of Parent Common Stock or Company Common Stock into
other securities, any other dividend or distribution with respect
to the Parent Common Stock or Company Common Stock other than
normal quarterly cash dividends as the same may be adjusted from
time to time pursuant to the terms of this Agreement (or if a
record date with respect to any of the foregoing should occur)
prior to the Effective Time, appropriate and proportionate
adjustments, if any, shall be made to the Conversion Number and
Cash Consideration, and all references to the Conversion Number and
Cash Consideration in this Agreement shall be deemed to be to the
Conversion Number and Cash Consideration as so adjusted.
SECTION 1.11 No Further Ownership Rights in Company Common
Stock. All Cash Consideration and shares of Parent Common Stock
issued pursuant to the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of Company
Common Stock represented by such Certificates.
SECTION 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of shares of Company Common Stock shall
thereafter be made on the records of the Company. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
SECTION 1.13 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct (but consistent with the
practices the Parent applies to its own shareholders), as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Cash Consideration,
shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other
distributions to which the holders thereof are entitled pursuant to
Section 1.7.
SECTION 1.14 Legend. Certificates representing shares of
Parent Common Stock issued in accordance with the terms of this
Agreement in exchange for shares of Company Common Stock
surrendered by any "affiliate" of the Company for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated
thereunder, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
A RULE 145 TRANSACTION, AS THAT TERM IS USED IN RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED ONLY (1)
PURSUANT TO RULE 145, (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (3) UPON RECEIPT OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER IS
OTHERWISE EXEMPT FROM REGISTRATION UNDER THE ACT.
SECTION 1.15 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances or
any other acts or things are necessary, desirable or proper (a) 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, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and
its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of
either of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation's right, title or interest in, to
or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
SECTION 1.16 Directors and Officers. The persons who are
directors of Sub immediately prior to the Effective Time, shall,
after the Effective Time, comprise the Board of Directors of the
Surviving Corporation. At the Effective Time, the officers of the
Surviving Corporation shall consist of the officers of Sub
immediately prior to the Effective Time. Each of such directors and
officers of the Surviving Corporation shall hold office until their
respective successors have been duly elected or appointed and
qualified or as otherwise provided in the Articles of Incorporation
of the Surviving Corporation, the Bylaws of the Surviving
Corporation or by law.
SECTION 1.17 Closing. Unless this Merger Agreement shall have
been terminated pursuant to the provisions of Article 7 hereof the
closing of the transactions contemplated by this Agreement (the
"Closing") and all actions specified in this Agreement to occur at
the Closing shall take place on or before the business day
immediately after all of the conditions set forth in Article VI of
this Agreement have been satisfied or waived, as the case may be,
or such other date as may be mutually agreed to by the parties (the
"Closing Date"); provided, however, that if any of the conditions
provided for in Article 6 hereof shall not have been satisfied or
waived in accordance with the terms hereof by the Closing Date,
then either party to this Merger Agreement shall be entitled to
postpone the Closing by notice to the other party until such
condition or conditions shall have been met or waived.
SECTION 1.18 Tax Treatment. Each of Parent, Sub, and the
Company shall use reasonable best efforts to cause the Merger to
qualify as a reorganization pursuant to Section 368(a) of the Code.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
SECTION 2.1 Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite
corporate power and authority to carry on its business as now being
conducted. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana and has
the requisite corporate power and authority to carry on its
business as now being conducted. Each Subsidiary of Parent is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite
corporate power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or
in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect
(as hereinafter defined) on Parent. Parent and each of its
Subsidiaries are duly qualified to do business, and are in good
standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their
activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes
of this Agreement (a) "Material Adverse Change" or "Material
Adverse Effect" means, when used with respect to Parent or the
Company, as the case may be, any change or effect that is
materially adverse to the assets, liabilities, results of operation
or financial condition of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as
the case may be, and (b) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Parent or
the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly,
50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
SECTION 2.2 Capital Structure. As of the Effective Time, the
authorized capital stock of Parent will consist of 30,000,000
shares of Parent Common Stock, 10,000,000 shares of Class B Common
Stock, par value $ 0.01 per share (the "Parent Class B Common
Stock") and 5,000,000 shares of Preferred Stock, par value $ 1.00
per share (the "Parent Preferred Stock"). At the close of business
on January 18, 1999, (i) 9,029,085 shares of Parent Common Stock
were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights; (ii)
2,200,000 shares of Parent Common Stock were reserved for future
issuance pursuant to Parent's 1996 Key Employee Stock Option Plan,
Employee Discount Stock Purchase Plan, Independent Director Stock
Option Plan and 1998 Stock Incentive Plan (collectively, "Parent
Stock Plans"). All of the shares of Parent Common Stock issuable in
exchange for Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. As of the date of this Agreement, except for
(a) this Agreement, (b) stock options covering 1,092,697 shares of
Parent Common Stock (collectively, the "Parent Stock Options"), and
(c) 3,325,303 shares of Parent Common Stock reserved for issuance
upon the conversion of the Parent Class B Common Stock and
1,289,000 shares of Parent Common Stock reserved for issuance upon
the conversion of the 7 1/2% Trust Preferred Securities into the
Parent's 7 1/2% Convertible Subordinated Debentures and the
subsequent conversion of the 7 1/2% Convertible Subordinated
Debentures into Parent Common Stock, there are no options,
warrants, calls, rights or agreements to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating
Parent or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital
stock of Parent or any of its Subsidiaries or obligating Parent or
any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Each outstanding share
of capital stock of each Subsidiary of Parent is duly authorized,
validly issued, fully paid and nonassessable and, except as
disclosed in the Parent SEC Documents (as hereinafter defined),
each such share is owned by Parent or another Subsidiary of Parent,
free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 2.3 Authority. The respective Boards of Directors of
Parent and Sub have on or prior to the date of this Agreement (a)
declared the Merger advisable and duly approved and adopted this
Agreement in accordance with the applicable law, (b) resolved to
recommend the approval by Parent's shareholders of the matters
covered by the Parent Shareholder Approvals (as hereinafter
defined) and (c) directed that this Agreement and the other matters
subject to Parent Shareholder Approvals be submitted to Parent's
shareholders for approval. Each of Parent and Sub has all requisite
corporate power and authority, and no other corporate proceeding on
the part of Parent or Sub is necessary, to enter into this
Agreement and subject to (y) the Parent Shareholders' Approvals and
(z) the filing of appropriate Merger documents as required by
Indiana law, to issue the Parent Common Stock in connection with
the Merger (the "Share Issuance"), to pay the total Cash
Consideration and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub, subject to the
filing of appropriate Merger documents as required by Indiana law.
This Agreement has been duly executed and delivered by Parent and
Sub and (assuming the valid authorization, execution and delivery
of this Agreement by the Company) this Agreement constitutes the
valid and binding obligation of Parent and Sub enforceable against
each of them in accordance with its terms except as enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar
laws relating to creditors rights generally and except that the
availability of equitable remedies, including specific performance,
is subject to judicial discretion. The Share Issuance and the
filing of a registration statement on Form S-4 with the SEC by
Parent under the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the "Securities
Act"), for the purpose of registering the shares of Parent Common
Stock (together with any amendments or supplements thereto, whether
prior to or after the effective date thereof, the "Registration
Statement") have been duly authorized by Parent's Board of
Directors.
SECTION 2.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings
and obligations described in this Section 2.4 have been made,
except as set forth on Schedule 2.4 of the disclosure schedule
delivered contemporaneously herewith (the "Disclosure Schedule")
the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries under, any provision of (i) the
Charter or Bylaws of Parent, (ii) any provision of the comparable
charter or organization documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its
Subsidiaries, or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have
a Material Adverse Effect on Parent, or prevent the consummation of
any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of any
domestic (federal and state), foreign or supranational court,
commission, governmental body, regulatory agency, authority or
tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), the Securities Act and the Securities Exchange Act
of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), and the anti-trust
laws of the European Union and its members (the "European Union
Laws"), (ii) the filing of Articles of Merger with the Secretary
and appropriate documents with the relevant authorities of other
states in which the Company or any of its Subsidiaries is qualified
to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this
Agreement, (iv) such filings and consents as may be required under
any state or foreign laws pertaining to debt collection, the
issuance of payment instruments or money transmission, (v)
applicable requirements, if any, of state securities or "blue sky"
laws (the "Blue Sky Laws") and Nasdaq, and (vi) such other
consents, orders authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on
Parent, or prevent or materially delay the consummation of any of
the transactions contemplated hereby.
SECTION 2.5 SEC Documents and Other Reports. Parent has,
since December 31, 1996, filed all documents and reports which it
is required to file with the SEC, including, without limitation, an
Annual Report on Form 10-K for each of the fiscal years ended
December 31, 1996 and December 31, 1997, and a Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed (and as amended through the date
hereof), none of the Parent SEC Documents 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
therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including,
in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except,
in the case of the unaudited statements, as permitted by Form 10-Q)
applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial
position of Parent and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to any other
adjustments described therein and normal year-end audit adjustments
which would not in the aggregate be material in amount or effect).
Except as disclosed in the Parent SEC Documents or as required by
generally accepted accounting principles, Parent has not, since
January 1, 1998, made any change in the accounting principles,
practices, methods or policies applied in the preparation of
financial statements.
SECTION 2.6 Registration Statement and Prospectus. None of
the information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the
joint proxy statement/prospectus included therein (together with
any amendments or supplements thereto, the "Joint Proxy Statement")
relating to the Company Shareholder Meeting will (i) in the case of
the Registration Statement, at the time it is filed, when it is
supplemented or amended and when it becomes effective, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein not misleading or (ii) in the case of the
Joint Proxy Statement, at the time of the mailing of the Joint
Proxy Statement, the time of the Company Shareholder Meeting, and
at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event
with respect to Parent, its officers and directors or any of its
Subsidiaries shall occur which is required to be described in the
Joint Proxy Statement or the Registration Statement, such event
shall be so described, and an appropriate amendment or supplement
shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The Registration
Statement will comply (with respect to Parent) as to form in all
material respects with the provisions of the Securities Act. At
the time of the filing of any disclosure document filed after the
date hereof pursuant to the Securities Act, the Exchange Act or any
state securities law (each a "Parent Disclosure Document") other
than the Registration Statement or Joint Proxy Statement, at the
time of any distribution thereof and throughout the remaining
pendency of the Merger each such Parent Disclosure Document (as
supplemented or amended) will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 2.7 Absence of Certain Changes or Events. Except as
disclosed in Schedule 4.1 or Schedule 2.7 of the Disclosure
Schedule, or the Parent SEC Documents filed with the SEC prior to
the date of this Agreement, since January 1, 1998, (A) Parent and
its Subsidiaries have not entered into any material oral or written
agreement or other transaction, that is not in the ordinary course
of business or that would result in a Material Adverse Effect on
Parent, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which Parent
and Subsidiaries of Parent are involved and except for any such
changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) Parent and its
Subsidiaries have not sustained any loss or interference with their
business or properties from fire, flood, windstorm, accident or
other calamity (whether or not covered by insurance) that has had
a Material Adverse Effect on Parent; (C) other than any
indebtedness incurred by Parent after the date hereof as permitted
by Section 4.l(a)(v), there has been no material change in the
consolidated indebtedness of Parent and its Subsidiaries, and no
dividend or distribution of any kind declared, paid or made by
Parent on any class of its stock; (D) there has been no event
causing, or reasonably likely to cause, a Material Adverse Effect
on Parent, excluding any changes and effects resulting from changes
in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which Parent
and Subsidiaries of Parent are involved and except for any such
changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; and (E) except as
permitted by this Agreement, there has been no direct or indirect
redemption, purchase or other acquisition of any shares of the
Parent's capital stock, or any declaration, setting aside or
payment of any dividend or other distribution by the Parent in
respect of the Parent's capital stock, or any issuance of any
shares of capital stock of the Parent, or any granting to any
person of any option to purchase or other right to acquire shares
of capital stock of the Parent or any stock split or other change
in the Parent's capitalization; (F) neither the Parent nor any
Subsidiary has entered into or agreed to enter into any new or
amended contract with any labor unions representing employees of
the Parent or any Subsidiary; and (G) except as disclosed in the
Parent SEC Documents, neither the Parent nor any Subsidiary has
entered into or agreed to enter into any amendment of any material
term of any outstanding security of the Parent or any Subsidiary.
SECTION 2.8 Permits and Compliance. Each of Parent and its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity which, to the Knowledge of Parent (as
hereinafter defined), are necessary for Parent or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Parent
Permits"), except where the failure to have any of the Parent
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, and, as of the date of this
Agreement, no suspension or cancellation of any of the Parent
Permits is pending or, to the Knowledge of Parent, threatened,
except where the suspension or cancellation of any of the Parent
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries is in violation of (A) its Charter, Bylaws or other
organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction
over Parent or any of its Subsidiaries, except, in the case of
clauses (B) and (C), for any violations that, individually or in
the aggregate, would not have a Material Adverse Effect on Parent.
Except as disclosed in the Parent SEC Documents filed prior to the
date of this Agreement there is no contract or agreement that is
material to the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole. Except
as set forth in the Parent SEC Documents, prior to the date of this
Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by Parent of the
transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or any lease, contractual license or
other agreement or instrument to which Parent or any of its
Subsidiaries is a party or by which Parent or any such Subsidiary
is bound or to which any of the properties, assets or operations of
Parent or any such Subsidiary is subject, other than any defaults
that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent. Set forth on Schedule 2.8 of the
Disclosure Schedule is a description of any material changes to the
amount and terms of the indebtedness of the Parent and its
Subsidiaries as described on Parent's Annual Report on Form 10-K.
"Knowledge of Parent" means the actual knowledge of any of the
Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer of the Parent.
SECTION 2.9 Tax Matters. Except as disclosed on Schedule 2.9:
(a) Each of Parent and its Subsidiaries has filed all Tax
Returns required to have been filed (or extensions have been
duly obtained) and has paid all Taxes required to have been paid
by it, except where failure to file such Tax Returns or pay such
Taxes would not, in the aggregate, have a Material Adverse
Effect on Parent. All such Tax Returns are correct and complete
in all material respects.
(b) Each of the Parent and its Subsidiaries has paid all
Taxes which have become due and payable, except where the
failure to pay such Taxes would not have a Material Adverse
Effect. Each of the Parent and its Subsidiaries has made
adequate provision in reserves established in its financial
statements and accounts for all Taxes which have accrued but are
not yet due and payable.
(c) There is no action, suit, taxing authority proceeding or
audit now in progress or pending with respect to the Parent or
any of its Subsidiaries. Neither the Parent nor any of its
Subsidiaries has waived or extended, or requested any waiver of
extension of, any limitation period for audit or assessment of
any Tax liability.
(d) No deficiency for any amount of Tax has been asserted or
assessed against the Parent or any of its Subsidiaries which
either (i) has not been paid, settled or adequately provided for
through reserves established in the financial statements and
accounts or (ii) would have a Material Adverse Effect if
required to by paid.
(e) No election under Section 341(f) of the Code has been
made to treat the Parent or any of its Subsidiaries as a
consenting corporation (as defined in Section 341(f) of the
Code). Neither the Parent nor any of its Subsidiaries is a U.S.
real property holding corporation within the meaning of Section
897(c)(2) of the Code.
For purposes of this Agreement: (i) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty,
imposed by any governmental authority and (ii) "Tax Return" means
any return, report or similar statement required to be filed with
respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
SECTION 2.10 Actions and Proceedings. Except as set forth in
the Parent SEC Documents or Schedule 2.24 of the Disclosure
Schedule, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against or involving
Parent or any of its Subsidiaries, as such, any of its properties,
assets or business or any Parent Plan (as hereinafter defined)
that, individually or in the aggregate, would have a Material
Adverse Effect on Parent. As of the date of this Agreement, there
are no actions, suits or claims or legal administrative or
arbitrative proceedings or investigations pending or, to the
Knowledge of Parent, threatened against or involving Parent or any
of its Subsidiaries, any of its properties, assets or business or
any Parent Plan that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect on Parent. As
of the date hereof there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of Parent,
threatened against or affecting Parent or any of its Subsidiaries,
any of its properties, assets or business relating to the
transactions contemplated by this Agreement.
SECTION 2.11 Certain Agreements. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries is a party to
any oral or written agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 2.12 ERISA. Each Parent Plan complies in all material
respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code and all other applicable statutes
and governmental rules and regulations, including but not limited
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and (i) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any
Parent Plan, (ii) neither Parent nor any of its ERISA Affiliates
(as hereinafter defined) has withdrawn from any Parent
Multi-employer Plan (as hereinafter defined) or instituted, or is
currently considering taking, any action to do so, (iii) no action
has been taken, or is currently being considered, to terminate any
Parent Plan subject to Title IV of ERISA, and (iv) Parent and its
ERISA Affiliates have complied in all material respects with the
continued medical coverage requirements of COBRA. No Parent Plan,
nor any trust created thereunder, has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived. With respect to the Parent Plans, no event has
occurred in connection with which Parent or any ERISA Affiliate
would be subject to any liability under the terms of such Parent
Plans, ERISA, the Code or any other applicable law which would have
a Material Adverse Effect on Parent. All Parent Plans that are
intended to be qualified under Section 401(a) of the Code have been
determined by the Internal Revenue Service to be so qualified, and
to the Knowledge of Parent, there is no reason why any Parent Plan
is not so qualified in operation. Except as set forth on Schedule
2.12, neither Parent nor any of its ERISA Affiliates has been
notified by any Parent Multi-employer Plan that such Parent
Multi-employer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or
that such Parent Multi-employer Plan intends to terminate or has
been terminated under Section 4041A of ERISA. Neither Parent nor
any of its ERISA Affiliates has any liability or obligation under
any welfare plan to provide benefits after termination of
employment to any employee or dependent other than as required by
ERISA or as disclosed in the Parent SEC Documents. As used herein,
(i) "Parent Plan" means a "pension plan" (as defined in Section
3(2) of ERISA (other than a Parent Multi-employer Plan)) or a
"welfare plan" (as defined in Section 3(1) of ERISA) established or
maintained by Parent or any of its ERISA Affiliates or as to which
Parent or any of its ERISA Affiliates has contributed or otherwise
may have any liability, (ii) "Parent Multi-employer Plan" means a
"Multi-employer plan" (as defined in Section 4001(a)(3) of ERISA)
to which Parent or any of its ERISA Affiliates is or has been
obligated to contribute or otherwise may have any liability, and
(iii) with respect to any person, "ERISA Affiliate" means any trade
or business (whether or not incorporated) which is under common
control or would be considered a single employer with such person
pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections or pursuant to Section
400l(b) of ERISA and the regulations promulgated thereunder.
SECTION 2.13 Compliance with Certain Laws. To the Knowledge
of Parent, the properties, assets and operations of Parent and its
Subsidiaries are in compliance in all material respects with all
applicable federal, state, local and foreign laws, rules and
regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety (collectively,
"Worker Safety Laws"), except for any violations that, individually
or in the aggregate, would not have a Material Adverse Effect on
the Parent.
SECTION 2.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the Parent
SEC Documents or incurred after the date of such financial
statements in the ordinary course of business consistent with past
practices, or expressly disclosed in the footnotes thereto, Parent
and its Subsidiaries have no liabilities (including, without
limitation, Tax liabilities and workmen's compensation
liabilities), absolute or contingent, other than liabilities that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Parent, and, to the Knowledge of Parent, have no
liabilities (including, without limitation, Tax liabilities) that
were not incurred in the ordinary course of business other than
liabilities that, individually or in the aggregate, would not have
a Material Adverse Effect on the Parent.
SECTION 2.15 Labor Matters. Neither Parent nor any of its
Subsidiaries is a party to any collective bargaining agreement or
labor contract except as set forth on Schedule 2.15 of the
Disclosure Schedule. To the Knowledge of Parent, neither Parent nor
any of its Subsidiaries has engaged in any unfair labor practice
with respect to any persons employed by or otherwise performing
services primarily for Parent or any of its Subsidiaries (the
"Parent Business Personnel"), and there is no unfair labor practice
complaint or grievance against Parent or any of its Subsidiaries by
the National Labor Relations Board or any comparable state agency
pending or, to the Knowledge of Parent, threatened in writing with
respect to the Parent Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material
Adverse Effect on Parent. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of Parent,
threatened against or affecting Parent or any of its Subsidiaries
which may interfere with the respective business activities of
Parent or any of its Subsidiaries, except where such dispute,
strike or work stoppage would not have a Material Adverse Effect on
Parent.
SECTION 2.16 Intellectual Property. Parent and its
Subsidiaries own or have a valid license to use all patents,
trademarks, trade names, service marks, trade secrets, copyrights
and other proprietary intellectual property rights (collectively,
"Intellectual Property Rights") that are used in connection with
the business of the Parent and its Subsidiaries, taken as a whole,
except where the failure to have such Intellectual Property Rights
would not have a Material Adverse Effect on the Parent. To the
Knowledge of the Parent, neither the Parent nor any of its
Subsidiaries has infringed any Intellectual Property Rights of any
third party other than any infringements that, individually or in
the aggregate, would not have a Material Adverse Effect on the
Company.
SECTION 2.17 Environmental Matters.
Except as disclosed on Schedule 2.17 of the Disclosure Schedule:
(a) Each of the Parent and its Subsidiaries has complied
with, and is in compliance with, all Environmental and Safety
Requirements (including all permits, licenses and other
authorizations required thereunder), except for any such
noncompliance which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of
$250,000.
(b) Neither the Parent nor any of its Subsidiaries has
received any notice, report or other information regarding any
actual or alleged violation of Environmental and Safety
Requirements, or any actual or potential liability, including
any investigatory, remedial or corrective obligation, relating
to any of them or its facilities arising under Environmental and
Safety Requirements, except for any notice, report or
information, the subject of which, would not reasonably be
expected to result in liabilities in excess of $250,000.
(c) None of the Parent or any of its Subsidiaries, or their
respective predecessors has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any substance, including without limitation any
hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would
reasonably be expected to give rise to liabilities pursuant to
the Comprehensive Environmental Response, Compensation and
Liability Act, the Solid Waste Disposal Act, or any other
Environmental and Safety Requirements, except for any such
liabilities which, individually or in the aggregate, would not
reasonably be expected to exceed $250,000.
(d) Neither this Agreement nor the transaction that is the
subject of this Agreement will result in any obligations for
environmental disclosure, investigation or cleanup, or
notification to or consent of government agencies or third
parties, with respect to any of the properties or facilities of
the Parent or any of its Subsidiaries, pursuant to any so-called
so-called "property transfer" Environmental and Safety
Requirements.
(e) Neither the Parent nor any of its Subsidiaries has
assumed, undertaken or otherwise become subject to any
liability, including without limitation any obligation for
corrective or remedial action, of any other person or entity
relating to Environmental and Safety Requirements, except for
any such liabilities which, individually or in the aggregate,
would not reasonably be expected to result in liabilities in
excess of $250,000.
(f) No capital expenditures relating the facilities or
operations of the Parent or any of its Subsidiaries are
anticipated to be required within three years after the Closing
Date in order to comply with current or future Environmental and
Safety Requirements, except for such expenditures that,
individually or in the aggregate, are not reasonably expected to
exceed $250,000.
For purposes of this Agreement, "Environmental and Safety
Requirements" shall mean all federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations, and all common law
concerning occupational health and safety, pollution or protection
of the environment, including without limitation all those relating
to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
SECTION 2.18 Operations of Sub. Sub is a direct, wholly-owned
subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as
contemplated hereby.
SECTION 2.19 Financing. The Company has received copies of a
commitment letter dated January 18, 1999 from Bank of America
National Trust and Savings Association and Nationsbanc Xxxxxxxxxx
Securities LLC (the "Financing Commitment Letter"), pursuant to
which the foregoing has committed, subject to the terms and
conditions set forth therein, to enter into one or more credit
agreements providing for loans to Parent and its subsidiaries of up
to $ 700,000,000 (the "Financing"). The aggregate commitments
under the Financing are in an amount sufficient to pay the cash
portion of the Merger Consideration, and to pay related fees and
expenses. As of the date hereof, the Financing Commitment Letter
relating to the Financing has not been withdrawn and Parent does
not know of any facts or circumstances that may reasonably be
expected to result in any of the conditions set forth in the
Financing Commitment Letter relating to the Financing not being
satisfied.
SECTION 2.20 Brokers. Except as set forth on Schedule 2.20 of
the Disclosure Schedule, no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Parent.
SECTION 2.21 Required Vote of Shareholders. The affirmative
vote of a majority of the votes of the shareholders of the Sub is
required to approve this Agreement. The affirmative vote of a
majority of the quorum of the Parent's stockholders is required to
approve the Share Issuance. No other vote of the stockholders of
Parent is required by law, the Charter or By-Laws of Parent or
otherwise in order for Parent to consummate the Merger and the
transactions contemplated hereby. The requisite votes for the
approval of this Agreement and for approval of the Share Issuance
are, collectively, the "Parent Shareholders' Approvals."
SECTION 2.22 Ownership of Shares. Neither Parent nor any of
its Subsidiaries (i) "Beneficially Owns" or is the "Beneficial
Owner" of (as such terms are defined in the Company's Rights
Agreement (as herein after defined)), or (ii) "owns," any Shares of
Company Common Stock.
SECTION 2.23 State Takeover Statutes and Shareholder Rights
Plan. Assuming the accuracy of the Company's representations and
warranties contained in Section 3.20 (Ownership of Shares), as of
the date hereof, no state takeover statutes or supermajority
Charter provisions are applicable to the Merger, this Agreement and
the transactions contemplated hereby.
SECTION 2.24 Investigations; Litigation.
(a) Except as described in Schedule 2.24, and other than
reviews pursuant to the HSR Act, there are, no pending
investigations, reviews or inquiries by any Governmental Entity
(an "Investigation") with respect to Parent or any Subsidiary or
with respect to the activities of any officer, director or
employee of Parent, nor to the Knowledge of Parent is an Inves-
tigation threatened, nor has any Governmental Entity indicated
to Parent or any executive officer of Parent an intention to
conduct an Investigation, other than Investigations which, if
the resolution thereof were adverse, would not, individually or
in the aggregate, have a Material Adverse Effect.
(b) Except as described in Schedule 2.24 hereto, (i) there
are no actions or proceedings pending or, to the Knowledge of
Parent, threatened against Parent or any Subsidiary before any
court or before any administrative agency or administrative
officer or executive, whether federal, state, local or foreign,
which seek to enjoin the Merger or which if adversely determined
would, individually or in the aggregate, have a Material Adverse
Effect, (ii) there are no outstanding domestic or foreign
judgments, decrees or orders against Parent or any Subsidiary
enjoining any of them in respect of, or the effect of which is
to prohibit, any business practice or the acquisition of any
property or the conduct of business in any area that,
individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect and (iii) there are no actions
pending, or to the Knowledge of Parent, threatened against the
directors or any director of Parent alleging a breach of such
directors' or director's fiduciary duties.
SECTION 2.25 Contracts and Commitments.
Except as disclosed on Schedule 2.25 to the Disclosure Schedule:
(a) Parent is not nor is any Subsidiary, with respect to its
business, a party to any oral or written contract:
(i) that prohibits Parent or any of its Subsidiaries
from freely engaging or competing in its line of business
anywhere in the world;
(ii) that is not on arms-length terms;
(iii) pursuant to which Parent or any of its Subsidiaries
has incurred or accrued losses;
(Iv) that commits Parent or any of its Subsidiaries to
purchase or sell any properties or assets outside of the
ordinary course of business for consideration in excess of
$100,000;
(v) that involves an unfulfilled obligation,
individually or in the aggregate, in excess of $100,000 and is
not terminable by Parent or any of its Subsidiaries upon less
than 60 calendar days' notice for a cost of not less than
$100,000;
(b) Since December 31, 1997, none of Parent's or any of its
Subsidiaries' significant customers, suppliers, outside service
providers or sources of referral has indicated that it will stop
or materially decrease the rate of business done with or
referred to either Parent or any such Subsidiary.
(c) To the Knowledge of Parent, neither Parent nor any of its
Subsidiaries is obligated to (i) purchase any property or
services at a price greater than the prevailing market price,
(ii) sell any property or services at a price less than the
prevailing market price, (iii) pay rentals or royalties at a
rate greater than the prevailing market price or (iv) act as
lessor or licensor at a rate less than the prevailing market
price.
(d) The Company has been supplied with a true and correct
copy of all written contracts which are referred to on Schedule
2.25, together with all amendments, exhibits, attachments, waivers
or other changes thereto.
SECTION 2.26 Real Estate Leases. Schedule 2.26 hereto sets
forth a list of (a) all leases and subleases under which Parent and
its Subsidiaries is lessor or lessee of any real property together
with all amendments, supplements, nondisturbance agreements and
other agreements pertaining thereto, (b) all options held by Parent
and its Subsidiaries or contractual obligations on the part of
Parent and its Subsidiaries to purchase or acquire any interest in
real property and (c) all options granted by Parent and its
Subsidiaries or contractual obligations on the part of Parent and
its Subsidiaries to sell or dispose of any interest in real
property. To Parent's knowledge, there is not any lien, claim,
option, charge, security interest, limitation, encumbrance or
restriction of any kind (any of the foregoing being a "Lien") on
any of the leasehold interests set forth on Schedule 2.26 hereto
except for (a) Liens reflected in the balance sheet included in
Parent's SEC Documents, (b) Liens of record consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property which do not materially
detract from the value of, or a materially impair the use of, such
property by Parent and its Subsidiaries in the operation of their
respective businesses, (c) Liens for current taxes, assessments or
governmental charges or levies on property not yet delinquent or
being contested in good faith and for which appropriate reserves
have been established in accordance with United States generally
acceptable accounting principles (which contested levies are
described on Schedule 2.26), and (d) Liens imposed by law, such as
materialman's, mechanic's, carrier's, workers' and repairmen's
Liens securing obligations not yet delinquent or being contested in
good faith and for which appropriate reserves have been established
in accordance with United States generally acceptable accounting
principles or securing obligations not being paid in the ordinary
course of business in accordance with customary and commercially
reasonable practice (collectively, "Permitted Liens").
SECTION 2.27 Real Property. Schedule 2.27 hereto lists all
real property owned by Parent and its Subsidiaries. Each of Parent
and its Subsidiaries has good and marketable title in fee simple to
its respective real properties set forth on Schedule 2.27 hereto,
in each case, to Parent's knowledge, free and clear of all Liens,
except for Permitted Liens.
SECTION 2.28 Opinion of Financial Advisor. Parent has received
the opinion of Xxxxxx X. Xxxxx & Co. Incorporated, dated January
18, 1999, to the effect that, as of such date, the Merger
Consideration to be paid in the Merger by Parent is fair to Parent
from a financial point of view, a copy of which opinion will be
delivered to the Company promptly after the execution and delivery
of this Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1 Organization, Standing and Power. The Company is
a corporation duly organized and validly existing under the laws of
the State of Indiana and has the requisite corporate power and
authority to carry on its business as now being conducted. Each
Subsidiary of the Company is duly organized, validly existing and
in good standing (where applicable) under the laws of the
jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or
other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or
in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held
under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
SECTION 3.2 Capital Structure. As of the Effective Time, the
authorized capital stock of the Company will consist of 20,000,000
shares of Company Common Stock and 1,000,000 shares of Preferred
Stock (the "Company Preferred Stock"). At the close of business on
January 18, 1999, (i) 12,179,031 shares of Company Common Stock
were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights; (ii)
473,550 shares of Company Common Stock were reserved for future
issuance pursuant to the Company's 1994 Stock Compensation Plan,
(iii) 500,000 shares of Company Common Stock were reserved for
future issuance pursuant to the Company's 1997 Long Term Incentive
Plan, (iv) 251,659 shares of Company Common Stock were reserved for
issuance under the Company's Employee Stock Purchase Plan; 381,000
shares of Company Common Stock were reserved for issuance upon
exercise of the Company Warrants granted in connection with the
acquisition of Xxxxxxxx Industries, Inc. by the Company and (vi) no
shares of the Company Preferred Stock were issued or outstanding.
As of the date of this Agreement, except for (a) this Agreement,
(b) stock options covering 321,900 shares of Company Common Stock
(collectively, the "Company Stock Options"), (c) 202,500 shares
subject to issuance pursuant to grants under the LTIP, (d) shares
reserved for issuance upon exercise of the Company Warrants and
(e) the Company Rights Plan (as hereinafter defined), there are no
options, warrants, calls, rights or agreements to which the Company
or any of its Subsidiaries is a party or by which any of them is
bound obligating Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call,
right or agreement. Each outstanding share of capital stock of each
Subsidiary of the Company is duly authorized, validly issued, fully
paid and nonassessable and, except as disclosed in the Company SEC
Documents (as hereinafter defined), each such share is owned by the
Company or another Subsidiary of the Company, free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on voting rights, charges
and other encumbrances of any nature whatsoever.
SECTION 3.3 Authority. The Board of Directors of the Company
has on or prior to the date of this Agreement (a) duly approved and
adopted this Agreement in accordance with Indiana law and declared
it to be in the best interests of the Company, (b) resolved to
recommend the approval of this Agreement by the Company's
shareholders and (c) directed that this Agreement be submitted to
the Company's shareholders for approval. The Company has all
requisite corporate power and authority, and no other corporate
proceeding on the part of the Company is necessary, to enter into
this Agreement and, subject to approval by the shareholders of the
Company of this Agreement, 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 authorized by all
necessary corporate action on the part of the Company, subject to
(x) approval of this Agreement by the shareholders of the Company
and (y) the filing of appropriate Merger documents as required by
Indiana law. This Agreement has been duly executed and delivered by
the Company and (assuming the valid authorization, execution and
delivery of this Agreement by Parent and Sub) constitutes the valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors rights generally and except that the
availability of equitable remedies, including specific performance,
is subject to judicial discretion.
SECTION 3.4 Consents and Approvals: No Violation. Assuming
that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings
and obligations described in this Section 3.4 have been made,
except as set forth on Schedule 3.4 of the Disclosure Schedule, the
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of or
default (with or without notice or lapse of time, or both) under,
or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the
Articles of Incorporation or Bylaws of the Company, (ii) any
provision of the comparable charter or organization documents of
any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Company or any of its Subsidiaries (iv) any
shareholder agreement, or (v) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any
of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (iii), (iv) or (v), any
such violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, or prevent
the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution
and delivery of this Agreement by the Company or is necessary for
the consummation of the Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act, the Exchange Act
and the European Union Laws, (ii) the filing of the Articles of
Merger with the Secretary and appropriate documents with the
relevant authorities of other states in which the Company or any of
its Subsidiaries is qualified to do business, (iii) such filings
and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure
or required approval triggered by the Merger or by the transactions
contemplated by this Agreement, (iv) such filings and consents as
may be required under any state or foreign laws pertaining to debt
collection, the issuance of payment instruments or money
transmission, (v) applicable requirements, if any, of Blue Sky Laws
and the New York Stock Exchange (the "NYSE"), and (vi) such other
consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company or prevent the consummation of any of the transactions
contemplated hereby.
SECTION 3.5 SEC Documents and Other Reports. The Company has,
since December 28, 1996, filed all documents and reports which it
is required to file with the SEC including, without limitation, an
Annual Report on Form 10-K for the fiscal years ended December 28,
1996 and December 27, 1997 and a Quarterly Report on Form 10-Q for
the quarter ended September 26, 1998 (the "Company SEC Documents").
As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and, at the respective
times they were filed (and as amended through the date hereof),
none of the Company SEC Documents 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 therein, in
light of the circumstances under which they were made, not
misleading. The consolidated financial statements (including, in
each case, any notes thereto) of the Company included in the
Company SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except,
in the case of the unaudited statements, as permitted by Form 10-Q)
applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to any
adjustments described therein and to adjustments for inventories,
receivables and other normal year-end audit adjustments consistent
with past practices). Except as disclosed in the Company SEC
Documents or as required by generally accepted accounting
principles, the Company has not, since December 27, 1997, made any
change in the accounting principles, practices, methods or policies
applied in the preparation of financial statements.
SECTION 3.6 Absence of Certain Changes or Events. Except as
set forth on Schedule 3.6 of the Disclosure Schedule, since
December 27, 1997, (A) the Company and its Subsidiaries have not
entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business or that
would result in a Material Adverse Effect on the Company, excluding
any changes and effects resulting from changes in economic,
regulatory or political conditions or changes in conditions
generally applicable to the industries in which the Company and
Subsidiaries of the Company are involved and except for any such
changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) the Company
and its Subsidiaries have not sustained any loss or interference
with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance)
that has had a Material Adverse Effect on the Company; (C) other
than any indebtedness incurred by the Company after the date hereof
as permitted by Section 4. l(b)(v), there has been no material
change in the consolidated indebtedness of the Company and its
Subsidiaries, and no dividend or distribution of any kind declared,
paid or made by the Company on any class of its stock; (D) there
has been no event causing, or reasonably likely to cause, a
Material Adverse Effect on the Company, excluding any changes and
effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the
industries in which the Company and Subsidiaries of the Company are
involved and except for any such changes or effects resulting from
this Agreement, the transactions contemplated hereby or the
announcement thereof; (E) except as permitted by this Agreement,
there has been no direct or indirect redemption, purchase or other
acquisition of any shares of the Company's capital stock, or any
declaration, setting aside or payment of any dividend or other
distribution by the Company in respect of the Company's capital
stock, or any issuance of any shares of capital stock of the
Company, or any granting to any person of any option to purchase or
other right to acquire shares of capital stock of the Company or
any stock split or other change in the Company's capitalization;
(F) neither the Company nor any Subsidiary has entered into or
agreed to enter into any new or amended contract with any labor
unions representing employees of the Company or any subsidiary; (G)
neither the Company nor any Subsidiary has entered into or agreed
to enter into any new or amended contract with any of the officers
thereof or otherwise increased the compensation payable to the
officers or directors of any such entity; (H) except as disclosed
in the Company SEC Documents, neither the Company nor any
Subsidiary has entered into or agreed to enter into any amendment
of any material term of any outstanding security of the Company or
any Subsidiary; and (I) except as disclosed in the Company SEC
Documents, neither the Company nor any Subsidiary has entered into
or agreed to enter into (i) any xxxxxxxxx xxxxx or termination pay
to any director, officer or employee of the Company or any
Subsidiary, (ii) any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement)
with any director, officer or employee of the Company or any
Subsidiary, (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements or
(iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary,
other than in the ordinary course of business consistent with past
practice.
SECTION 3.7 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by the Company for inclusion
or incorporation by reference in the Registration Statement or the
Joint Proxy Statement will (i) in the case of the Registration
Statement, at the time it is filed, when it is supplemented or
amended and when it becomes effective, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein not misleading or (ii) in the case of the Joint Proxy
Statement , at the time of the mailing of the Joint Proxy Statement
, the time of the Company Shareholder Meeting, and at the Effective
Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to the
Company, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Joint Proxy
Statement or the Registration Statement, such event shall be so
described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated
to the shareholders of the Company. The Registration Statement will
comply (with respect to the Company) as to form in all material
respects with the provisions of the Securities Act. At the time of
the filing of any disclosure document filed after the date hereof
pursuant to the Securities Act, the Exchange Act or any state
securities law (each a "Company Disclosure Document") other than
the Joint Proxy Statement, at the time of any distribution thereof
and throughout the remaining pendency of the Merger each such
Company Disclosure Document (as supplemented or amended) will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity which, to the Knowledge of the Company (as
hereinafter defined), are necessary for the Company or any of its
Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Company
Permits") except where the failure to have any of the Company
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, and, as of the date of this
Agreement, no suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company threatened,
except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on Company. Neither the Company nor any of
its Subsidiaries is in violation of (A) its Articles of
Incorporation, Bylaws or other organizational document, (B) any
applicable law, ordinance, administrative or governmental rule or
regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over the Company or any of its
Subsidiaries, except, in the case of clauses (B) and (C), for any
violations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. Except as disclosed in
the Company SEC Documents filed prior to the date of this
Agreement, as of the date hereof there is no contract or agreement
that is material to the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
Except as set forth in the Company SEC Documents and Schedule 3.8
of the Disclosure Schedule, prior to the date of this Agreement, no
event of default or event that, but for the giving of notice or the
lapse of time or both, would constitute an event of default exists
or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for
borrowed money or any lease, contractual license or other agreement
or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any such Subsidiary is bound or to
which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Set forth on Schedule 3.8 to this Agreement
is a description of any material changes to the amount and terms of
the indebtedness of the Company and its Subsidiaries as described
in the Company's Annual Report on Form 10-K. "Knowledge of the
Company" means the actual knowledge of any of the Chief Executive
Officer and Chief Financial Officer of the Company.
SECTION 3.9 Tax Matters. Except as set forth on Schedule 3.9:
(a) Each of the Company and its Subsidiaries has filed all
Tax Returns required to have been filed (or extensions have been
duly obtained) and has paid all Taxes required to have been paid
by it, except where failure to file such Tax Returns or pay such
Taxes would not, in the aggregate, have a Material Adverse
Effect on the Company. All such Tax Returns are correct and
complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid all
Taxes which have become due and payable, except where the
failure to pay such Taxes would not have a Material Adverse
Effect. Each of the Company and its Subsidiaries has made
adequate provision in reserves established in its financial
statements and accounts for all Taxes which have accrued but are
not yet due and payable.
(c) There is no action, suit, taxing authority proceeding or
audit now in progress or pending with respect to the Company or
any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has waived or extended, or requested any waiver of
extension of, any limitation period for audit or assessment of
any Tax liability.
(d) No deficiency for any amount of Tax has been asserted or
assessed against the Company or any of its Subsidiaries which
either (i) has not been paid, settled or adequately provided for
through reserves established in the financial statements and
accounts or (ii) would have a Material Adverse Effect if
required to by paid.
(e) No election under Section 341(f) Code has been made to
treat the Company or any of its Subsidiaries as a consenting
corporation (as defined in Section 341(f) of the Code). Neither
the Company nor any of its Subsidiaries is a U.S. real property
holding corporation within the meaning of Section 897(c)(2) of
the Code.
(f) Neither the Company nor any of its Subsidiaries is a
party to any agreement, contract, arrangement, or plan that has
resulted or would result, separately or in the aggregate, in the
payment of any "excess parachute payment" within the meaning of
Section 280G of the Code (or any similar provision of state,
local or foreign law) as a result of the transactions
contemplated by this Agreement.
SECTION 3.10 Actions and Proceedings. Except as set forth on
the Company SEC Documents, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Entity against or involving the Company or any of its Subsidiaries,
that, individually or in the aggregate, would have a Material
Adverse Effect on the Company. Except as set forth on Schedule 3.10
of the Disclosure Schedule, as of the date of this Agreement, there
are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the
Knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries or any of its properties, assets
or business or any Company Plan that, individually or in the
aggregate, would have a Material Adverse Effect on the Company. As
of the date hereof there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries or any of its properties, assets or business relating
to the transactions contemplated by this Agreement.
SECTION 3.11 Certain Agreements. As of the date of this
Agreement, except as set forth on Schedule 3.11 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to purchase
shares of Company Common Stock, or shares of Company Common Stock
granted in connection with the performance of services for the
Company or its Subsidiaries, is or will be entitled to receive cash
from the Company or any Subsidiary in lieu of or in exchange for
such option or shares as a result of the transactions contemplated
by this Agreement. Neither the Company nor any Subsidiary is a
party to any termination benefits agreement or severance agreement
or employment agreement one trigger of which would be the
consummation of the transactions contemplated by this Agreement,
except as set forth on Schedule 3.11 of the Disclosure Schedule.
SECTION 3.12 ERISA. Each Company Plan complies in all material
respects with the Code and all other applicable statutes and
governmental rules and regulations, including but not limited to
COBRA, and (i) no "reportable event" (within the meaning of Section
4043 of ERISA) has occurred with respect to any Company Plan, (ii)
neither the Company nor any of its ERISA Affiliates has withdrawn
from any Company Multi-employer Plan or instituted, or is currently
considering taking, any action to do so, (iii) no action has been
taken, or is currently being considered, to terminate any Company
Plan subject to Title IV of ERISA, and (iv) the Company and its
ERISA Affiliates have complied in all material respects with the
continued medical coverage requirements of COBRA. No Company Plan,
nor any trust created thereunder, has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA, whether or
not waived. With respect to the Company Plans, no event has
occurred in connection with which Company or any ERISA Affiliate
would be subject to any liability under the terms of such Company
Plans, ERISA, the Code or any other applicable law which would have
a Material Adverse Effect on Company. All Company Plans that are
intended to be qualified under Section 401(a) of the Code have been
determined by the Internal Revenue Service to be so qualified, and
to the Knowledge of Company, there is no reason why any Company
Plan is not so qualified in operation. Except as set forth on
Schedule 3.12, neither Company nor any of its ERISA Affiliates has
been notified by any Company Multi-employer Plan that such Company
Multi-employer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or
that such Company Multi-employer Plan intends to terminate or has
been terminated under Section 4041A of ERISA. Neither Company nor
any of its ERISA Affiliates has any liability or obligation under
any welfare plan to provide benefits after termination of
employment to any employee or dependent other than as required by
ERISA or as disclosed in the Company SEC Documents. Except as set
forth on Schedule 3.12, none of the Company Plans or any other
agreement, commitment or arrangement obligates the Company to pay
any separation, severance, termination or similar benefit as a
result of the transaction contemplated by this Agreement or solely
as a result of a change in control or ownership within the meaning
of Section 280G of the Code. As used herein, (i) "Company Plan"
means a "pension plan" (as defined in Section 3(2) of ERISA (other
than a Company Multi-employer Plan)) or a "welfare plan" (as
defined in Section 3(1) of ERISA) established or maintained by
Company or any of its ERISA Affiliates or as to which Company or
any of its ERISA Affiliates has contributed or otherwise may have
any liability and (ii) "Company Multi-employer Plan" means a
"Multi-employer plan" (as defined in Section 4001(a)(3) of ERISA)
to which Company or any of its ERISA Affiliates is or has been
obligated to contribute or otherwise may have any liability. No
action has been taken by the Company to accelerate the vesting of
or accural of any benefits or obligations under the LTIP and, as of
the Effective Time, no participant shall be vested with any benefit
under the LTIP and the Company shall have no obligation to any
participant under the LTIP.
SECTION 3.13 Compliance with Certain Laws. To the Knowledge
of the Company, the properties, assets and operations of the
Company and its Subsidiaries are in compliance in all material
respects with all applicable Worker Safety Laws, except for any
violations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company.
SECTION 3.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the
Company SEC Documents or incurred after the date of such financial
statements in the ordinary course of business consistent with past
practices, or expressly disclosed in the footnotes thereto, the
Company and its Subsidiaries have no liabilities (including,
without limitation, Tax liabilities and workmen's compensation
liabilities), absolute or contingent, other than liabilities that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company, and, to the Knowledge of the Company, have
no liabilities (including, without limitation, Tax liabilities)
that were not incurred in the ordinary course of business other
than liabilities that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
SECTION 3.15 Labor Matters. Except as set forth on Schedule
3.15 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or
labor contract. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its
Subsidiaries (the "Company Business Personnel"), and there is no
unfair labor practice complaint or grievance against the Company or
any of its Subsidiaries by the National Labor Relations Board or
any comparable state agency pending or, to the Knowledge of the
Company, threatened in writing with respect to the Company Business
Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on the Company.
There is no labor strike, dispute, slowdown or stoppage pending or,
to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries which may interfere with the
respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on the Company.
SECTION 3.16 Intellectual Property. The Company and its
Subsidiaries own or have a valid license to use all Intellectual
Property Rights that are used in connection with the business of
the Company and its Subsidiaries, taken as a whole, except where
the failure to have such Intellectual Property Rights would not
have a Material Adverse Effect on the Company. To the Knowledge of
the Company, neither the Company nor any of its Subsidiaries has
infringed any Intellectual Property Rights of any third party other
than any infringements that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
SECTION 3.17 Environmental Matters.
Except as disclosed on Schedule 3.17 of the Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has complied
with, and is in compliance with, all Environmental and Safety
Requirements (including all permits, licenses and other
authorizations required thereunder), except for any such
noncompliance which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of
$250,000.
(b) Neither the Company nor any of its Subsidiaries has
received any notice, report or other information regarding any
actual or alleged violation of Environmental and Safety
Requirements, or any actual or potential liability, including
any investigatory, remedial or corrective obligation, relating
to any of them or its facilities arising under Environmental and
Safety Requirements, except for any notice, report or
information, the subject of which, would not reasonably be
expected to result in liabilities in excess of $250,000.
(c) None of the Company or any of its Subsidiaries, or their
respective predecessors has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any substance, including without limitation any
hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would
reasonably be expected to give rise to liabilities pursuant to
the Comprehensive Environmental Response, Compensation and
Liability Act, the Solid Waste Disposal Act, or any other
Environmental and Safety Requirements, except for any such
liabilities which, individually or in the aggregate, would not
reasonably be expected to exceed $250,000.
(d) Neither this Agreement nor the transaction that is the
subject of this Agreement will result in any obligations for
environmental disclosure, investigation or cleanup, or
notification to or consent of government agencies or third
parties, with respect to any of the properties or facilities of
the Company or any of its Subsidiaries, pursuant to any
so-called so-called "property transfer" Environmental and Safety
Requirements.
(e) Neither the Company nor any of its Subsidiaries has
assumed, undertaken or otherwise become subject to any
liability, including without limitation any obligation for
corrective or remedial action, of any other person or entity
relating to Environmental and Safety Requirements, except for
any such liabilities which, individually or in the aggregate,
would not reasonably be expected to result in liabilities in
excess of $250,000.
(f) The Company has furnished to Parent all material
environmental, and all material occupational health and safety,
audits, reports and other documents relating to the Parent, its
Subsidiaries, and any of their properties or facilities, that
are in the possession, custody, or control of the Company or any
of its Subsidiaries.
(g) No capital expenditures relating the facilities or
operations of the Company or any of its Subsidiaries are
anticipated to be required within three years after the Closing
Date in order to comply with current or future Environmental and
Safety Requirements, except for such expenditures that,
individually or in the aggregate, are not reasonably expected to
exceed $250,000.
SECTION 3.18 Required Vote of Company Shareholders. The
affirmative vote of the holders of not less than a majority of the
outstanding shares of Company Common Stock is required to approve
the transactions contemplated by this Agreement. No other vote of
the shareholders of the Company is required by law, the Articles of
Incorporation or By-laws of the Company or otherwise in order for
the Company to consummate the Merger and the transactions
contemplated hereby.
SECTION 3.19 Brokers. Except as set forth on Schedule 3.19 of
the Disclosure Schedule, no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Company. The fees and commissions relating to the disclosures set
forth on Schedule 3.19, together with the legal and accounting fees
and expenses arising in connection with the transactions
contemplated hereby, shall not exceed $4.5 million.
SECTION 3.20 State Takeover Statutes and Shareholder Rights
Plan.
(a) Assuming the accuracy of Parent's representations and
warranties contained in Section 2.22 (Ownership of Shares), as
of the date hereof, no state takeover statute including, without
limitation, any business combination act or control share
acquisition act, are applicable to the Merger, this Agreement or
the transactions contemplated hereby.
(b) The Company has taken all necessary action so that, as of
the Effective Time, (i) the Company will have no additional
obligations and Parent will have no obligations under the rights
to purchase Company Common Stock (the "Rights") issued pursuant
to the Rights Agreement between the Company and Xxxxx Xxxxxx
Shareholder Services LLC Bank, dated as of December 21, 1995
(the "Rights Agreement") (the Rights and Rights Agreement
collectively are the "Company Rights Plan") or the Rights
Agreement and (ii) the holders of the Rights will have no
additional rights under the Rights or the Rights Agreement, in
each case as a result of the transactions contemplated by this
Agreement. Execution and delivery of this Agreement does not,
and compliance with the provisions hereof will not, cause the
holders of the Rights to have any rights under the Rights or the
Rights Agreement.
SECTION 3.21 Investigations; Litigation.
(a) Except as described in Schedule 3.21, and other than
reviews pursuant to the HSR Act, there are, no pending
Investigations with respect to the Company or any Subsidiary or
with respect to the activities of any officer, director or
employee of the Company, nor to the Knowledge of the Company is
an Investigation threatened, nor has any Governmental Entity
indicated to the Company or any executive officer of the Company
an intention to conduct an Investigation, other than
Investigations which, if the resolution thereof were adverse,
would not, individually or in the aggregate, a Material Adverse
Effect.
(b) Except as described in Schedule 3.21 hereto, (i) there
are no actions or proceedings pending or, to the Knowledge of
the Company, threatened against the Company or any Subsidiary
before any court or before any administrative agency or
administrative officer or executive, whether federal, state,
local or foreign, which seek to enjoin the Merger or which if
adversely determined would, individually or in the aggregate,
have a Material Adverse Effect, (ii) there are no outstanding
domestic or foreign judgments, decrees or orders against the
Company or any Subsidiary enjoining any of them in respect of,
or the effect of which is to prohibit, any business practice or
the acquisition of any property or the conduct of business in
any area that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect and
(iii) there are no actions pending, or to the Knowledge of the
Company, threatened against the directors or any director of the
Company alleging a breach of such directors' or director's
fiduciary duties.
SECTION 3.22 Contracts and Commitments.
Except as disclosed on Schedule 3.22 of the Disclosure Schedule:
(a) The Company is not nor is any Subsidiary, with respect to
its business, a party to any oral or written contract:
(i) that prohibits the Company or any of its Subsidiaries
from freely engaging or competing in its line of business
anywhere in the world;
(ii) that is not on arms-length terms;
(iii) pursuant to which the Company or any of its
Subsidiaries has incurred or accrued losses;
(iv) that by its terms may be terminated upon a change in
control of the Company or any of its Subsidiaries;
(v) that commits the Company or any of its Subsidiaries to
purchase or sell any properties or assets outside of the
ordinary course of business for consideration in excess of
$100,000;
(vi) that involves an unfulfilled obligation, individually
or in the aggregate, in excess of $100,000 and is not terminable
by the Company or any of its Subsidiaries upon less than 60
calendar days' notice for a cost of not less than $100,000;
(b) Since December 31, 1997, none of the Company's or any of
its Subsidiaries' significant customers, suppliers, outside
service providers or sources of referral has indicated that it
will stop or materially decrease the rate of business done with
or referred to either the Company or any such Subsidiary.
(c) To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries is obligated to (i) purchase any
property or services at a price greater than the prevailing
market price, (ii) sell any property or services at a price less
than the prevailing market price, (iii) pay rentals or royalties
at a rate greater than the prevailing market price or (iv) act
as lessor or licensor at a rate less than the prevailing market
price.
(d) Parent has been supplied with a true and correct copy of
all written contracts which are referred to on Schedule 3.22,
together with all amendments, exhibits, attachments, waivers or
other changes thereto.
SECTION 3.23 Real Estate Leases. Schedule 3.23 hereto sets
forth a list of (a) all leases and subleases under which the
Company and its Subsidiaries is lessor or lessee of any real
property together with all amendments, supplements, nondisturbance
agreements and other agreements pertaining thereto, (b) all options
held by the Company and its Subsidiaries or contractual obligations
on the part of the Company and its Subsidiaries to purchase or
acquire any interest in real property and (c) all options granted
by the Company and its Subsidiaries or contractual obligations on
the part of the Company and its Subsidiaries to sell or dispose of
any interest in real property. To the Company's knowledge, there
is not any lien, claim, option, charge, security interest,
limitation, encumbrance or restriction of any kind (any of the
foregoing being a "Lien") on any of the leasehold interests set
forth on Schedule 3.23 hereto except for (a) Liens reflected in the
balance sheet included in the Company's SEC Documents, (b) Liens of
record consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real
property which do not materially detract from the value of, or a
materially impair the use of, such property by the Company and its
Subsidiaries in the operation of their respective businesses, (c)
Liens for current taxes, assessments or governmental charges or
levies on property not yet delinquent or being contested in good
faith and for which appropriate reserves have been established in
accordance with United States generally acceptable accounting
principles (which contested levies are described on Schedule 3.23),
and (d) Liens imposed by law, such as materialman's, mechanic's,
carrier's, workers' and repairmen's Liens securing obligations not
yet delinquent or being contested in good faith and for which
appropriate reserves have been established in accordance with
United States generally acceptable accounting principles or
securing obligations not being paid in the ordinary course of
business in accordance with customary and commercially reasonable
practice (collectively, "Permitted Liens").
SECTION 3.24 Real Property. Schedule 3.24 hereto lists all
real property owned by the Company and its Subsidiaries. Each of
the Company and its Subsidiaries has good and marketable title in
fee simple to its respective real properties set forth on Schedule
3.24 hereto, in each case, to the Company's knowledge, free and
clear of all Liens, except for Permitted Liens.
SECTION 3.25 Opinion of Financial Advisor. The Company has
received the opinion of Xxxxxx Xxxxxxx & Co. Incorporated, dated
the date hereof, to the effect that, as of such date, the Merger
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, a copy of which opinion will be delivered to Parent
promptly after the execution of this Agreement.
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business Pending the Merger.
(a) Actions by Parent. Except in connection with the
transactions described on Schedule 4.1 or as expressly permitted
by clauses (i) through (x) of this Section 4.1(a), during the
period from the date of this Agreement through the Effective
Time, Parent shall, and shall cause each of its Subsidiaries
to, in all material respects, carry on its business in the
ordinary course of its business as currently conducted and, to
the extent consistent therewith, use reasonable good faith
efforts to preserve intact its current business organizations,
keep available the services of its current officers and
employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at
the Effective Time. Without limiting the generality of the
foregoing, and except in connection with the transactions
described on Schedule 4.1 or as otherwise expressly contemplated
by or necessary to effect this Agreement, Parent shall not, and
shall not permit any of its Subsidiaries to, without the prior
written consent of the Company:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in
respect of, any of its capital stock, or otherwise make any
payments to its shareholders in their capacity as such (other
than dividends and other distributions by Subsidiaries), (x)
other than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (y) purchase,
redeem or otherwise acquire any shares of capital stock of
Parent or any other securities thereof or those of any
Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible
into, or any rights, warrants or options to acquire any such
shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of stock options and
shares of Parent Common Stock to employees, directors or
consultants of Parent or any of its Subsidiaries in the ordinary
course of business consistent with past practice, (B) the
issuance by any wholly-owned Subsidiary of Parent of its capital
stock to Parent or another wholly-owned Subsidiary of Parent,
(C) the issuance of no more than 2,200,000 shares of Parent
Common Stock in connection with the Parent's Stock Plans, the
issuance of shares of Parent Common Stock upon conversion of
Parent Class B Common Stock and shares of Parent Common Stock
upon the conversion of the 7 1/2% Trust Preferred Securities into
the 7 1/2% Convertible Subordinated Debentures and the subsequent
conversion of the 7 1/2% Convertible Subordinated Debentures into
Parent Common Stock;
(iii) amend its Charter or Bylaws;
(iv) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure
or ownership of the Parent;
(v) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other person in
excess of $500,000,000, other than (A) in the ordinary course of
business consistent with past practice, (B) indebtedness, loans,
advances, capital contributions and investments between Company
and any of its wholly-owned Subsidiaries or between any of such
wholly-owned Subsidiaries (C) in connection with the
consummation of the transactions contemplated hereby, and (D) as
necessary in connection with any acquisition permitted in
Section 4.1(a)(vi) hereof ;
(vi) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree
to acquire any assets, unless (i) the entering into a definitive
agreement relating to or the consummation of such acquisition,
merger, consolidation or purchase would not (A) impose any
material delay in the obtaining of, or significantly increase
the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity necessary
to consummate the Merger or the expiration or termination of any
applicable waiting period, (B) significantly increase the risk
of any Governmental Entity entering an order prohibiting the
consummation of the Merger or (C) significantly increase the
risk of not being able to remove any such order on appeal or
otherwise, and (ii) in the case of any acquisitions, mergers,
consolidations or purchases, the asset purchase price or equity
purchase price for which Parent is responsible does not exceed
$100,000,000 million in the aggregate and which does not
materially change the ratio of debt to total capitalization of
Parent;
(vii) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any Subsidiary by
any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(viii) take any action, other than reasonable and usual
actions in the ordinary course of business consistent with past
practice, with respect to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(ix) take any action or knowingly omit to take any action
which would cause any of its representations or warranties
contained in this Agreement to be untrue in any material respect
or result in a material breach of any covenant made by it in
this Agreement; or
(x) authorize, recommend or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
(b) Actions by the Company. Except as expressly permitted by
clauses (i) through (xiv) of this Section 4.l(b), during the
period from the date of this Agreement through the Effective
Time, the Company shall, and shall cause each of its
Subsidiaries to, in all material respects, carry on its business
in, the ordinary course of its business as currently conducted
and, to the extent consistent therewith, use reasonable good
faith efforts to preserve intact its current business
organizations, keep available the services of its current
officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it
to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly
contemplated by or necessary to effect this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Parent:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in
respect of, any of its capital stock, or otherwise make any
payments to its shareholders in their capacity as such;
provided, however, that if the transactions contemplated by this
Agreement have not closed by May 28, 1999, the Company may
declare a dividend of $0.25 per share in June, payable in July,
and may thereafter resume its regular quarterly dividend, (x)
other than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (y) purchase,
redeem or otherwise acquire any shares of capital stock of the
Company or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible
into, or any rights, warrants or options to acquire any such
shares, voting securities, equity equivalent or convertible
securities, except issuances of Company Common Stock (A)
pursuant to the exercise of a Company Stock Option granted prior
to the date hereof, (B) pursuant to the Company Warrant, and (C)
in accordance with Schedule 3.6; provided that no additional
options shall be granted after the date hereof;
(iii) amend its Articles of Incorporation or Bylaws;
(iv) sell, lease or otherwise dispose of or agree to sell,
lease or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business
consistent with past practice and not material to the Company
and its Subsidiaries taken as a whole;
(v) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other person,
other than (A) in the ordinary course of business consistent
with past practice, and (B) indebtedness, loans, advances,
capital contributions and investments between Company and any of
its wholly-owned Subsidiaries or between any of such
wholly-owned Subsidiaries;
(vi) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree
to acquire any assets outside of the ordinary course of
business;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure
or ownership of the Company or any Subsidiary;
(viii) knowingly violate or knowingly fail to perform any
material obligation or duty imposed upon it or any Subsidiary by
any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(ix) enter into or adopt, or amend any existing, severance
plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, except one
that can be terminated on 30-days' notice without cost, the
payment of any penalty, or termination fee, other than as
required by law;
(x) increase the compensation payable or to become payable to
its officers or employees, except for increases in the ordinary
course of business consistent with past practice in salaries or
wages of employees of the Company or any of its Subsidiaries who
are not officers of the Company or any of its Subsidiaries, or,
except pursuant to existing plans or policies, grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any employee of the Company or any of
its Subsidiaries, or establish, adopt, enter into, or, except
as may be required to comply with applicable law, amend or take
action to enhance or accelerate any rights or benefits under,
any labor, collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or
employee;
(xi) take any action, other than reasonable and usual actions
in the ordinary course of business consistent with past
practice, with respect to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(xii) take any action or knowingly omit to take any action
which would cause any of its representations or warranties
contained in this Agreement to be untrue in any material respect
or result in a material breach of any covenant made by it in
this Agreement;
(xiii) make any Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
or
(xiv) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
SECTION 4.2 No Solicitation. From and after the date hereof,
neither Parent nor the Company will, and each will use its best
efforts to cause any of its officers, directors, employees,
attorneys, financial advisors, agents or other representatives and
those of any of its Subsidiaries not to, directly or indirectly,
(a) invite, solicit, initiate or knowingly encourage (including by
way of furnishing non-public information or assistance) any
proposal or offer from any person that constitutes, or may
reasonably be expected to lead to, a Takeover Proposal (as
hereinafter defined), or (b) engage in or continue discussions or
negotiations relating to a Takeover Proposal; provided, however,
that prior to the receipt of approval by their respective
shareholders, the Company and the Parent may engage in discussions
or negotiations with, or furnish information concerning itself and
its Subsidiaries, business, properties or assets to, any third
party which makes an unsolicited, bona fide written Takeover
Proposal (as hereinafter defined) if the Board of Directors of the
Company or the Parent, as applicable, (i) concludes in good faith
on the basis of the written advice of its respective outside
counsel (in the case of the Company, Xxxxxx & Xxxxxxx, PC and in
the case of the Parent, Xxxxxxxx & Xxxxx) that the failure to take
such action would violate the fiduciary obligations of such Board
under applicable law, and (ii) concludes in good faith that such
Takeover Proposal includes the necessary financing or commitments
thereof and is reasonably capable of being consummated taking into
account all legal, financial and regulatory aspects of the Takeover
Proposal and, in the case of the Company, that such Takeover
Proposal would, if consummated, be more favorable, from a financial
point of view, to the shareholders of the Company than the Merger
(any such more favorable Takeover Proposal satisfying all of the
conditions set forth herein being referred to as a "Superior
Proposal") and the Company enters into an appropriate
confidentiality agreement with such third party (which agreement
shall be no less favorable to the Company than the Confidentiality
Agreement), a copy of which will be delivered to Parent promptly
after execution thereof. Each of Parent and the Company will
promptly (but in no case later than 24 hours) notify (and if in
writing, provide a copy to) the other party of any Takeover
Proposal or amendment or modification thereof, including the
material terms and conditions thereof. As used in this Agreement,
"Takeover Proposal" shall mean any proposal or offer, or any
expression of interest by any third party relating to Parent's or
the Company's willingness or ability to receive or discuss a
proposal or offer, for (A) a tender or exchange offer, or other
acquisition of beneficial ownership of, in each case 20% or more of
the outstanding voting capital stock of Parent or the Company,
respectively, (B) a merger, consolidation, share exchange,
recapitalization or other business combination involving either
Parent or the Company or any of their respective Subsidiaries or
(C) any acquisition in any manner of 20% or more of the assets of,
either Parent or the Company and their respective Subsidiaries,
taken as a whole in one or more of a series of related
transactions.
SECTION 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time,
the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement, entered
into in connection with any potential business combination, sale of
all or substantially all of the assets, merger or transaction of
comparable character involving the Company or any of its
Subsidiaries, to which the Company or any of its Subsidiaries is a
party (other than any involving Parent), unless the Board of
Directors of the Company concludes in good faith on the basis of
the advice of its outside counsel (who may be its regularly engaged
outside counsel), that the failure to terminate, amend, modify or
waive any such confidentiality or standstill agreement would
violate the fiduciary obligations of the Board under applicable
law. Subject to such fiduciary duties, during such period, the
Company agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including,
but not limited to, obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States or any state
thereof having jurisdiction.
ARTICLE 5.
ADDITIONAL AGREEMENTS
SECTION 5.1 Shareholder Meetings. Except to the extent
legally required for the discharge by the board of directors of its
fiduciary duties as advised in writing by its respective outside
counsel, the Company and Parent each shall call a meeting of its
shareholders (respectively, the "Company Shareholder Meeting" and
the "Parent Shareholder Meeting" and, collectively, the
"Shareholder Meetings") to be held on the same day and as promptly
as practicable after the date on which the Registration Statement
becomes effective for the purpose of considering the approval of
this Agreement and the transactions contemplated hereby (in the
case of the Company) and the Parent Shareholders' Approvals (in the
case of Parent). The Company and Parent will, through their
respective Boards of Directors, recommend to their respective
shareholders approval of such matters and shall not withdraw such
recommendation and shall use their reasonable best efforts to
obtain their respective shareholders' approval of such matters;
provided, however, that a Board of Directors shall not be required
to make, and shall be entitled to withdraw, such recommendation if
such Board concludes in good faith on the basis of the written
advice of Xxxxxx & Xxxxxxx, PC in the case of the Company and
Xxxxxxxx & Xxxxx in the case of Parent that the making of, or the
failure to withdraw, such recommendation would violate the
fiduciary obligations of such Board under applicable law. The
Boards of Directors of the Company, Parent and Sub will not rescind
their respective declarations that the Merger is advisable, fair to
and in the best interest of such company and its shareholders
unless, in any such case, any such Board concludes in good faith on
the basis of the written advice of Xxxxxx & Xxxxxxx, PC in the case
of the Company and Xxxxxxxx & Xxxxx in the case of Parent that the
failure to rescind such determination would violate the fiduciary
obligations of such Board under applicable law.
SECTION 5.2 Preparation of the Registration Statement and the
Joint Proxy Statement. The Company and Parent shall promptly
prepare and file with the SEC the Joint Proxy Statement and Parent
shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus.
Each of Parent and the Company shall use its reasonable best
efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. As
promptly as practicable after the Registration Statement shall have
become effective, each of Parent and the Company shall mail the
Joint Proxy Statement to its respective shareholders. Parent shall
also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be
taken under any applicable federal or state securities laws in
connection with the issuance of Parent Common Stock in the Merger,
and the Company shall furnish all information concerning the
Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action. No
amendment or supplement to the Joint Proxy Statement or the
Registration Statement will be made by Parent or the Company
without the providing the other party the opportunity to review and
comment thereon. Parent and the Company each will advise the other,
promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the
suspension of the qualification of the Parent Common Stock issuable
in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the
Joint Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their
respective affiliates, officers or directors, should be discovered
by the Company or Parent which should be set forth in an amendment
or supplement to any of the Registration Statement or the Joint
Proxy Statement, so that any of such documents would not include
any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other
party hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of the
Company and Parent.
SECTION 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions (including the
maintenance of the attorney-client privilege) applicable to Parent
or to the Company or any of their Subsidiaries, each of Parent and
the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other
representatives of the other party hereto reasonable access to, and
permit them to make such inspections and copies as they may
reasonably require of, during normal business hours during the
period from the date of this Agreement through the Effective Time,
all their respective properties, books, contracts, commitments and
records. All such information obtained by the parties pursuant to
this Section 5.1 shall be subject to the terms of the
Confidentiality Agreement between the Company and the Parent (the
"Confidentiality Agreement").
SECTION 5.4 Fees and Expenses. Except as otherwise provided
herein, whether or not the transactions contemplated herein shall
be consummated, each party shall pay its own expenses in connection
with this Agreement and the transactions contemplated herein,
except that each of Parent and the Company shall bear and pay one-half
of the costs and expenses incurred in connection with the
filing under the HSR Act and the filing, printing and mailing of
the Registration Statement and the Joint Proxy Statement (including
related filing fees).
SECTION 5.5 Reasonable Good Faith Efforts.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use reasonable
good faith efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including, but not
limited to: (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity (including
those in connection with the HSR Act and State Takeover
Approvals, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
obtaining of any requisite shareholder vote, or other necessary
corporate approvals, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by this Agreement; provided, however, that the
Company shall not, without Parent's prior written consent, and
Parent shall not be required to, divest or hold separate or
otherwise take or commit to take any other similar action with
respect to any assets, businesses or product lines of Parent,
the Company or any of their respective Subsidiaries. No party to
this Agreement shall consent to any voluntary delay of the
consummation of the Merger at the behest of any Governmental
Entity without the consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld.
(b) Public Announcements. The initial press release relating
to this Agreement shall be a joint press release and thereafter
the Company and Parent each shall consult with the other prior
to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making
any filings with any third party and/or any Governmental Entity
with respect thereto, except as may be required by law or by
obligations pursuant to any listing agreement with or rules of
the NYSE and Nasdaq.
SECTION 5.6 Securities Filings. From the date hereof to the
Effective Time and thereafter, each of Parent and Company shall
timely file all reports required to be filed by it under the
Exchange Act, including, without limitation, the timely filing of
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
SECTION 5.7 Indemnification. For six years from and after the
Effective Time, Parent agrees to, and to cause the Surviving
Corporation to, indemnify and hold harmless all past and present
officers and directors of the Company and of its Subsidiaries to
the same extent such persons are indemnified as of the date of this
Agreement by the Company pursuant to the Company's Articles of
Incorporation and By-Laws in existence on the date hereof for acts
or omissions occurring in their capacities as a director or officer
at or prior to the Effective Time, including, without limitation,
such acts or omissions occurring in connection with the approval of
this Agreement and the consummation of the transactions
contemplated hereby. Parent shall cause the Surviving Corporation
to provide, for an aggregate period of not more than two years from
the Effective Time, the Company's current directors and officers an
insurance and indemnification policy that provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance")
that is no less favorable than the Company's existing policy or, if
substantially equivalent insurance coverage is unavailable, the
best available coverage; provided, however, that the Surviving
Corporation shall not be required to pay an annual premium for the
D&O Insurance in excess of 200 percent of the last annual premium
paid prior to the date hereof.
SECTION 5.8 Employee Benefits. Parent agrees to cause the
Surviving Corporation to provide to the current employees of the
Company employee benefits (including, without limitation, health,
life and disability insurance, retirement benefits and other
employee benefits) which are no less favorable to such employees
than those provided by either (i) the Company currently or (ii) the
Parent for employees in similar positions, as such employee
benefits may be provided generally from time to time, the choice of
which set of benefits to be in Parent's sole discretion.
SECTION 5.9 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or
other similar statute or regulation shall become applicable to the
transactions contemplated hereby, Parent and the Company and their
respective Boards of Directors shall use their reasonable best
efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
SECTION 5.10 Notification of Certain Matters. Parent shall use
its reasonable best efforts to give prompt written notice to the
Company, and the Company shall use its reasonable best efforts to
give prompt written notice to Parent, of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of
which it is aware and which would be reasonably likely to cause (x)
any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant,
condition or agreement contained in this Agreement not to be
complied with or satisfied in all material respects, (ii) any
failure of Parent or the Company, as the case may be, to comply in
a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii)
any change or event which would be reasonably likely to have a
Material Adverse Effect on Parent or the Company, as the case may
be, (iv) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement, (v) any
notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions
contemplated by this Agreement, or (vi) any actions, suits, claims,
investigations or proceedings commenced or, to the best of its
knowledge threatened against, relating to or involving or otherwise
affecting the Company or any Subsidiary, on the one hand, or Parent
or Sub, on the other hand, which relate to the consummation of the
transactions contemplated by this Agreement; provided, however,
that the delivery of any notice pursuant to this Section 5.10 shall
not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 5.11 Designation of Directors. As soon as reasonably
practicable after the Effective Time, the Board of Directors of
Parent shall adopt resolutions increasing the number of members of
the Board from 12 to 14 directors and to appoint Xxxxx X.
Xxxxxxxxxxxx and such additional person who is recommended by Xx.
Xxxxxxxxxxxx and approved by the Chairman of the Parent (which
approval shall not be unreasonably withheld) to fill the vacancies
created by such increase in the number of directors, effective upon
such increase. Each shall serve until the next regularly scheduled
annual meeting of Parent or until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Charter and By-Laws,
and each shall be nominated to serve on the Board at such annual
meeting of Parent.
SECTION 5.12 Letters of Parent's and the Company's Accountants.
The Company shall use its reasonable best efforts to cause to be
delivered to Parent, and Parent shall use its reasonable best
efforts to cause to be delivered to the Company, two letters from
the their respective independent accountants, one dated a date
within two business days before the date on which the Registration
Statement shall become effective and one dated a date within two
business days before the Closing Date, each addressed to the other
party, in form and substance reasonably satisfactory to the other
party and customary in scope and substance for comfort letters
delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
SECTION 5.13 Amendment of Rights Agreement. The Board of
Directors of the Company shall take all necessary action to amend
the Rights Agreement so that none of the execution or delivery of
this Agreement, the exchange of the shares of Company Common Stock
for the shares of Parent Common Stock and cash in accordance with
Article I will cause (A) the Rights issued pursuant to the Rights
Agreement to become exercisable under the Rights Agreement, (B)
Parent or Sub to be deemed an "Acquiring Person" (as defined in the
Rights Agreement), or (C) the "Shares Acquisition Date" (as defined
in the Rights Agreement) to occur upon any such event.
SECTION 5.14 Financing. Parent shall use its best efforts to
obtain the Financing. In the event that any portion of such
Financing becomes unavailable, regardless of the reason therefor,
Parent will use its best efforts to obtain alternative debt
financing from other commercially reasonable sources on pricing
terms in which the weighted average interest rate (including all
applicable fees) with respect to such alternative financing is not
40% greater than the weighted average interest rate (including all
applicable fees) of the proposed Financing and other non-pricing
terms are not materially more restrictive than the proposed
Financing.
ARTICLE 6.
CONDITIONS PRECEDENT TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved and adopted by the requisite vote of shareholders of
the Company in accordance with applicable law and the Articles
of Incorporation and By-Laws of the Company, and the Parent
Shareholders' Approvals shall have been obtained by the
requisite vote of the shareholders of Parent in accordance with
applicable rules of the Nasdaq, applicable law, and the Charter
and By-Laws of Parent.
(b) Listing on the Nasdaq. The Parent Common Stock issuable
in the Merger shall have been authorized for listing on the
Nasdaq, subject to official notice of issuance.
(c) HSR and Other Approvals.
(i) The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of or filings with, or terminations or expirations
of waiting periods imposed by, any Governmental Entity
(including State Takeover Approvals, if any), which the
failure to obtain, make or occur would have the effect of
making the Merger or any of the transactions contemplated
hereby illegal or would have a Material Adverse Effect on
Parent (assuming the Merger had taken place), shall have been
obtained, shall have been made or shall have occurred.
(d) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their
respective Subsidiaries, shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and
has the effect of prohibiting or restricting the Merger or
making the Merger or any of the transactions contemplated hereby
illegal; provided, however, subject to the proviso to Section
5.5(a) hereof, that the party seeking to terminate this
Agreement pursuant to this Section 6.1(d) shall have used its
reasonable best efforts to remove such injunction or overturn
such action.
(e) Litigation. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity as a result
of this Agreement or any of the transactions contemplated herein
which prohibits or restricts the Merger or is reasonably likely
to have a Material Adverse Effect on the Parent or the Company,
as the case may be.
(f) Registration Statement or Exemption. Either the
Registration Statement shall have become effective in accordance
with the provisions of the Securities Act or there shall be an
effective exemption from the registration requirements of the
Securities Act. If the Registration Statement shall have become
effective, no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or, to
the Knowledge of Parent or the Company, threatened by the SEC.
All necessary state securities or blue sky authorizations shall
have been received.
SECTION 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligations of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all
material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective
Time, each of the representations and warranties of Parent and
Sub contained in this Agreement shall be true and correct in all
material respects (except to the extent qualified as to
materiality (including a "Material Adverse Effect"), in which
case such representations and warranties shall be true and
correct in all respects) on and as of the Effective Time as if
made on and as of such date (other than representations and
warranties which address matters only as of a certain date which
shall be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted
by this Agreement, and the Company shall have received a
certificate signed on behalf of each of Parent and Sub by its
Chief Executive Officer, its Chief Operating Officer and its
Chief Financial Officer to such effect.
(b) Legal Opinions.
(i) The opinion of Xxxxxxxx & Xxxxx, counsel to Parent,
issued in connection with the Registration Statement shall
contain a clause entitling the Company to rely thereon.
(ii) The Company shall have received an opinion from Xxxxxx
& Xxxxxxx, PC, dated as of the Closing Date, substantially to
the effect that (i) the Merger will qualify as a reorganization
pursuant to Section 368(a) of the Code, (ii) that no gain or
loss will be recognized by the Company as a result of the
Merger, and (iii) no gain or loss will be recognized by a
shareholder of the Company as a result of the Merger except to
the extent of cash received pursuant to the Merger. In
rendering such opinion, Xxxxxx & Xxxxxxx, PC shall be entitled
to rely upon usual and customary representations of shareholders
and officers of Parent, the Company and others.
SECTION 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material
respects each of its agreements contained in this Agreement
required to be performed on or prior to the Effective Time and,
each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all
material respects (except to the extent qualified as to
materiality (including a "Material Adverse Effect"), in which
case such representations and warranties shall be true and
correct in all respects) on and as of the Effective Time as if
made on and as of such date (other than representations and
warranties which address matters only as of a certain date which
shall be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted
by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer,
its Chief Operating Officer and its Chief Financial Officer to
such effect.
(b) Consents. All material third-party consents, except
financing consents, and consents necessary under any shareholder
agreements applicable to the Company and its Subsidiaries shall
have been obtained.
(c) Legal Opinion. Parent shall have received an opinion
from Parent's counsel, dated as of the Closing Date,
substantially to the effect that (i) the Merger will qualify as
a reorganization pursuant to Section 368(a) of the Code, (ii)
that no gain or loss will be recognized by the Company as a
result of the Merger, and (iii) no gain or loss will be
recognized by a shareholder of the Company as a result of the
Merger except to the extent of cash received pursuant to the
Merger. In rendering such opinion, Parent's counsel shall be
entitled to rely upon usual and customary representations of
shareholders and officers of Parent, the Company and others.
(d) Financing. Parent shall have received the proceeds of
the Financing necessary to consummate the Merger in accordance
with the Financing Commitment Letter.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by
the shareholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall
have failed to comply in any material respect with any of its
covenants or agreements contained in this Agreement required to
be complied with prior to the date of such termination, which
failure to comply has not been cured within five business days
following receipt by such other party of written notice of such
failure to comply; provided, however, that if any such breach is
curable by the breaching party through the exercise of the
breaching party's best efforts and for so long as the breaching
party shall be so using its best efforts to cure such breach,
the non-breaching party may not terminate this Agreement
pursuant to this paragraph unless such breach remains uncured 30
days following such written notice;
(c) by either Parent or the Company if there has been (i) a
breach by the other party (in the case of Parent, including any
material breach by Sub) of any representation or warranty that
is not qualified as to materiality which has the effect of
making such representation or warranty not true and correct in
all material respects or (ii) a breach by the other party (in
the case of Parent, including any material breach by Sub) of any
representation or warranty that is qualified as to materiality,
in each case which breach has not been cured within five
business days following receipt by the breaching party of
written notice of the breach; provided, however, that if any
such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long
as the breaching party shall be so using its best efforts to
cure such breach, the non-breaching party may not terminate this
Agreement pursuant to this paragraph unless such breach remains
uncured 30 days following such written notice;
(d) by the Parent or the Company if there shall be any law or
regulation that makes consummation of the transaction
contemplated herein illegal or otherwise prohibited or if any
order, decree or other order has been entered by a court or
other Governmental Entity which has the effect of making the
Merger or any of the transactions contemplated hereby illegal;
(e) by Parent or the Company if the Merger has not been
effected on or prior to the close of business on July 31, 1999
(the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 7.l(e) shall
not be available to any party whose failure to fulfill any of
its obligations contained in this Agreement has been the cause
of or resulted in, the failure of the Merger to have occurred on
or prior to the aforesaid date;
(f) by Parent or the Company if the shareholders of the
Company do not approve this Agreement at the Company Shareholder
Meeting or at any adjournment or postponement thereof;
(g) by Parent or the Company if the Parent Shareholders'
Approvals are not obtained at the Parent Shareholder Meeting or
any adjournment or postponement thereof;
(h) by Parent if (i) the Board of Directors of the Company
(the "Company's Board") shall not have recommended, or shall
have resolved not to recommend, or shall have modified, amended
or withdrawn its approval or recommendation of the Merger, this
Agreement or declaration that the Merger is advisable and fair
to and in the best interests of the Company, its shareholders,
or the Company's Board shall have recommended or accepted any
Takeover Proposal, or shall have resolved to do any of the
foregoing, (ii) Parent shall request that the Company's Board
reaffirm its approval or recommendation of this Agreement or the
Merger and the Company's Board shall fail to do so within 10
business days after such request, (iii) any corporation,
partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) shall have become the
beneficial owner of more than 20% of the outstanding shares of
Company Common Stock, (iv) the Company shall have breached its
obligations set forth in Section 4.2 above, or (v) the Company
shall have failed, as promptly as practicable after the
Registration Statement is declared effective, to call the
Company Shareholder Meeting or to mail the Joint Proxy Statement
to its shareholders, or failed to include in such statement the
Company's Board recommendation of the Merger;
(i) by the Company if (i) the Board of Directors of Parent
(the "Parent's Board") shall not have recommended, or shall have
resolved not to recommend, or shall have modified, amended or
withdrawn its approval or recommendation of the Share Issuance
or that the Share Issuance under this Agreement is advisable and
fair and in the best interests of the Parent and its
stockholders, or the Parent's Board shall have recommended or
accepted any Takeover Proposal or shall have resolved to do any
of the foregoing, (ii) the Company shall request that the
Parent's Board reaffirm its approval or recommendation of this
Agreement or the Merger and the Parent's Board shall fail to do
so within 10 business days after such request, (iii) any
corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) shall have
become the beneficial owner of more than 20% of the outstanding
shares of Parent Common Stock, (iv) Parent shall have breached
its obligations set forth in Section 4.2 above, or (v) Parent
shall have failed, as promptly as practicable after the
Registration Statement is declared effective, to call the Parent
Shareholder Meeting or to mail the Joint Proxy Statement to its
shareholders, or failed to include in such statement the Board
of Directors recommendation of the Merger; or
(j) by the Company if (i) the closing price on Nasdaq of the
Parent Common Stock is less than $24.00 per share on each
trading day in any period of five (5) or more consecutive
trading days (the "Measurement Period") beginning seven calendar
days after execution of this Agreement and (ii) the closing
price of the S&P MidCap Index on the last day of the Measurement
Period, as reported in The Wall Street Journal, has not
decreased by 20% or more from the closing price of the S&P
MidCap Index as of the date of this Agreement and (iii) the
average of the closing prices on the last day of the Measurement
Period of the companies included in the Parent's industry peer
group as set forth under the heading Performance Graph in the
Parent's proxy statement dated April 6, 1998, that are currently
publicly traded (the "Peer Group"), as reported in The Wall
Street Journal, has not decreased by 20% or more from average of
the closing prices of the Peer Group as of the date of this
Agreement and (iv) the Company provides written notice to Parent
of its election to terminate under this paragraph (j) by giving
notice of such termination pursuant to Section 8.2 hereof within
five (5) trading days after the last day of any such Measurement
Period.
SECTION 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company, as
provided in Section 7.1, this Agreement shall forthwith terminate
and there shall be no liability hereunder on the part of the
Company, Parent, Sub or their respective officers or directors
(except for Section 5.4, 7.5, Article 8 and the obligations of the
parties under the Confidentiality Agreement which shall survive the
termination); provided, however, that nothing contained in this
Section 7.2 shall relieve any party hereto from any liability for
any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this
Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective
Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders
of the Company, but, after any such approval, no amendment shall be
made which by law requires further approval by such shareholders
without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions
contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party.
SECTION 7.5 Fees on Termination.
(a) (i) If any event referred to in Section 7.1(h) occurs at
a time when the Company does not have a right to terminate under
Section 7.1(j), this Agreement is terminated thereafter by the
Company or Parent (whether or not pursuant to such clause), then
the Company shall (without prejudice to any other rights of
Parent against the Company) pay to Parent a fee of $12.5 million
(the "Fee"), plus actual and reasonable out of pocket expenses
of Parent and Sub relating to the transactions contemplated by
this Agreement (including, but not limited to, reasonable fees
and expenses of Parent's counsel, accountants, financing sources
and financial advisors) not to exceed $500,000 (the "Expenses"),
in cash, such payment to be made promptly, but in no event later
than the second business day following such termination.
(ii) If at a time when the Company does not have a right to
terminate under Section 7.1(j):
(A) this Agreement is terminated by the Company pursuant
to Section 7.1(e) where prior to the date of termination a
Takeover Proposal with respect to the Company was made; or
(B) (x) this Agreement is terminated by the Company or
Parent at a time when Parent is entitled to terminate this
Agreement pursuant to Section 7.1(f) or 7.1(g), and (y) prior to
the Company Shareholder Meeting but after the date of this
Agreement a Takeover Proposal with respect to the Company was
made;
then, in each case, the Company shall (without prejudice to any
other rights of Parent against the Company) pay to Parent the
Expenses in cash, such payment to be made promptly, but in no
event later than the second business day following such
termination. If within eighteen months after such termination,
a Company Acquisition Transaction occurs, then in addition to
the Expenses, Company shall pay the Fee promptly, but in no
event later than the second business day following the closing
of the Company Acquisition Transaction. Regardless of the
circumstances giving rise to termination, the Fee plus Expenses
will be the maximum amount payable under clauses (a)(i) and
(a)(ii).
The Company acknowledges that the agreements contained in this
Section 7.5 are an integral part of the transactions
contemplated by this Agreement. Accordingly, if the Company
shall fail to pay when due any amounts which shall become due
under Section 7.5 hereof, the Company shall in addition thereto
pay to Parent all costs and expenses (including feeds and
disbursements of counsel) incurred in collecting such overdue
amounts, together with interest on such overdue amounts from the
date such payment was required to be made until the date such
payment is received at a rate per annum equal to the "prime
rate" as announced from time to time by Bank of America.
A "Company Acquisition Transaction" means any of the following
events: (A) any Person other than Parent or its Affiliates,
acquires or becomes the beneficial owner of 20% or more of the
outstanding shares of Company Common Stock; (B) any new group is
formed which, at the time of formation, beneficially owns 20% or
more of the outstanding shares of Company Common Stock (other
than a group which includes or may reasonably be deemed to
include Parent or any of its Affiliates); (C) the Company enters
into an agreement, including, without limitation, an agreement
in principle, providing for a merger, consolidation, share
exchange, recapitalization or other business combination
involving the Company or the acquisition of a 20% interest in,
or at least 20% of the assets, business or operations of, the
Company (other than the transactions contemplated by this
Agreement); or (D) any Person (other than Parent or its
Affiliates) is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner
of shares of Company Common Stock which, together with all
shares of Company Common Stock beneficially owned by such
Person, results or would result in such Person being the
beneficial owner of 20% or more of the outstanding shares of
Company Common Stock. For purposes of this Section 7.5, the
terms "group" and "beneficial owner" shall be defined by
reference to Section 13(d) of the Exchange Act.
(b) (i) If any event referred to in Section 7.1(i) occurs,
this Agreement is terminated thereafter by the Company or Parent
(whether or not pursuant to such clause) Parent shall (without
prejudice to any other rights of Company against Parent) pay to
the Company a fee of $12.5 million (the "Company Fee"), plus
actual and reasonable out of pocket expenses of the Company
relating to the transactions contemplated by this Agreement
(including, but not limited to, reasonable fees and expenses of
Company's counsel, accountants, financing sources and financial
advisors) not to exceed $500,000 (the "Company Expenses") in
cash, such payment to be made promptly, but in no event later
than the second business day following such termination.
(ii) If:
(A) this Agreement is terminated by Parent pursuant to
Section 7.1(e) where prior to the date of termination a Takeover
Proposal with respect to the Parent was made;
(B) (x) this Agreement is terminated by the Company or
Parent at a time when the Company is entitled to terminate this
Agreement pursuant to Section 7.1(f) or 7.1(g), and (y) prior to
the date of termination but after the date of this Agreement a
Takeover Proposal with respect to Parent was made;
(C) this Agreement is terminated by the Parent pursuant
to Section 7.1(e) solely as a result of the failure of the
condition set forth in Section 6.3(d);
then, in each case, Parent shall (without prejudice to any other
rights of the Company against Parent) pay to the Company the
Company Expenses in cash, such payment to be made promptly, but
in no event later than the second business day following such
termination. In addition, if the termination occurs under clause
(C) above, or if a Parent Acquisition Transaction occurs within
eighteen months following the termination in clauses (A) and
(B), then Parent shall pay to the Company the Company Fee, in
addition to the Company Expenses, in cash promptly, but in no
event later than the second business day following (1) such
termination under clause (C) or (2) the closing the Parent
Acquisition Transaction under clauses (A) and (B). Regardless
of the circumstances giving rise to termination, the Company
Fee, plus Company Expenses will be the maximum amount payable
under clauses (b)(i) and (b)(ii).
Parent acknowledges that the agreements contained in this
Section 7.5 are an integral part of the transactions
contemplated by this Agreement. Accordingly, if Parent shall
fail to pay when due any amounts which shall become due under
Section 7.5 hereof, Parent shall in addition thereto pay to the
Company all costs and expenses (including feeds and
disbursements of counsel) incurred in collecting such overdue
amounts, together with interest on such overdue amounts from the
date such payment was required to be made until the date such
payment is received at a rate per annum equal to the "prime
rate" as announced from time to time by Bank of America.
A "Parent Acquisition Transaction" means any of the following
events: (A) any Person acquires or becomes the beneficial owner
of 20% or more of the outstanding shares of Parent Common Stock
and Parent Class B Common Stock in the aggregate; (B) any new
group is formed which, at the time of formation, beneficially
owns 20% or more of the outstanding shares of Parent Common
Stock and Parent Class B Common Stock in the aggregate (other
than a group which includes or may reasonably be deemed to
include Parent or any of its Affiliates); (C) Parent enters into
an agreement, including, without limitation, an agreement in
principle, providing for a merger, consolidation, share
exchange, recapitalization or other business combination
involving Parent (other than this Agreement) or the acquisition
of a 20% interest in, or at least 20% of the assets, business or
operations of, Parent or (D) any Person (other than the Company
or its Affiliates) is granted any option or right, conditional
or otherwise, to acquire or otherwise become the beneficial
owner of shares of Parent Common Stock and Parent Class B Common
Stock in the aggregate which, together with all shares of Parent
Common Stock beneficially owned by such Person, results or would
result in such Person being the beneficial owner of 20% or more
of the outstanding shares of Parent Common Stock and Parent
Class B Common Stock in the aggregate.
ARTICLE 8.
GENERAL PROVISIONS
SECTION 8.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement
shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.1, as the case may be, except
that the agreements set forth in Article I, Sections 5.3, 5.4, 5.7,
5.8, and 5.11, this Article 8 and the Confidentiality Agreement
shall survive the Effective Time, and those set forth in Section
5.4, 7.5, this Article 8 and the Confidentiality Agreement shall
survive termination.
SECTION 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when
delivered personally, three days after mailing by United States
certified mail, return receipt requested, one day after being
delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to Parent or Sub:
Dura Automotive Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
with copies to:
Hidden Creek Industries
0000 XXX Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Xxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, PC
Xxxx X. Xxxxxxxxxx, Esquire
Facsimile Number: (000) 000-0000
(b) if to the Company:
Excel Industries, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxxx
Facsimile Number: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxx, PC
4000 Bank One Tower
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esquire
Facsimile Number: (000) 000-0000
SECTION 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include, " "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation. "
SECTION 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the Exhibits and Schedules attached
hereto or referred to herein, and the Confidentiality Agreement
constitute the entire agreement of the parties and supersede all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
SECTION 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Indiana, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
SECTION 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
SECTION 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of the
transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated
as originally contemplated to the fullest extent possible.
SECTION 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is
entitled at law or in equity. Each party hereto irrevocably waives
right to trial by jury.
SECTION 8.10 Litigation Costs. In the event it becomes
necessary for any party hereto to initiate litigation for the
purpose of enforcing any of its rights hereunder or for the purpose
of seeking damages for any violation hereof then, in addition to
any and all other judicial remedies that may be granted, the
prevailing party shall be entitled to recover attorneys' fees and
all other costs sustained by it in connection with such litigation.
[Remainder of page is intentionally left blank.]
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
DURA AUTOMOTIVE SYSTEMS, INC.
By: ___________________________
Its: ___________________________
WINDOWS ACQUISITION CORPORATION
By: ___________________________
Its: ___________________________
EXCEL INDUSTRIES, INC.
By: ___________________________
Xxxxx X. Xxxxxxxxxxxx, Xx.
Its: Chairman of the Board, President and
Chief Executive Officer
