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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
June 30, 1997, by and among Xxxxx Corporation, an Ohio corporation ("Parent"),
ETN Acquisition Corp., a Delaware corporation and a subsidiary of Parent (the
"Purchaser"), and Fusion Systems Corporation, a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Company has declared a dividend of Contingent
Payment Rights (the "Contingent Rights") to holders of the Company's common
stock, par value $.01 per share (the "Common Shares"), having the terms set
forth in Exhibit A which will be issued pursuant to a Contingent Payment Rights
Agreement (the "Contingent Payment Rights Agreement") between the Company and
BankBoston, N.A., as trustee or such other mutually acceptable trustee (the
"Trustee");
WHEREAS, pursuant to this Agreement the Purchaser has agreed
to commence a tender offer (the "Offer") to purchase all of the outstanding
Common Shares (including the associated preferred share purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of September 8,
1994, as amended as of April 19, 1995 and June 30, 1997, between the Company and
The First National Bank of Boston, as Rights Agent (the "Rights Agreement"),
which Rights together with the Common Shares are hereinafter referred to as the
"Shares"), at a price per Share of $39.00 net to the seller in cash (the "Offer
Price"), it being understood that the Offer is not being made with respect to
the Contingent Rights;
WHEREAS, the Board of Directors of the Company (the "Company
Board") has, in light of and subject to the conditions set forth herein, (i)
approved the Offer and (ii) adopted this Agreement and is recommending that the
Company's stockholders accept the Offer, tender their Shares to the Purchaser
and approve this Agreement;
WHEREAS, the respective Boards of Directors of the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the General
Corporation Law of
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the State of Delaware (the "GCL") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each of the issued and
outstanding Common Shares not owned directly or indirectly by Parent, the
Purchaser or the Company will be converted into the right to receive $39.00 in
cash; and
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VIII hereof and none of the events set
forth in Annex I hereto (the "Tender Offer Conditions") shall have occurred, as
promptly as practicable but in no event later than the fifth business day from
the date of this Agreement, Parent shall cause the Purchaser to commence (within
the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder, the "Exchange
Act")) an offer to purchase all outstanding Shares at the Offer Price, shall,
after affording the Company a reasonable opportunity to review and comment
thereon, file all necessary documents with the Securities and Exchange
Commission (the "SEC") in connection with the Offer (the "Offer Documents") and
shall use reasonable efforts to consummate the Offer, subject to the terms and
conditions thereof. The obligation of the Purchaser to accept for payment or pay
for any Shares tendered pursuant thereto will be subject only to the
satisfaction of the conditions set forth in Annex I hereto.
(b) Without the prior written consent of the Company,
the Purchaser shall not decrease the Offer Price or
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change the form of consideration payable in the Offer, decrease the number of
Shares sought to be purchased in the Offer, impose additional conditions to the
Offer or amend any other term of the Offer in any manner adverse to the holders
of Common Shares. The Offer shall remain open until the date that is 20 business
days (as such term is defined in Rule 14d-1(c)(6) under the Exchange Act) after
the commencement of the Offer (the "Expiration Date"), unless the Purchaser
shall have extended the period of time for which the Offer is open pursuant to,
and in accordance with, the two succeeding sentences or as may be required by
applicable law, in which event the term "Expiration Date" shall mean the latest
time and date as the Offer, as so extended, may expire. If at any Expiration
Date, any of the Tender Offer Conditions are not satisfied or waived by the
Purchaser, the Purchaser may extend the Offer from time to time. Subject to the
terms of the Offer and this Agreement and the satisfaction of all the Tender
Offer Conditions as of any Expiration Date, the Purchaser will accept for
payment and pay for all Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after such expiration date of the Offer;
provided that, if all of the Tender Offer Conditions are satisfied and more than
75% but less than 90% of the outstanding Common Shares on a fully diluted basis
(excluding Options (as defined herein) which are not exercisable for 30 days)
have been validly tendered and not withdrawn in the Offer, the Purchaser shall
have the right, in its sole discretion, to extend the Offer from time to time
for up to a maximum of five additional business days in the aggregate for all
such extensions provided the Purchaser agrees to waive the conditions set forth
in paragraphs (b), (c), (f) and (h) of Annex I. Without the prior written
consent of the Company, the Purchaser shall not accept for payment or pay for
any Shares in the Offer if, as a result, Purchaser would acquire less than the
number of Shares necessary to satisfy the Minimum Condition (as defined in Annex
I hereto).
(c) Parent and the Purchaser represent that the Offer
Documents will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information supplied by the Company in writing for inclusion in
the Offer Documents. Each of Parent
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and the Purchaser, on the one hand, and the Company, on the other hand, agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and the Purchaser further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to stockholders of the Company, in each case, as and to
the extent required by applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall, after affording Parent a
reasonable opportunity to review and comment thereon, file with the SEC and mail
to the holders of Common Shares, as promptly as practicable on the date of the
filing by Parent and the Purchaser of the Offer Documents, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") reflecting the
recommendation of the Company Board that holders of Shares tender their Shares
pursuant to the Offer and shall disseminate the Schedule 14D-9 as required by
Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9 will set
forth, and the Company hereby represents, that the Company Board, at a meeting
duly called and held, has (i) determined by unanimous vote of its directors that
each of the transactions contemplated hereby, including each of the Offer and
the Merger and the distribution of the Contingent Rights, is fair to and in the
best interests of the Company and its stockholders, (ii) approved the
distribution of the Contingent Rights, (iii) approved the Offer and adopted this
Agreement in accordance with the GCL, (iv) recommended acceptance of the Offer
and approval of this Agreement by the Company's stockholders (if such approval
is required by applicable law), and (v) taken all other action necessary to
render Section 203 of the GCL and the Rights inapplicable to the Offer and the
Merger; provided, however, that such recommendation and approval may be
withdrawn, modified or amended to the extent that the Company Board determines
in good faith, after consultation with its outside legal counsel, that failure
to take such action would reasonably be expected to result in a breach of the
Company Board's fiduciary obligations under applicable law. The Company further
represents that, prior to the execution hereof, Salomon Brothers Inc ("Salomon
Brothers"), has delivered to the Company Board its written opinion that, as of
June 29, 1997, the consideration to be received by the holders of Common Shares
(other than Parent or any of its affiliates) pursuant to the Offer, the Merger
and the Contingent Rights is fair to the Company's stockholders from a financial
point of view. The Company hereby con-
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sents to the inclusion in the Offer Documents of the recommendations of the
Company Board described in this Section 1.02(a).
(b) The Company represents that the Schedule 14D-9
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or the Purchaser in writing for inclusion in the Schedule
14D-9. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, agree promptly to correct any information provided by either of
them for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to the holders of Shares, in each case, as and to the
extent required by applicable federal securities law.
(c) In connection with the Offer, the Company will
promptly furnish the Purchaser with mailing labels, security position listings,
any available non-objecting beneficial owner lists and any available listing or
computer list containing the names and addresses of the record holders of the
Common Shares as of the most recent practicable date and shall furnish the
Purchaser with such additional available information (including, but not limited
to, updated lists of holders of Common Shares and their addresses, mailing
labels and lists of security positions and non-objecting beneficial owner lists)
and such other assistance as the Purchaser or its agents may reasonably request
in communicating the Offer to the Company's record and beneficial stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, the Purchaser and their affiliates,
associates, agents and advisors, shall keep such information confidential and
use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger and, should the Offer terminate or if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
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SECTION 1.03 Directors.
(a) Subject to compliance with applicable law,
promptly upon the payment by the Purchaser for Shares pursuant to the Offer
representing at least such number of Shares as shall satisfy the Minimum
Condition, and from time to time thereafter, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company Board as is equal to the product of the total number of directors on the
Company Board (determined after giving effect to the directors elected pursuant
to this sentence) multiplied by the percentage that the aggregate number of
Common Shares beneficially owned by Parent or its affiliates bears to the total
number of Common Shares then outstanding, and the Company shall, upon request of
Parent, promptly take all actions necessary to cause Parent's designees to be so
elected, including, if necessary, seeking the resignations of one or more
existing directors; provided, however, that prior to the Effective Time (as
defined in Section 2.02), the Company Board shall always have at least two
members who are neither officers, directors or designees of the Purchaser or any
of its affiliates ("Purchaser Insiders"). If the number of directors who are not
Purchaser Insiders is reduced below two prior to the Effective Time, the
remaining director who is not a Purchaser Insider shall be entitled to designate
a person to fill such vacancy who is not a Purchaser Insider and who shall be a
director not deemed to be a Purchaser Insider for all purposes of this
Agreement.
(b) The Company's obligations to appoint Parent's
designees to the Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its obligations under this
Section 1.03 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under such
Section and Rule in order to fulfill its obligations under this Section 1.03.
Parent will supply any information with respect to itself and its officers,
directors and affiliates required by such Section and Rule to the Company.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
will require the concurrence of a
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majority of the directors of the Company then in office who are not Purchaser
Insiders (or in the case where there are two or fewer directors who are not
Purchaser Insiders, the concurrence of one director who is not a Purchaser
Insider) if such amendment, termination, extension or waiver would be reasonably
likely to have an adverse effect on the minority stockholders of the Company.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the GCL, at the Effective Time the
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
SECTION 2.02 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.01(a) and
7.01(b), but subject to Sections 7.01(c) and 7.01(d), the Company shall execute,
in the manner required by the GCL, and deliver to the Secretary of State of the
State of Delaware a duly executed and verified certificate of merger, and the
parties shall take such other and further actions as may be required by law to
make the Merger effective. The time the Merger becomes effective in accordance
with applicable law is referred to herein as the "Effective Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the
effects set forth in the GCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and the Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04 Certificate of Incorporation and ByLaws of the
Surviving Corporation.
(a) The Certificate of Incorporation of the Company,
as in effect immediately prior to the Effective
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Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended in accordance with the provisions thereof and hereof
and applicable law.
(b) The By-Laws of the Purchaser in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation until amended,
subject to the provisions of Section 6.06 of this Agreement, in accordance with
the provisions thereof and applicable law.
SECTION 2.05 Directors. Subject to applicable law, the
directors of the Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 2.06 Officers. The individuals specified by Parent
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Common Shares; Effect on Contingent
Rights. (a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, each Common Share issued and
outstanding immediately prior to the Effective Time (other than (i) any Common
Shares held by Parent, the Purchaser, any wholly owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company, which Common Shares, by virtue of the Merger and without any
action on the part of the holder thereof, shall be cancelled and retired and
shall cease to exist with no payment being made with respect thereto and (ii)
Dissenting Shares (as defined in Section 3.01)), shall be cancelled and retired
and shall be converted into the right to receive $39 in cash (the "Merger
Price"), payable to the holder thereof, without interest thereon, upon surrender
of the certificate formerly representing such Common Share.
(b) The Contingent Rights shall not be changed or
affected by the Merger and shall remain outstanding after the Effective Time in
accordance with their terms.
SECTION 2.08 Conversion of Purchaser Common Stock. The
Purchaser has outstanding 10 shares of common stock, par value $.01 per share,
all of which are entitled to vote with respect to approval of this Agreement. At
the Effective Time, each share of common stock of the Purchaser issued and
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outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.09. Options; Stock Plans. Prior to the Effective
Time, the Company Board (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and take all other actions necessary to provide for the
cancellation, effective at the Effective Time, of all the outstanding stock
options (the "Options") heretofore granted under any stock option or similar
plan of the Company (the "Stock Plans"), without any payment therefor except as
otherwise provided in this Section 2.09. Immediately prior to the Effective
Time, the Company shall accelerate the vesting of all Options which are listed
on Section 2.09 of the Company Disclosure Schedule and each then vested Option
shall no longer be exercisable but shall entitle each holder thereof, in
cancellation and settlement therefor, to (i) a payment in cash by the Company
(subject to any applicable withholding taxes), at the Effective Time, equal to
the product of (x) the total number of Common Shares subject to such vested
Option and (y) the excess of the Merger Price over the exercise price per Common
Share subject to such vested Option, and (ii) a payment in cash by the Surviving
Corporation (subject to any applicable withholding taxes) at the earlier of
March 31, 1999 or the redemption date of the Contingent Rights equal to the
product of (x) the total number of Common Shares subject to such cancelled
vested Option and (y) the Redemption Price or the Contingent Payment (as such
terms are defined in the Contingent Payment Rights Agreement), as the case may
be, if any (the amounts payable under clauses (i) and (ii) being referred to as
the "Cash Payments"). The Company Board has taken all necessary action to
terminate the 1994 Employee Stock Purchase Plan effective prior to the beginning
of the payment period which would have commenced on July 1, 1997, and no Options
have been or will be issued under such Stock Plan with respect to any payment
period beginning on or after July 1, 1997. All other Stock Plans and any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any subsidiary shall
terminate as of the Effective Time. The Company will take all reasonable steps
to ensure that none of Parent, the Company or any of their respective
subsidiaries is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any Person, other than Parent or its
affiliates, to own any capital stock of the Surviving Corporation
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or any of its subsidiaries or to receive any payment in respect thereof other
than, to the extent provided herein, with respect to the Contingent Rights. The
Company will use its reasonable best efforts to obtain all necessary consents to
ensure that after the Effective Time, holders of Options will have no rights
other than the rights of the holders of vested Options to receive the Cash
Payment in cancellation and settlement thereof.
SECTION 2.10 Stockholders' Meeting.
(a) If required by applicable law in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special Meeting") as
soon as practicable following the acceptance for payment of and payment
for Common Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a
preliminary proxy statement relating to this Agreement, and use its
reasonable efforts (x) to obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its stockholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to the fiduciary obligations
of the Company Board under applicable law as provided in Section
1.02(a), include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the
approval of this Agreement.
(b) Parent agrees that it will vote, or cause to be
voted, all of the Common Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval of the Plan of Merger and of this
Agreement.
SECTION 2.11 Merger Without Meeting of Stockholders.
Notwithstanding Section 2.10, in the event that Parent, the Purchaser or any
other subsidiary of Parent shall acquire at least 90% of the outstanding Common
Shares pursuant to the
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Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Common Shares by
the Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01. Dissenting Shares. Notwithstanding Section 2.07,
Common Shares outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in writing
and who has demanded appraisal for such Common Shares in accordance with the GCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Price, unless such holder fails to perfect or withdraws or otherwise loses his
right to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses his right to appraisal, such Common Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive
the Merger Price. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Common Shares, and Parent shall have
the right to participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.02. Payment for Common Shares.
(a) From and after the Effective Time, such bank or
trust company as shall be mutually acceptable to Parent and the Company shall
act as paying agent (the "Paying Agent") in effecting the payment of the Merger
Price in respect of certificates (the "Certificates") that, prior to the
Effective Time, represented Common Shares entitled to payment of the Merger
Price pursuant to Section 2.07. Promptly following the Effective Time, Parent or
the Purchaser shall deposit, or cause to be deposited, with the Paying Agent the
aggregate Merger Price to which holders of Common Shares shall be entitled at
the Effective Time pursuant to Section 2.07.
(b) Promptly after the Effective Time, Parent shall
cause the Paying Agent to mail to each record holder of Certificates that
immediately prior to the Effective Time
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represented Common Shares a form of letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and instructions for use in surrendering such Certificates and receiving the
Merger Price in respect thereof. Upon the surrender of each such Certificate,
the Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than Certificates
representing Common Shares held by Parent or the Purchaser, any wholly owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly owned subsidiary of the Company or Dissenting Shares) shall represent
solely the right to receive the aggregate Merger Price relating thereto. No
interest or dividends shall be paid or accrued on the Merger Price. If the
Merger Price (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate formerly representing Common
Shares surrendered therefor is registered, it shall be a condition to such right
to receive such Merger Price that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Common Shares shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of the Merger Price to
a person other than the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Paying Agent that such tax has been
paid or is not applicable.
(c) Promptly following the date which is 180 days
after the Effective Time, the Paying Agent shall deliver to the Surviving
Corporation all cash, Certificates and other documents in its possession
relating to the transactions described in this Agreement, and the Paying Agent's
duties shall terminate. Thereafter, each holder of a Certificate formerly
representing a Common Share may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in consideration therefor the aggregate Merger Price relating
thereto, without any interest or dividends thereon.
(d) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving Corporation of any Common
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates formerly representing Common Shares are
presented to the Surviving Corporation or the Paying Agent,
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they shall be surrendered and cancelled in return for the payment of the
aggregate Merger Price relating thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser as follows:
SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Company's Significant
Subsidiaries (as defined herein) is a corporation duly organized, validly
existing and, with respect to the Company's Significant Subsidiaries that are
incorporated or organized in a jurisdiction in the United States of America, in
good standing under the laws of the jurisdiction of its incorporation. The
Company and each of its subsidiaries has the requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, and is duly qualified or licensed to do business,
and, with respect to the Company and the Company's Significant Subsidiaries that
are incorporated or organized in a jurisdiction in the United States of America,
is in good standing, in each jurisdiction in which the nature of its business or
the properties owned, operated or leased by it makes such qualification,
licensing or good standing necessary, except where the failure to have such
power or authority, or the failure to be so qualified, licensed or in good
standing, would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company. The term "Material Adverse Effect
on the Company," as used in this Agreement, means any change in or effect on the
business, assets, liabilities, condition (financial or otherwise), prospects or
results of operations of the Company or any of its subsidiaries that would
reasonably be expected to be materially adverse to the Company and its
subsidiaries taken as a whole. The Company has heretofore made available to
Parent and the Purchaser a complete and correct copy of the certificate of
incorporation and the by-laws or comparable organizational documents, each as
amended to the date hereof, of the Company and each of its Significant
Subsidiaries and has made available a complete and correct copy of the Rights
Agreement as amended to the date hereof. A "Significant Subsidiary" of any
person means the subsidiaries identified on Section 4.02 of the Company
Disclosure Schedule as a
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"Significant Subsidiary" and any subsidiary or person that constitutes a
significant subsidiary of such person within the meaning of Rule 1-02(v) of
Regulation S-X.
SECTION 4.02 Capitalization; Subsidiaries. The authorized
capital stock of the Company consists of 40,000,000 Common Shares and 5,000,000
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
which 100,000 shares are designated Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Junior Preferred Stock"). As of the close
of business on June 27, 1997, 7,492,935 Common Shares were issued and
outstanding, all of which are entitled to vote on this Agreement, and 438,920
Common Shares were held in treasury. The Company has no shares of Preferred
Stock issued and outstanding. The Company has no shares reserved for issuance,
except that, as of June 27, 1997, there were 865,392 Common Shares reserved for
issuance pursuant to outstanding Options and rights granted under the Stock
Plans and 100,000 shares of Series A Junior Participating Preferred Stock
reserved for issuance upon exercise of the Rights. Section 4.02 of the
disclosure schedule delivered to Parent by the Company prior to the date hereof
(the "Company Disclosure Schedule") sets forth the holders of all outstanding
Options and the number, exercise prices, vesting schedules and expiration dates
of each grant to such holders. Since January 1, 1997, the Company has not issued
any shares of capital stock except pursuant to the exercise of Options
outstanding as of such date; provided, however, that not more than 10,000 Common
Shares are reserved for issuance as of June 30, 1997 pursuant to the exercise of
options (the "Purchase Plan Options") granted prior to the date of this
Agreement pursuant to the Company's 1994 Employee Stock Purchase Plan. All the
outstanding Common Shares are, and all Common Shares which may be issued
pursuant to the exercise of outstanding Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable and are not subject to, nor were they issued in
violation of, any preemptive rights. There are no bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into securities
having such rights) ("Voting Debt") of the Company or any of its subsidiaries
issued and outstanding. Except as set forth in this Section 4.02, and except for
the Contingent Rights and the Rights, there are no existing options, warrants,
calls, subscriptions or other rights, agreements, arrangements or commitments of
any character to which the Company or any of its subsidiaries is a party or by
which any of them is bound, obligating the Company or any of its subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or
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Voting Debt of, or other equity interest in, the Company or any of its
subsidiaries or securities convertible into or exchangeable for such shares or
equity interests or obligating the Company or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment. Except as contemplated by this
Agreement or the Rights Agreement and except for the Company's obligations in
respect of the Options under the Stock Plans, there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Common Shares or the capital stock of the
Company or any of its subsidiaries. Each of the outstanding shares of capital
stock of each of the Company's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and, except as set forth in
Section 4.02 of the Company Disclosure Schedule, such shares of the Company's
Significant Subsidiaries are owned by the Company or by a subsidiary of the
Company in each case free and clear of any lien, claim, option, charge, security
interest, limitation, encumbrance and restriction of any kind (any of the
foregoing being a "Lien"). Set forth in Section 4.02 of the Company Disclosure
Schedule is a complete and correct list of each subsidiary (direct or indirect)
of the Company and indicates whether such subsidiary is a Significant
Subsidiary. No entity in which the Company owns, directly or indirectly, less
than a 50% equity interest is, individually or when taken together with all such
other entities, material to the business of the Company and its subsidiaries
taken as a whole.
SECTION 4.03 Authority Relative to this Agreement and Related
Matters. The Company has all necessary corporate power and authority to execute
and deliver this Agreement and, except for any required approval by the
Company's stockholders in connection with consummation of the Merger, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Company Board and no other corporate proceedings on the part of
the Company are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval of this Agreement by the affirmative vote of the holders of
a majority of the then outstanding Common Shares entitled to vote thereon, to
the extent required by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation
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of the Company enforceable against the Company in accordance with its terms.
SECTION 4.04 No Conflict; Required Filings and
Consents.
(a) Assuming (i) the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
are made and the waiting periods thereunder have been terminated or have
expired, (ii) the requirements of the Exchange Act and any applicable state
securities, "blue sky" or takeover law are met, (iii) the filing of the
certificate of merger and other appropriate merger documents, if any, as
required by the GCL, is made and (iv) approval of this agreement by the holders
of a majority of the Common Shares, if required by the GCL, is received, none of
the execution and delivery of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the Company
with any of the provisions hereof will (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company or the comparable
organizational documents of any of its Significant Subsidiaries, (ii) except as
disclosed on Section 4.04(a) of the Company Disclosure Schedule, result in a
breach or violation of, a default under or the triggering of any payment or
other material obligations pursuant to, any of the Company's existing Employee
Benefit Arrangements (as hereinafter defined) or any grant or award made under
any of the foregoing, (iii) conflict with or violate any statute, ordinance,
rule, regulation, order, judgment, decree, permit or license applicable to the
Company or any of its subsidiaries, or by which any of them or any of their
respective properties or assets may be bound or affected, or (iv) result in a
violation or breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
any loss of any benefit, or the creation of any Lien on any of the properties or
assets of the Company or any of its subsidiaries (any of the foregoing referred
to in clause (ii), (iii) or this clause (iv) being a "Violation") pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties may be bound or affected,
other than, in the case of clause (iii) or (iv) above, any such Violations that,
individually or in the aggregate, would not (A) reasonably be expected to have a
Material Adverse Effect
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on the Company, (B) impair the ability of the Company to perform its obligations
under this Agreement or (C) prevent or materially delay consummation of any
transactions contemplated by this Agreement.
(b) None of the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will require any consent, waiver, approval, authorization or permit of,
or registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or regulatory authority,
agency, commission, tribunal or body, domestic, foreign or supranational (a
"Governmental Entity"), except for (i) compliance with any applicable
requirements of the Exchange Act, (ii) the filing of the certificate of merger
pursuant to the GCL, (iii) compliance with the HSR Act and any requirements of
any foreign or supranational antitrust laws, and (iv) such filings,
authorizations, orders and approvals (which to the Company's knowledge are set
forth on Section 4.04(b) of the Company Disclosure Schedule) as (A) may be
required under the laws of any foreign country in which the Company or any of
its subsidiaries conducts any business or owns any property or assets or (B) as
to which failure to obtain or make would not (x) reasonably be expected to have
a Material Adverse Effect on the Company or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
SECTION 4.05 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms,
reports, schedules, registration statements and definitive proxy statements
required to be filed by the Company with the SEC since January 1, 1994 (as they
have been amended since the time of their filing, and including any documents
filed as exhibits thereto, collectively, the "SEC Reports") and has heretofore
made available to Parent complete and correct copies of all such forms, reports,
schedules, registration statements, and proxy statements. As of their respective
dates, the SEC Reports (including but not limited to any financial statements or
schedules included or incorporated by reference therein) complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations of
the SEC promulgated thereunder applicable, as the case may be, to such SEC
Reports, and none of the SEC Reports contained any untrue statement of a
material fact or
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omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) The consolidated balance sheets as of December
31, 1996 and 1995 and the consolidated statements of income, common
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996 (including the related notes and schedules thereto) of
the Company contained in the Company's Form 10-K, as amended prior to the date
hereof, for the fiscal year ended December 31, 1996 present fairly the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein and were prepared in accordance with United
States generally accepted accounting principles ("GAAP") consistently applied
during the periods involved except as otherwise noted therein, including the
related notes.
(c) Except as reflected, reserved against or
otherwise disclosed in the financial statements of the Company included in the
SEC Reports filed prior to the date of this Agreement or as set forth in Section
4.05(c) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries have any liabilities or obligations (absolute, accrued, fixed,
contingent or otherwise) other than liabilities incurred in the ordinary course
of business consistent with past practice since December 31, 1996 which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(d) The Company has heretofore furnished to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
(e) As of May 23, 1997, the Company had on hand cash
and cash equivalents (collectively, "Cash") of at least $110,440,000 and Net
Working Capital of at least $129,901,000. For purposes of this Agreement, "Net
Working Capital" shall mean, as of any date of determination, the remainder of
(1) Total Current Assets less (2) Total Current Liabilities, in each case as of
such date, calculated in the same manner, using the same methods, as the line
items on the
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Company's balance sheet as reported in the Company's Form 10-K, as amended prior
to the date hereof, for the fiscal year ended December 31, 1996 (the "Balance
Sheet").
SECTION 4.06 Environmental Matters.
(a) The business and operations of the Company and its
subsidiaries comply in all material respects with all applicable Environmental
Laws. The Company and its subsidiaries have obtained all material Governmental
Permits relating to Environmental Laws necessary for the operation of their
businesses; all such material Governmental Permits are set forth on Schedule
4.06 and are in full force and effect and the Company and its subsidiaries are
in compliance in all material respects with all terms and conditions of such
permits. To the best knowledge of the Company, neither the Company nor its
subsidiaries is subject to, and no facts exist that would form the basis for,
any investigation by, order from or claim by any person (including without
limitation any Governmental Entity or prior owner or operator of any of the
Company Property) respecting (i) any Environmental Law, (ii) any Remedial Action
or (iii) any claim arising from the Release or threatened Release of a
Contaminant into the environment. Neither the Company nor any of its
subsidiaries is subject to any judicial or administrative proceeding, order,
judgment, decree or settlement alleging or addressing a violation of or
liability under any Environmental Law.
(b) Neither the Company nor any of its subsidiaries has (i)
reported a Release of a hazardous substance pursuant to Section 103(a) of
CERCLA, or any state equivalent; (ii) filed a notice pursuant to Section 103(c)
of CERCLA; or (iii) filed any notice under any applicable Environmental Law
reporting a violation of any applicable Environmental Law. There is not now with
respect to the operations of the Company or any of its subsidiaries, nor to the
best knowledge of the Company has there ever been, on or in any Company
Property: (A) any Release, (B) any treatment, recycling, storage or disposal of
any hazardous waste, as that term is defined under RCRA or any state equivalent,
or (C) any underground storage tank or surface impoundment or landfill or waste
pile, except for such events which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
(c) There is not now on or in any Company Property any
polychlorinated biphenyls (PCB) used in the Company's operations in pigments,
hydraulic oils, electrical transformers or other equipment.
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(d) To the best knowledge of the Company, any
asbestos-containing material or presumed asbestos-containing material which is
on or part of any Company Property is in good repair according to the current
standards and practices governing such material, and its presence or condition
does not violate any currently applicable Environmental Law. None of the
products manufactured, distributed or sold by the Company or any of its
subsidiaries contained asbestos or asbestos-containing material.
(e) For purposes of this Section:
(i) "Company Property" means any real or
personal property, plant, building, facility, structure, underground
storage tank, equipment or unit, or other asset now or, to the
Company's knowledge, previously owned, leased or operated primarily by
the Company or any of its present or, to the Company's knowledge, past
subsidiaries.
(ii) "CERCLA" means the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and
any regulations promulgated thereunder.
(iii) "Contaminant" means any waste,
pollutant, hazardous or toxic substance or waste, petroleum,
petroleum-based substance or waste, special waste, hazardous material
or any constituent of any such substance, waste or material.
(iv) "Environmental Law" means all federal,
state and local laws or regulations relating to or addressing the
environment, health or safety, including but not limited to CERCLA,
OSHA and RCRA and any state equivalent thereof.
(v) "Governmental Permits" means any
permits, licenses, certificates, orders, consents, authorizations,
franchises and other approvals from, or required by, any Governmental
Entity that are used by, or are necessary to own and to operate, the
business of the Company and its subsidiaries as currently configured
and operated, together with any applications for the issuance, renewal,
modification or extension thereof and all supporting information and
analyses.
(vi) "OSHA" means the Occupational Safety
and Health Act, as amended, and any regulations promulgated
thereunder.
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(vii) "RCRA" means the Resource Conservation
and Recovery Act, as amended, and any regulations promulgated
thereunder.
(viii) "Release" means release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration of a Contaminant into the environment
or into or out of any Company Property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Company Property.
SECTION 4.07 Compliance with Applicable Laws. Except with
respect to Environmental Laws which are covered in Section 4.06, the Company and
its subsidiaries hold all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities (the "Company Permits"). The
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except for such failures to comply which would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect on the
Company. Except with respect to Environmental Laws which are covered in Section
4.06, the business operations of the Company and its subsidiaries have been
conducted in compliance with all laws, ordinances and regulations of any
Governmental Entity, except for possible violations which could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on the Company.
SECTION 4.08 Change of Control. Except as set forth on Section
4.08 of the Company Disclosure Schedule, the transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to a third party pursuant to, permit a third party
to terminate or accelerate vesting or repurchase rights or create any other
detriment under the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, except where the adverse
consequences resulting from such change of control or where the failure to
obtain such consents or provide such notices would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company; provided, however, that the foregoing exception will not be applicable
to any (i) note, bond, mortgage, indenture, contract, agreement or other
instrument or obligation relating to (x) indebtedness of the Company or any of
its subsidiaries with an outstanding principal amount of more than $100,000 or
(y) annual revenues
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to the Company of more than $150,000 or (ii) employment, compensation,
termination or severance agreement, instrument or obligation of the Company or
any of its subsidiaries. The total amounts payable to the executives identified
in Section 4.08 of the Company Disclosure Schedule, as a result of the
transactions contemplated by this Agreement and/or any subsequent employment
termination (including any cash-out or acceleration of options and restricted
stock and any "gross-up" payments with respect to any of the foregoing), based
on compensation data applicable as of the date hereof will not exceed the amount
set forth on such schedule.
SECTION 4.09 Litigation. There is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened, against the Company or any of its subsidiaries, individually or in
the aggregate, which would reasonably be expected to have a Material Adverse
Effect on the Company and its subsidiaries or could prevent or materially delay
the consummation of the transactions contemplated by this Agreement. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement, neither
the Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company or could
prevent or materially delay the consummation of the transactions contemplated
hereby.
SECTION 4.10 Information. None of the information supplied by
the Company in writing (other than projections of future financial performance)
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Proxy Statement or (iii) any other document to be filed with
the SEC or any other Governmental Entity in connection with the transactions
contemplated by this Agreement (the "Other Filings") will, at the respective
times filed with the SEC or other Governmental Entity and, in addition, in the
case of the Proxy Statement, at the date it or any amendment or supplement is
mailed to stockholders, at the time of the Special 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 made therein, in light of the circumstances under which they were
made, not misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect to
statements made therein based on information supplied by Parent or the Purchaser
in writing specifically for inclusion in the Proxy Statement.
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SECTION 4.11 Certain Approvals. The Company Board has taken
any and all necessary and appropriate action to render inapplicable to the
Offer, the Merger and the transactions contemplated by this Agreement the
provisions of Section 203 of the GCL. No other state takeover statute or similar
statute or regulation applies or purports to apply to the Offer, the Merger or
the transactions contemplated by this Agreement.
SECTION 4.12 Employee Benefit Plans.
(a) Section 4.12(a) of the Company Disclosure
Schedule includes a complete list of all employee benefit plans, programs, and
other arrangements providing benefits to any employee or former employee or
beneficiary or dependent thereof, whether or not written, and whether covering
one person or more than one person, sponsored or maintained by the Company or
any of its subsidiaries or to which the Company or any of its subsidiaries
contributes or is obligated to contribute ("Plans"). Without limiting the
generality of the foregoing, the term "Plans" includes all employee welfare
benefit plans within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations thereunder
("ERISA") and all employee pension benefit plans within the meaning of Section
3(2) of ERISA.
(b) With respect to each Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; and (vi) the most recent determination letter
from the Internal Revenue Service (the "IRS"), if any. Except as specifically
provided in the foregoing documents made available to Parent, there are no
amendments to any Plan that have been adopted or approved nor has the Company or
any of its subsidiaries undertaken to make any such amendments.
(c) Section 4.12(c) of the Company Disclosure
Schedule identifies each Plan that is intended to be a "qualified plan" within
the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations thereunder (the "Code") ("Qualified Plans"). The
IRS has issued a favorable determination letter with respect
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to each Qualified Plan that has not been revoked, and there are no existing
circumstances nor any events that have occurred that could adversely affect the
qualified status of any Qualified Plan or the related trust. Schedule 4.12(c)
identifies each Plan which is intended to meet the requirements of Code
Section 501(c)(9), and each such plan meets such requirements and provides no
disqualified benefits (as such term is defined in Code Section 4976(b).
(d) All contributions required to be made to any Plan
by applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under generally
accepted accounting principles.
(e) The Company and each of its subsidiaries has
complied, and is now in compliance, in all material respects with all provisions
of ERISA, the Code and all laws and regulations applicable to the Plans. There
is not now, nor do any circumstances exist that could give rise to, any
requirement for the posting of security with respect to a Plan or the imposition
of any lien on the assets of the Company or any of its subsidiaries under ERISA
or the Code. No prohibited transaction has occurred with respect to any Plan.
(f) No Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA and which is subject to Title IV of ERISA
(a "Multiple Employer Plan"), nor has the Company or any of its subsidiaries, or
any of their respective ERISA Affiliates (as defined in the next sentence), at
any time since September 2, 1974, contributed to or been obligated to contribute
to any Multiemployer Plan or Multiple Employer Plan. An "ERISA Affiliate" means
any entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the Company or any of its subsidiaries, or that is a member of the same
"controlled group" as the Company or any of its subsidiaries, pursuant to
Section 4001(a)(14) of ERISA.
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(g) There does not now exist, nor do any
circumstances exist that could result in, any liability under (i) Title IV of
ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code, (iv)
the continuation coverage requirements of section 601 et seq. of ERISA and
section 4980B of the Code, or (v) corresponding or similar provisions of foreign
laws or regulations, other than a liability that arises solely out of, or relate
solely to, the Plans, that would be a liability of the Company or any of its
subsidiaries following the Closing. Without limiting the generality of the
foregoing, none of the Company, its subsidiaries nor any ERISA Affiliate of the
Company or any of its subsidiaries has engaged in any transaction described in
Section 4069 or Section 4204 or 4212 of ERISA.
(h) Neither the Company nor any of its subsidiaries
has any liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof, except for health continuation
coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA
and at no expense to the Company and its subsidiaries.
(i) There are no pending or threatened claims (other
than claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the trusts under
any of the Plans which could reasonably be expected to result in any material
liability of the Company or any of its subsidiaries to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor or any
Multiemployer Plan.
SECTION 4.13 Intellectual Property.
(a) Set forth on Section 4.13(a) of the Company
Disclosure Schedule is a list of all material patents, patent applications,
patent disclosures, trademark registrations and trademark applications, service
xxxx registrations and service xxxx applications, certification xxxx
registrations and certification xxxx applications, copyright registrations and
copyright registration applications, mask works registrations and mask works
registration applications, both domestic and foreign, which are owned by the
Company or any of its subsidiaries. The assets described on Section 4.13(a) of
the Company Disclosure Schedule and all computer software, trade secrets,
trademarks, trade names, service marks, certification marks, copyrights,
know-how, methods, processes,
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procedures, apparatus, equipment, industrial property, discoveries, inventions,
designs, drawings, plans, specifications, engineering data, manuals, development
projects, research and development work in progress, technology or other
proprietary rights or confidential information which are owned or used by the
Company or any of its subsidiaries are referred to as the "Intellectual
Property." Except as otherwise indicated on Section 4.13(a) of the Company
Disclosure Schedule, the Company and its subsidiaries own all right, title and
interest in and to the Intellectual Property validly and beneficially, free and
clear of all material Liens, with the sole and exclusive right to use the same,
subject to those licenses listed on Section 4.13(b) of the Company Disclosure
Schedule.
(b) Set forth on Section 4.13(b) of the Company
Disclosure Schedule is a list of (i) all material licenses, assignments and
other transfers of Intellectual Property granted to others by the Company or any
of its subsidiaries, and (ii) all material licenses, assignments and other
transfers of patents, trade names, trademarks, service marks, copyrights, mask
works registrations, software, trade secrets, know-how, technology or other
proprietary rights or information granted to the Company or any of its
subsidiaries by others. Except as set forth in Section 4.13(b) of the Company
Disclosure Schedule, none of the licenses, assignments or other transfers
described above is subject to termination or cancellation or change in its terms
or provisions as a result of this Agreement or the transactions provided for in
this Agreement.
(c) To the knowledge of the Company, there is no
material unauthorized use, infringement or misappropriation of any Intellectual
Property.
(d) Except as disclosed in Section 4.13(d) of the
Company Disclosure Schedule, no material claim with respect to the Intellectual
Property has been asserted or, to the best knowledge of the Company, is
threatened by any person nor does the Company know of any valid ground for any
bona fide claims (i) to the effect that the manufacture, sale or use of any
product or process as used (currently or in the past) or offered or proposed for
use or sale by the Company infringes on any copyright, trade secret, patent,
tradename or other intellectual property right of any person, (ii) against the
Company relating to the use of any Intellectual Property, or (iii) challenging
the ownership, validity or effectiveness of any Intellectual Property. To the
Company's best knowledge, all granted and issued patents and all registered
trademarks and service marks listed in Section 4.13(a)
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of the Company Disclosure Schedule and all copyrights held by the Company are
valid, enforceable and subsisting.
(e) No material Intellectual Property is subject to
any outstanding order, judgment, decree, stipulation or agreement restricting in
any manner the licensing, assignment or other transfer, use or enforceability
thereof by the Company. The Company has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, except indemnities agreed to in the ordinary course of
business included as part of the Company's license agreements. The Company has
the exclusive right to file, prosecute and maintain all applications and
registrations with respect to Intellectual Property.
SECTION 4.14 Taxes.
(a) The Company and each of its subsidiaries has
filed all federal, state, local and foreign income Tax Returns (as hereinafter
defined) required to be filed by it, and all other material Tax Returns required
to be filed by it, and has paid or caused to be paid all Taxes (as hereinafter
defined) shown as due and payable on such Tax Returns in respect of the periods
covered by such returns and has made adequate provision in the Company's
financial statements for payment of all Taxes anticipated to be payable in
respect of all taxable periods or portions thereof ending on or before the date
hereof, except where the failures to so file or pay or make adequate provision
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. Section 4.14 of the Company Disclosure
Schedule lists the periods through which the Tax Returns required to be filed by
the Company or any of its subsidiaries have been examined by the IRS or other
appropriate taxing authority, or the period during which any assessments may be
made by the IRS or other appropriate taxing authority has expired. All material
deficiencies and assessments asserted as a result of such examinations or other
audits by federal, state, local or foreign taxing authorities have been paid,
fully settled or adequately provided for in the Company's financial statements,
and no issue or claim has been asserted in writing for Taxes by any taxing
authority for any prior period, the adverse determination of which would result
in a deficiency which could have a Material Adverse Effect on the Company, other
than those heretofore paid or provided for in the Company's financial
statements. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of the Company or
any of its subsidiaries. Neither the Company nor any of its subsidiaries has
filed a consent pursuant to Section 341(f) of the
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Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(2) of the
Code) owned by the Company or any of its subsidiaries. Neither the Company nor
any of its subsidiaries is a party to any agreement, contract or arrangement
that could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code or that would
not be deductible pursuant to the terms of Section 162(m) of the Code. Neither
the Company nor any of its subsidiaries (i) has been a member of a group filing
consolidated returns for federal income tax purposes (except for the group of
which the Company is the common parent), or (ii) is a party to a Tax sharing or
Tax indemnity agreement or any other agreement of a similar nature that remains
in effect.
(b) For purposes of this Agreement, the term "Taxes"
means all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.15 Absence of Certain Changes. Except as disclosed
in the SEC Reports filed prior to the date of this Agreement or as otherwise
disclosed on Section 4.15 of the Company Disclosure Schedule, since December 31,
1996 (i) there has not been any Material Adverse Effect on the Company; (ii) the
businesses of the Company and each of its subsidiaries have been conducted only
in the ordinary course and in a manner consistent with past practice; (iii)
neither the Company nor any of its subsidiaries has incurred any material
liabilities (direct, contingent or otherwise) or engaged in any material
transaction or entered into any material agreement or commitments outside the
ordinary course of business; (iv) neither the Company nor any of its
subsidiaries has taken any action referred to in Section 6.01 hereof except as
permitted thereby; or (v) there has not been any revaluation by the Company or
any of its subsidiaries of any material assets, including but not limited to
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business.
SECTION 4.16 Labor Matters. No employees of the Company or of
any of its subsidiaries are represented by any
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labor union or any collective bargaining organization. No labor organization or
group of employees of the Company or any of its subsidiaries has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority, which would
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.17 Relationships with Customers, Suppliers,
Distributors and Sales Representatives. Except as set forth in Section 4.17 of
the Company Disclosure Schedule, the Company has not received written notice
that any customer, supplier, distributor or sales representative intends to
cancel, terminate or otherwise modify its relationship with the Company or any
subsidiary which would reasonably be expected to have a Material Adverse Effect
on the Company.
SECTION 4.18 Contracts. Section 4.18 of the Company Disclosure
Schedule lists all written or oral contracts, agreements, guarantees, leases
(each a "Contract") to which the Company or any of its subsidiaries is a party
and which fall within any of the following categories: (i) Contracts not entered
into in the ordinary course of business, (ii) joint venture, partnership and
like agreements, (iii) Contracts containing covenants purporting to limit the
freedom of the Company or any of its subsidiaries to compete in any line of
business in any geographic area or to hire or solicit any individual or group of
individuals, (iv) Contracts which after the Effective Time would have the effect
of limiting the freedom of Parent or its subsidiaries (other than the Company
and its subsidiaries) to compete in any line of business in any geographic area
or to hire any individual or group of individuals, (v) Contracts which contain
minimum purchase conditions or requirements or other terms that restrict or
limit the purchasing relationships of the Company or any of its subsidiaries,
(vi) Contracts relating to any outstanding commitment for capital expenditures
in excess of $100,000, (vii) indentures, mortgages, promissory notes, loan
agreements, guarantees of amounts in excess of $100,000, letters of credit or
other agreements or instruments of the Company or any of its subsidiaries or
commitments for the borrowing or the lending of amounts in excess of $100,000 by
the Company or any of its subsidiaries or providing for the creation of any
charge, security interest, encumbrance or lien upon any of the assets of the
Company or any of its subsidiaries and (viii) Contracts with or for the benefit
of any
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affiliate of the Company (other than subsidiaries of the Company). All of the
Contracts required to be disclosed by this Section 4.18 are valid and binding
obligations of the Company or a subsidiary of the Company and the valid and
binding obligation of each other party thereto, except such Contracts which if
not so valid and binding would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company. Neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company, any
other party thereto is in violation of or in default in respect of, nor has
there occurred an event or condition which with the passage of time or giving of
notice (or both) could constitute a default under, any such Contract except such
violations or defaults under such Contracts which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
SECTION 4.19 Rights Agreement. The Company and the Company
Board have authorized all necessary action to amend the Rights Agreement
(without redeeming the Rights) so that none of the execution or delivery of this
Agreement, the making of the Offer, the acquisition of Common Shares pursuant to
the Offer or the consummation of the Merger will (i) cause any Rights issued
pursuant to the Rights Agreement to become exercisable or to separate from the
stock certificates to which they are attached, (ii) cause Parent, the Purchaser
or any of their Affiliates or Associates to be an Acquiring Person (as each such
term is defined in the Rights Agreement) or (iii) trigger other provisions of
the Rights Agreement, including giving rise to a Distribution Date or a
Triggering Event (as each such term is defined in the Rights Agreement), and
such amendment shall be in full force and effect from and after the date hereof.
SECTION 4.20 Product Recalls. The Company is not aware of any
pattern or series of claims against the Company or any of its subsidiaries which
reasonably could be expected to result in a generalized product recall relating
to products sold by the Company or any of its subsidiaries, regardless of
whether such product recall is formal, informal, voluntary or involuntary.
SECTION 4.21 Sale of UV Curing Business. The Company is not
aware of any pending or threatened claim against the Company or any of its
subsidiaries, whether for indemnification, retained liabilities or otherwise,
arising out of or related to the sale by the Company of its ultraviolet curing
systems business to affiliates of Fairey Group, plc pursuant to a Purchase
Agreement, dated as of August 14, 1996, a
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true, correct and complete copy of which has previously been made available to
Parent.
SECTION 4.22 Brokers. Except for the engagement of Salomon
Brothers and Venture Advisors, Inc. ("VAI"), an affiliate of Xxxxxx Xxxxxxx,
Chairman of the Company Board, none of the Company, any of its subsidiaries, or
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated by this
Agreement. The Company has previously delivered to Parent a copy of the
Company's engagement letters with Salomon Brothers and VAI. The aggregate Merger
Fees owed or which will be owing by the Company and its subsidiaries in
connection with the Offer, the Merger and the transactions contemplated by this
Agreement will not exceed the amount set forth in Section 4.22 of the Company
Disclosure Schedule. "Merger Fees" means all fees and expenses paid or payable
by or on behalf of the Company or any of its subsidiaries to all attorneys,
accountants, investment bankers, financial advisors and other experts and
advisors incident to negotiation, preparation, execution and consummation of
this Agreement and the transactions contemplated hereby, and all amounts payable
to any officer, director or significant employee of the Company or any of its
subsidiaries whose Options are covered by Schedule 2.09 arising out of severance
of employment following consummation of the transactions contemplated by this
Agreement or otherwise attributable to the consummation of the transactions
contemplated by this Agreement, exclusive of payments in respect of Options.
SECTION 4.23 Opinion of Salomon Brothers. The Company has
received the written opinion of Salomon Brothers to the effect that, as of June
29, 1997, the consideration to be received by the holders of Common Shares
(other than Parent or any of its affiliates) pursuant to the Offer, the Merger
and the Contingent Rights, is fair to the Company's stockholders from a
financial point of view. The Company has previously delivered to Parent a copy
of such opinion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as follows:
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SECTION 5.01 Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Ohio and each material subsidiary of Parent is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent and each of
its material subsidiaries (including the Purchaser) has the requisite corporate
power and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction in which the nature of
its business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or
in good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent", as used in this Agreement, means any
change in or effect on the business, assets, liabilities, condition (financial
or otherwise), prospects or results of operations of Parent or any of its
subsidiaries that would be materially adverse to Parent and its subsidiaries
taken as a whole.
SECTION 5.02 Authority Relative to this Agreement. Each of
Parent and the Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the Purchaser and the consummation by Parent and the Purchaser of the
transactions contemplated hereby have been duly and validly authorized and
approved by the respective Boards of Directors of Parent and the Purchaser and
by Parent as sole stockholder of the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to authorize or
approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of Parent and the
Purchaser and, assuming the due and valid authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of each of Parent and
the Purchaser enforceable against each of them in accordance with its terms.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the HSR
Act are made and the waiting periods thereunder have
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terminated or have expired, (ii) the requirements of the Exchange Act and any
applicable state securities, "blue sky" or takeover law are met and (iii) the
filing of the certificate of merger and other appropriate merger documents, if
any, as required by the GCL, is made, none of the execution and delivery of this
Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the transactions contemplated hereby or compliance by Parent or the
Purchaser with any of the provisions hereof will (i) conflict with or violate
the organizational documents of Parent or the Purchaser, (ii) conflict with or
violate in any material respect any statute, ordinance, rule, regulation, order,
judgment, decree, permit or license applicable to Parent or the Purchaser or any
of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser or any of their subsidiaries is a party or by which Parent or the
Purchaser or any of their subsidiaries or any of their respective properties or
assets may be bound or affected, which would prevent or materially delay the
consummation of the transactions contemplated hereby.
(b) None of the execution and delivery of this
Agreement by Parent and the Purchaser, the consummation by Parent and the
Purchaser of the transactions contemplated hereby or compliance by Parent and
the Purchaser with any of the provisions hereof will require any Consent of any
Governmental Entity, except for (i) compliance with any applicable requirements
of the Exchange Act and any state securities "blue sky" or takeover law, (ii)
the filing of a certificate of merger pursuant to the GCL, and (iii) compliance
with the HSR Act and any requirements of any foreign or supranational antitrust
laws.
SECTION 5.04 Information. None of the information supplied or
to be supplied by Parent and the Purchaser in writing specifically for inclusion
in (i) the Schedule 14D-9, (ii) the Proxy Statement or (iii) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to stockholders, at the time of the
Special 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 made therein, in light of the
circumstances under which they were made, not misleading.
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SECTION 5.05 Financing. Parent has possession of, or has
available to it under existing lines of credit, sufficient funds to consummate
the transactions contemplated by this Agreement, and will cause the Purchaser to
have sufficient funds available to consummate the Offer and the Merger and the
transactions contemplated hereby.
SECTION 5.06 Delaware Law. Neither Parent nor any of its
subsidiaries was, immediately prior to the execution of this Agreement, an
"interested stockholder" within the meaning of Section 203 of the GCL.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as
required by this Agreement or otherwise with the prior written consent of
Parent, during the period from the date of this Agreement to the Effective Time,
the Company will, and will cause each of its subsidiaries to, conduct its
operations only in the ordinary and usual course of business consistent with
past practice and will use its reasonable efforts, and will cause each of its
subsidiaries to use its reasonable efforts, to preserve intact the business
organization of the Company and each of its subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the good will of those having business relationships with it, including, without
limitation, maintaining satisfactory relationships with licensors, suppliers,
distributors, customers and others having business relationships with the
Company. Without limiting the generality of the foregoing, and except as
otherwise required by this Agreement, the Company will not, and will not permit
any of its subsidiaries to, prior to the Effective Time, without the prior
written consent of Parent:
(a) adopt any amendment to its Certificate of
Incorporation or By-Laws or comparable organizational documents or the Rights
Agreement (other than the amendment contemplated by Section 4.19) or the
Contingent Payment Rights Agreement;
(b) sell, pledge or encumber any stock owned by it in
any of its subsidiaries;
(c) (i) issue, reissue or sell, or authorize the
issuance, reissuance or sale of (A) additional shares of capital stock of any
class, or securities convertible into
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capital stock of any class, or any rights, warrants or options to acquire any
convertible securities or capital stock, other than the issuance of Common
Shares (and the related Rights), in accordance with the terms of the instruments
governing such issuance on the date hereof, pursuant to the exercise of Options
outstanding on the date hereof (or, if a Triggering Event (as defined in the
Rights Agreement) by a party other than Parent or the Purchaser shall occur,
Rights) or (B) any other securities in respect of, in lieu of, or in
substitution for, Common Shares outstanding on the date hereof, other than the
Contingent Rights or (ii) make any other changes in its capital structure;
(d) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than (i)
between any of the Company and any of its wholly owned subsidiaries or (ii) the
Contingent Rights;
(e) split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other securities;
(f) increase the compensation or fringe benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any of its subsidiaries) other than an aggregate of $8,000
in bonuses previously disclosed to Parent, or pay or award any benefit not
required by any existing plan or arrangement to any officer, director or
employee (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units pursuant to
the Stock Plans or otherwise), or grant any severance or termination pay to any
officer, director or other employee of the Company or any of its subsidiaries
(other than as required by existing agreements or policies described in the
Company Disclosure Schedule), or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or any of
its subsidiaries or establish, adopt, enter into, amend or waive any performance
or vesting criteria or accelerate vesting or exercisability under any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or current or
former employees of the Company or its subsidiaries (any of the foregoing being
an
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"Employee Benefit Arrangement"), except, in each case, to the extent required
by applicable law or regulation;
(g) acquire, mortgage, encumber, sell, lease, license
or dispose of any assets (including Intellectual Property) or securities, except
pursuant to existing contracts or commitments or the sale or purchase of goods
in the ordinary course of business consistent with past practice, or enter into
any commitment or transaction outside the ordinary course of business consistent
with past practice other than transactions between a wholly owned subsidiary of
the Company and the Company or another wholly owned subsidiary of the Company,
provided that nothing herein shall prevent the Company from extending until
December 31, 1997 an agreement to provide benefits administration services to
Lighting, and extending the Company's MIS support for Lighting until the later
of June 30, 1998 or the Company's cessation of use of the Company's ASK Man Man
software system, in each case on their current terms and conditions;
(h) (i) incur, assume or pre-pay any long-term debt
or incur or assume any short-term debt, except that the Company and its
subsidiaries may incur, assume or pre-pay debt in the ordinary course of
business in amounts and for purposes consistent with past practice under
existing lines of credit, (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practice, (iii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), except
in the ordinary course of business consistent with past practice and in
accordance with their terms, (iv) make any loans, advances or capital
contributions to, or investments in, any other person, except for loans,
advances, capital contributions or investments between any wholly owned
subsidiary of the Company and the Company or another wholly owned subsidiary of
the Company, (v) authorize or make capital expenditures not provided for in the
Company's capital budget included in Section 6.01(h) of the Company Disclosure
Schedule which are in excess of $100,000, (vi) accelerate or delay collection of
notes or accounts receivable in advance of or beyond their regular due dates or
the dates when the same would have been collected in the ordinary course of
business consistent with past practice, (vii) delay or accelerate payment of
accounts payable beyond or in advance of its due date or the date such liability
would have been paid in the ordinary course of business consistent with past
practice, or (viii) vary the Company's inventory practices in any material
respect from the Company's past practices;
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(i) settle or compromise any suit or claim or
threatened suit or claim where the amount involved is greater than $100,000;
(j) other than in the ordinary course of business
consistent with past practice, (i) modify, amend or terminate any contract, (ii)
waive, release, relinquish or assign any contract (or any of the Company's
rights thereunder), right or claim, or (iii) cancel or forgive any indebtedness
owed to the Company or any of its subsidiaries; provided, however, that the
Company may not under any circumstance waive or release any of its rights under
any confidentiality agreement to which it is a party;
(k) make any tax election not required by law or
settle or compromise any tax liability;
(l) permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated without notice
to the Purchaser, except in the ordinary course of business consistent with past
practice;
(m) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or, except in the ordinary course of business
consistent with past practice, any assets;
(n) enter into any contract or agreement other than
in the ordinary course of business consistent with past practice;
(o) except as may be required as a result of a change
in law or in generally accepted accounting principles, make any change in its
methods of accounting, including tax accounting policies and procedures; or
(p) agree in writing or otherwise to take any of the
foregoing actions prohibited under this Section 6.01 or any action which would
cause any representation or warranty in this Agreement to be or become untrue or
incorrect.
SECTION 6.02 Access to Information. From the date of this
Agreement until the Effective Time, the Company will, and will cause its
subsidiaries, and each of their respective officers, directors, employees,
counsel, advisors and representatives (collectively, the "Company
Representatives") to, give Parent and the Purchaser and their respective
officers, employees, counsel, advisors and representatives (collectively, the
"Parent Representatives") full access, during
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normal business hours, to the offices and other facilities and to the books and
records of the Company and its subsidiaries and will cause the Company
Representatives and the Company's subsidiaries to furnish Parent, the Purchaser
and the Parent Representatives with such financial and operating data and such
other information with respect to the business and operations of the Company and
its subsidiaries as Parent and the Purchaser may from time to time reasonably
request. The Company shall furnish promptly to Parent and the Purchaser a copy
of each report, schedule, registration statement and other document filed by it
or its subsidiaries during such period pursuant to the requirements of federal
or state securities laws. Parent and the Purchaser agree that any information
furnished pursuant to this Section 6.02 will be subject to the provisions of the
letter agreement dated April 7, 1997 between the Parent and the Company (the
"Confidentiality Agreement"), it being understood that the provisions set forth
in the eighth, ninth and tenth paragraphs thereof shall have no further force
and effect.
SECTION 6.03 Efforts.
(a) Subject to the terms and conditions provided
herein, each of the Company, Parent and the Purchaser shall, and the Company
shall cause each of its subsidiaries to, cooperate and use reasonable efforts to
make, or cause to be made, all filings necessary or proper under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement, including but not limited to cooperation in the preparation
and filing of the Offer Documents, the Schedule 14D-9, the distribution of
Contingent Rights and any actions or filings related thereto, the Proxy
Statement, any required filings under the HSR Act, or other foreign filings and
any amendments to any thereof.
In addition, if at any time prior to the Effective
Time any event or circumstance relating to either the Company or Parent or the
Purchaser or any of their respective subsidiaries should be discovered by the
Company or Parent, as the case may be, which should be set forth in an amendment
to the Offer Documents or Schedule 14D-9, the discovering party will promptly
inform the other party of such event or circumstance. If at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, including the execution of additional instruments,
the proper officers and directors of each party to this Agreement shall take all
such necessary action.
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(b) Each of the parties will use its reasonable
efforts to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with, and waivers of any
Violations that may be caused by, the consummation of the transactions
contemplated by the Offer and this Agreement.
SECTION 6.04 Public Announcements. The Company, on the one
hand, and Parent and the Purchaser, on the other hand, agree to consult promptly
with each other prior to issuing any press release or otherwise making any
public statement with respect to the Offer, the Merger and the other
transactions contemplated hereby, agree to provide to the other party for review
a copy of any such press release or statement, and shall not issue any such
press release or make any such public statement prior to such consultation and
review, unless required by applicable law or any listing agreement with a
securities exchange.
SECTION 6.05 Employee Benefit Arrangements.
(a) Parent agrees that the Company will honor and,
from and after the Effective Time, Parent will cause the Surviving Corporation
to honor, all obligations under Employee Benefit Arrangements to which the
Company or any of its subsidiaries is presently a party which are listed in
Section 6.05(a) of the Company Disclosure Schedule. Notwithstanding the
foregoing, from and after the Effective Time, subject to the remaining
provisions of this Section 6.05(a), the Surviving Corporation shall have the
right to amend, modify, alter or terminate any Employee Benefit Arrangements,
provided that any such action shall not adversely affect the rights of any
employees or other beneficiaries which shall have arisen thereunder prior to
such amendment, modification, alteration or termination, and shall not affect
any rights for which the agreement of the other party or a beneficiary is
required.
(b) Parent shall cause the Surviving Corporation to
establish a special bonus plan (the "Special Bonus Plan") for all employees of
the Company or any of its subsidiaries who held Options which were outstanding
as of immediately before the Effective Time which were not then vested and were
terminated as of the Effective Time. The Special Bonus Plan shall provide for a
cash payment on the second anniversary of the Effective Time to each employee
who continues to be an employee of the Surviving Corporation, Parent or any of
their respective subsidiaries on such second anniversary in an amount (subject
to any applicable withholding taxes) equal to the sum of (i) the product of (x)
the total
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number of Common Shares subject to such terminated Options and (y) the excess of
the Merger Price over the exercise price per Common Share of such terminated
Options, plus (ii) interest on the amount set forth in clause (i) at a rate of
6% per annum from the Effective Time, plus (iii) the product of (x) the total
number of Common Shares subject to such terminated Option and (y) the amount of
cash, if any, paid with respect to each Contingent Right pursuant to the
Contingent Rights Agreement. Any employee of the Company who is involuntarily
terminated without cause or whose employment ceases by reason of death or
disability, in each case prior to the second anniversary of the Effective Time,
shall be entitled, promptly following such termination or cessation of
employment (or, in the case of any payment pursuant to clause (y) of the
preceding sentence, promptly following the later of March 31, 1999 or the date
of such termination or cessation of employment), to receive from the Company a
cash payment equal to the amount which such employee would have received
pursuant to the formula in the immediately preceding sentence, had such employee
remained employed throughout the period ending on the second anniversary of the
Effective Time.
SECTION 6.06 Indemnification; Directors' and Officers'
Insurance.
(a) From and after the time the Purchaser purchases
Shares pursuant to the Offer through and including the Effective Time (without
regard to the termination of this Agreement), neither Parent nor the Purchaser
will take any action, nor permit any action to be taken, which would change or
amend the provisions of the Certificate of Incorporation or By-Laws of the
Company in effect on the date hereof (copies of which previously have been
supplied to Parent) relating to limitation of liability or indemnification
inconsistent with its obligations under Section 6.06(b) hereof or eliminate or
make any modification in the Company's existing director's and officer's
insurance inconsistent with its obligations under Section 6.06(c) hereof. Parent
agrees that from and after the Effective Time all rights to indemnification now
existing in favor of individuals who at or prior to the Effective Time were
directors or officers of the Company or any of its subsidiaries as set forth in
the Certificate of Incorporation or By-Laws of the Company shall survive the
Merger with respect to matters existing or occurring at or prior to the
Effective Time and shall continue in full force and effect for a period of six
years following the Effective Time.
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(b) The Company shall, and from and after the
Effective Time, the Surviving Corporation shall, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of the
Company or any of its subsidiaries (each individually an "Indemnified Party"
and, collectively, the "Indemnified Parties") against all losses, claims,
damages, costs, expenses (including attorneys' fees and expenses), liabilities
or judgments or amounts that are paid in settlement with the approval of the
Indemnifying Party as a result of or in connection with any threatened or actual
claim, action, suit, proceeding or investigation based on or arising out of the
fact that such person is or was a director or officer of the Company or any of
its subsidiaries or out of or in connection with activities in such capacity,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based on, or arising out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the full extent a corporation
is permitted under the GCL to indemnify any such person and, without limiting
the generality or effect of the foregoing, to the fullest extent provided in the
respective Certificates of Incorporation or By-Laws of the Company and its
subsidiaries as in effect on the date hereof. Parent will cause the Surviving
Corporation to pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent permitted
by law and, without limiting the generality or effect of the foregoing, to the
fullest extent provided in the respective Certificates of Incorporation or
By-Laws of the Company and its subsidiaries as in effect on the date hereof
subject to receipt by the Company of an undertaking by or on behalf of such
officer or director contemplated by Section 145(e) of the GCL. Without limiting
the generality or effect of the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time) and, in the opinion of
counsel to an Indemnified Party, under applicable standards of professional
conduct, there is a conflict on any significant issue between the position of
the Company and an Indemnified Party or different defenses may reasonably be
expected to exist, the Indemnified Parties may retain counsel which counsel
shall be reasonably satisfactory to the Company (or the Surviving Corporation
after the Effective Time) and the Company shall (or after the Effective Time,
Parent will cause the Surviving Corporation to) pay all reasonable fees and
expenses of such counsel for the Indemnified Parties
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promptly as statements therefor are received, provided, however that (i) Parent
or the Surviving Corporation shall have the right, from and after the purchase
of Common Shares pursuant to the Offer, to assume the defense thereof (which
right shall not affect the right of the Indemnified Parties to be reimbursed for
separate counsel as specified in the preceding sentence), (ii) the Company and
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) neither Parent, the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent. Any Indemnified
Party wishing to claim indemnification under this Section 6.06, upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly notify
both Parent and the Company (or, after the Effective Time, the Surviving
Corporation) (but the failure to so notify shall not relieve a party from any
liability which it may have under this Section 6.06 except and only to the
extent such failure materially prejudices such party), and shall deliver to both
Parent and the Company (or after the Effective Time, the Surviving Corporation)
the undertaking contemplated by Section 145(e) of the GCL. The Indemnified
Parties as a group may not retain more than one counsel to represent them with
respect to each such matter unless there is, in the opinion of counsel to an
Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties or unless different defenses may reasonably be expected to
exist. The Company, Parent and Purchaser agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the Indemnified Parties
with respect to matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities.
(c) Parent agrees that the Company, and from and
after the Effective Time, the Surviving Corporation shall cause to be maintained
in effect for not less than six years (except as provided in the last sentence
of this Section 6.06(c)) from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation may substitute therefor other policies of at
least the same coverage
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amounts and which contain terms and conditions not less advantageous (other than
to a de minimus extent) to the beneficiaries of the current policies and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 125% of the last annual premium paid by the
Company prior to the date hereof (which the Company represents to be $196,000
for the 12-month period ending May 12, 1998) and if the Surviving Corporation is
unable to obtain the insurance required by this Section 6.06(c) it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount. Notwithstanding the foregoing, at any time on or after the
second anniversary of the Effective Time, Parent may, at its election, undertake
to provide funds to the Surviving Corporation to the extent necessary so that
the Surviving Corporation may self-insure with respect to the level and scope of
insurance coverage required under this Section 6.06(c) in lieu of causing to
remain in effect any directors' and officers' liability insurance policy.
(d) Parent shall guarantee the obligations of the
Surviving Corporation under this Section 6.06.
(e) This Section 6.06 shall survive the consummation
of the Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of Parent and the Surviving Corporation and shall be
enforceable by the Indemnified Parties.
SECTION 6.07 Notification of Certain Matters. Parent and the
Company shall promptly notify each other of (a) the occurrence or non-occurrence
of any fact or event which would be reasonably likely (i) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied and (b) any failure of the
Company, Parent or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder. Each of the Company, Parent and the Purchaser shall give
prompt notice to the other parties hereof of any notice or other communication
from any third party alleging that the consent of such third party is or may be
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required in connection with the transactions contemplated by this Agreement.
SECTION 6.08 Rights Agreement. The Company covenants and
agrees that it will not (i) redeem the Rights, (ii) amend the Rights Agreement
or (iii) take any action which would allow any Person (as defined in the Rights
Agreement) other than Parent or the Purchaser to acquire beneficial ownership of
15% or more of the Common Shares without causing a Distribution Date or a
Triggering Event (as each such term is defined in the Rights Agreement) to
occur. Notwithstanding the foregoing, the Company may upon at least two business
days prior written notice to Parent take the actions described in clauses (i) or
(iii) of the preceding sentence, if (x) the Company Board determines in good
faith, after consultation with its outside legal counsel, that failing to take
such action would reasonably be expected to result in a breach of the fiduciary
duties of the Company Board, and (y) prior to such action the Company shall have
paid to Parent a fee of $13 million (which amount shall be paid in lieu of any
Termination Fee payable pursuant to Section 8.03(b)). Neither the Board of
Directors of the Company nor the Continuing Directors (as defined in the Rights
Agreement) of the Company shall make a determination that Parent, the Purchaser
or any of their respective Affiliates or Associates is an "Adverse Person" for
purposes of the Rights Agreement.
SECTION 6.09 State Takeover Laws. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer and the Merger, of any state
takeover law.
SECTION 6.10 No Solicitation.
(a) The Company, its affiliates and their respective
officers, directors, employees, representatives and agents shall immediately
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition or exchange of all or any
material portion of the assets of, or any equity interest in, the Company or any
of its subsidiaries or any business combination with the Company or any of its
subsidiaries. The Company agrees that, prior to the Effective Time, it shall
not, and shall not authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate or encourage, or furnish or
disclose non-public information in furtherance of, any inquiries or the
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making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its subsidiaries or acquisition of any capital stock or any material
portion of the assets (except for acquisition of assets in the ordinary course
of business consistent with past practice) of the Company or its subsidiaries,
or any combination of the foregoing (other than the Offer and the Merger) (an
"Acquisition Transaction"), or negotiate, explore or otherwise engage in
substantive discussions with any person (other than the Purchaser, Parent or
their respective directors, officers, employees, agents and representatives)
with respect to any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement;
provided that the Company may furnish information to, and negotiate or otherwise
engage in substantive discussions with, any person who delivers a written
proposal for an Acquisition Transaction if the Company Board determines in good
faith by a majority vote, after consultation with its outside legal counsel,
that failing to take such action would reasonably be expected to result in a
breach of the fiduciary duties of the Company Board, and prior to furnishing
non-public information to any such party, the Company shall have entered into a
confidentiality agreement containing terms at least as favorable to the Company
as those of the Confidentiality Agreement with respect to the maintenance of
confidentiality and the permitted use of information provided by or on behalf of
the Company.
(b) From and after the execution of this Agreement,
the Company shall immediately advise the Purchaser in writing of the receipt,
directly or indirectly, of any, discussions, negotiations or proposals relating
to an Acquisition Transaction, identify the offeror and furnish to the Purchaser
a copy of any such proposal, if it is in writing, or a written summary of any
such proposal relating to an Acquisition Transaction if it is not in writing.
The Company shall promptly advise Parent of any development relating to such
proposal, including the results of any discussions or negotiations with respect
thereto.
SECTION 6.11 Parent Agreements. (a) Parent agrees to cause the
Purchaser to comply with its obligations under this Agreement.
(b) Parent shall not take any action to cause the
Company, including after the Effective Time the Surviving Corporation, to breach
its covenants and other obligations in the Contingent Payment Rights Agreement.
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SECTION 6.12 Contingent Payment Rights Agreement. As promptly
as practicable after the date hereof, the Company shall enter into a Contingent
Payment Rights Agreement in the form set forth in Exhibit B, except for such
immaterial changes as shall be approved by Parent, such approval not to be
unreasonably withheld.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent,
the Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. The stockholders of the
Company shall have duly approved the transactions contemplated by this
Agreement, if required by applicable law.
(b) Purchase of Common Shares. The Purchaser shall
have accepted for payment and paid for Common Shares in an amount sufficient to
meet the Minimum Condition and otherwise pursuant to the Offer in accordance
with the terms hereof; provided, however, that this condition shall be deemed to
be satisfied with respect to the obligation of Parent and the Purchaser to
effect the Merger if the Purchaser fails to accept for payment or pay for Common
Shares pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
(c) Injunctions; Illegality. The consummation of the
Merger shall not be restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger or has the
effect of making the purchase of Common Shares illegal.
(d) HSR Act. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have expired or
terminated.
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ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company (with any termination by Parent also being an effective termination by
the Purchaser):
(a) by the mutual written consent of Parent and the
Company, by action of their respective Boards of Directors;
(b) by the Company if (i) Parent or the Purchaser
fails to commence the Offer as provided in Section 1.01 hereof, or (ii) Parent
or the Purchaser shall not have accepted for payment and paid for Common Shares
pursuant to the Offer in accordance with the terms hereof and thereof on or
before October 31, 1997; provided, however, that the Company may not terminate
this Agreement pursuant to this Section 8.01(b) if the Company shall have
materially breached this Agreement;
(c) by Parent or the Company if (i) the Offer is
terminated or withdrawn pursuant to its terms without any Common Shares being
purchased thereunder or (ii) the Merger shall not have been consummated on or
before December 31, 1997; provided, however, that neither Parent nor the Company
may terminate this Agreement pursuant to this Section 8.01(c) if such party
shall have materially breached this Agreement;
(d) by Parent or the Company if any court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Common
Shares pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable, provided that the party
seeking to terminate this Agreement shall have used its reasonable efforts to
remove or lift such order, decree or ruling;
(e) by the Company if, prior to the acceptance for
payment of Common Shares pursuant to the Offer, the Company Board approves an
Acquisition Transaction, on terms which a majority of the members of the Company
Board have determined in good faith (i) after consultation with Salomon Brothers
or another nationally recognized investment banking
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firm, to be more favorable to the Company and its stockholders than the
transactions contemplated by this Agreement, taking into account the
distribution of the Contingent Rights, and (ii) after consultation with outside
legal counsel, that failure to approve such proposal and terminate this
Agreement would reasonably be expected to result in a breach of fiduciary duties
of the Company Board under applicable law; provided that the termination
described in this Section 8.01(e) shall not be permissible unless and until the
Company shall have provided the Purchaser and Parent prior written notice at
least two business days prior to such termination that the Company Board has
authorized and intends to effect the termination of this Agreement pursuant to
this Section 8.01(e), including copies of all proposed written agreements,
arrangements, or understandings, including the forms of any agreements supplied
by third parties, with respect to such Acquisition Transaction (and a
description of all material oral agreements with respect thereto), the Company
shall otherwise be in compliance with its obligations under this Agreement and
on or prior to such termination shall have paid to Parent the Termination Fees
described in Section 8.03(b); provided further, that notwithstanding anything in
this Agreement to the contrary the termination of this Agreement by the Company
in compliance with this Section 8.01(e) shall not be deemed to violate other
obligations of the Company under this Agreement.
(f) by Parent if the Company breaches its covenant in
Section 6.08 or takes an action pursuant to the second sentence of Section 6.08,
provided, however, such breach occurs prior to the time that designees of Parent
constitute a majority of the Company Board pursuant to Section 1.03;
(g) by Parent prior to the purchase of Common Shares
pursuant to the Offer, if the Company Board shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to the
Purchaser its approval or recommendation of the Offer, this Agreement or the
Merger, shall have approved or recommended an Acquisition Transaction, or shall
have resolved to effect any of the foregoing; or
(h) by Parent prior to the purchase of Common Shares
pursuant to the Offer if the Minimum Condition (as defined in Annex I) shall not
have been satisfied by the Expiration Date of the Offer and on or prior to such
Date an Acquisition Transaction shall have been publicly announced or disclosed.
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SECTION 8.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party or its directors, officers or stockholders, other than the provisions
of the last sentence of Section 6.02 and the provisions of this Section 8.02
and Section 8.03, which shall survive any such termination. Nothing contained
in this Section 8.02 shall relieve any party from liability for any breach of
this Agreement.
SECTION 8.03 Fees and Expenses.
(a) Whether or not the Merger is consummated, except
as otherwise specifically provided herein, all costs and expenses incurred in
connection with the Offer, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
(b) In the event that this Agreement is terminated
pursuant to SECTION 8.01(e), (f) or (g) hereof, or is terminated pursuant to
SECTION 8.01(c)(i) hereof as a result of the failure to satisfy any of the
conditions set forth in paragraphs (d) or (g) of Annex I, then the Company shall
promptly (and in any event within one business day after such termination or, in
the case of any such termination by the Company, prior to such termination) pay
Parent a termination fee of $13 million (the "Termination Fee"), provided that
in no event shall more than one Termination Fee be payable by the Company
(including for this purpose the fee payable under Section 6.08).
(c) In the event that this Agreement is terminated
pursuant to Section 8.01(h) hereof and within six months of the date of
termination of this Agreement a transaction constituting an Acquisition
Transaction is consummated or the Company or any of its subsidiaries enters into
an agreement with respect to, or approves or recommends such a transaction, the
Company shall promptly (and in any event within one business day thereafter) pay
Parent the Termination Fee; provided, however, that in no event shall the
Company be obligated to pay more than one such Termination Fee with respect to
all such occurrences (including for this purpose the fee payable under Section
6.08).
(d) The prevailing party in any legal action
undertaken to enforce this Agreement or any provision hereof shall be entitled
to recover from the other party the costs and expenses (including attorneys' and
expert witness fees) incurred in connection with such action.
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SECTION 8.04 Amendment. Subject to Section 1.03(c), this
Agreement may be amended by the Company, Parent and the Purchaser at any time
before or after any approval of this Agreement by the stockholders of the
Company but, after any such approval, no amendment shall be made which decreases
the Merger Price or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at
any time prior to the Effective Time, Parent and the Purchaser, on the one hand,
and the Company, on the other hand, may (i) extend the time for the performance
of any of the obligations or other acts of the other, (ii) waive any
inaccuracies in the representations and warranties contained herein of the other
or in any document, certificate or writing delivered pursuant hereto by the
other or (iii) waive compliance by the other with any of the agreements or
conditions. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties.
The representations and warranties made in this Agreement shall not survive
beyond the Effective Time. Notwithstanding the foregoing, the agreements set
forth in Section 2.09, Section 3.02, the last sentence of the second paragraph
of Section 6.03(a), Section 6.05(b), 6.11(b) and Section 6.06 shall survive the
Effective Time indefinitely (except to the extent a shorter period of time is
explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other
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party (except that Parent may assign its rights and the Purchaser may assign its
rights, interest and obligations to any affiliate or direct or indirect
subsidiary of Parent without the consent of the Company provided that no such
assignment shall relieve Parent of any liability for any breach by such
assignee. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or facsimile
to the respective parties as follows:
If to Parent or the Purchaser:
Xxxxx Corporation
Eaton Center
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
Facsimile Number: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile Number: (000) 000-0000
If to the Company:
Fusion Systems Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
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with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Facsimile Number: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.05 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.06 Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
SECTION 9.08 Parties in Interest. Except with respect to
Sections 2.09, 6.05(b) and 6.06 (which are intended to be for the benefit of the
persons identified therein, and may be enforced by such persons) and Section
6.11(b) (which is intended to be for the benefit of the Trustee, and may be
enforced by such person or, to the extent holders are permitted under the
Contingent Payment Rights Agreement to enforce their rights thereunder, by such
holders), this Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person,
shall mean any other person directly or indirectly controlling, controlled by,
or under common control with,
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that person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise;
(b) the term "Person" or "person" shall include
individuals, corporations, partnerships, trusts, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act); and
(c) the term "Subsidiary" or "subsidiaries" means,
with respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.10 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties 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, this being in addition to any
other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.
XXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President --
Semiconductor and
Specialty Systems
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
ETN ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
FUSION SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
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ANNEX I
Conditions to the Offer. Notwithstanding any other provisions
of the Offer, the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) promulgated under the Exchange Act, pay for any tendered Common
Shares and may terminate or, subject to the terms of the Merger Agreement, amend
the Offer, if (i) there shall not be validly tendered and not properly withdrawn
prior to the Expiration Date for the Offer that number of Common Shares which
represents at least a majority of the total number of outstanding Common Shares
on a fully diluted basis on the date of purchase (not taking into account the
Rights) (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act or under any applicable foreign statutes or regulations shall not have
expired or been terminated prior to the Expiration Date, or (iii) at any time on
or after June 30, 1997 and prior to the time of acceptance for payment or
payment for any Common Shares, any of the following events (each, an "Event")
shall occur:
(a) there shall be any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction enacted, enforced, promulgated, amended, issued or deemed
applicable to the Offer, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, other than the application of the waiting period
provisions of the HSR Act to the Offer or to the Merger, that, in the
reasonable judgment of Parent, would be expected to, directly or
indirectly: (i) make illegal or otherwise prohibit or materially delay
consummation of the Offer or the Merger or seek to obtain material
damages or make materially more costly the making of the Offer, (ii)
prohibit or materially limit the ownership or operation by Parent or
the Purchaser of all or any material portion of the business or assets
of the Company or any of its subsidiaries taken as a whole or compel
Parent or the Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent or the Purchaser
or the Company or any of its subsidiaries taken as a whole, or seek to
impose any material limitation on the ability of Parent or the
Purchaser to conduct its business or own such assets, (iii) impose
material limitations on the ability of Parent or the Purchaser
effectively to acquire, hold or exercise full rights of ownership of
the Common Shares, including, without limitation, the right to vote any
Common Shares acquired or owned by the Purchaser or Parent on all
matters properly presented to the Company's stockholders, (iv) require
divestiture by
56
Parent or the Purchaser of any Common Shares, or (v) may, in the
reasonable judgment of Parent, be expected to result in a Material
Adverse Effect on the Company; or
(b) there shall be instituted or pending any action
or proceeding by any Governmental Entity seeking, or that would
reasonably be expected to result in, any of the consequences referred
to in clauses (i) through (v) of paragraph (a) above or by any third
party for which there is a substantial likelihood of resulting in any
of the consequences referred to in clauses (i) through (v) of paragraph
(a) above; or
(c) any change shall have occurred (or any
development shall have occurred involving prospective changes) in the
business, assets, liabilities, condition (financial or otherwise),
prospects or results of operations of the Company or any of its
subsidiaries that has, or could reasonably be expected to have, a
Material Adverse Effect on the Company; or
(d) (i) the Company Board or any committee thereof
shall have withdrawn, or shall have modified or amended in a manner
adverse to Parent or the Purchaser, the approval, adoption or
recommendation, as the case may be, of the Offer or the Merger
Agreement, or approved or recommended any Acquisition Transaction, (ii)
a Person shall have entered into a definitive agreement or an agreement
in principle with the Company with respect to an Acquisition
Transaction, or (iii) the Company Board or any committee thereof shall
have resolved to do any of the foregoing; or
(e) the Company and the Purchaser and Parent shall
have reached an agreement that the Offer or the Merger Agreement be
terminated, or the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) any of the representations and warranties of the
Company set forth in the Merger Agreement, when read without any
exception or qualification as to materiality or Material Adverse Effect
on the Company, shall not be true and correct, as if such
representations and warranties were made at the time of such
determination (except as to any such representation or warranty which
speaks as of a specific date, which must be untrue or incorrect as of
such specific date) except where the failure to be so true and correct
would not,
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57
individually or in the aggregate, reasonably be expected to (i) have a
Material Adverse Effect on the Company, (ii) prevent or materially
delay the consummation of the Offer, (iii) materially increase the cost
of the Offer to the Purchaser or (iv) have a material adverse effect on
the benefits to Parent of the transactions contemplated by this
Agreement; or
(g) the Company shall have failed to perform in any
material respect or to comply in any material respect with any of its
material obligations, covenants or agreements under the Merger
Agreement; or
(h) there shall have occurred, and continued to
exist, (i) any general suspension of, or limitation on prices for,
trading in securities on the New York Stock Exchange or on the
over-the-counter stock market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
(ii) any decline of at least 25% in either the Dow Xxxxx Average of
Industrial Stocks or the Standard & Poor's 500 Index from the close of
business on the last trading day immediately preceding the date of the
Merger Agreement through the applicable Expiration Date, (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, or (iv) a commencement of a war,
armed hostilities or other national or international crisis involving
the United States or a material limitation (whether or not mandatory)
by any Governmental Entity on the extension of credit by banks or other
lending institutions.
The foregoing conditions (including those set forth in clauses
(i) and (ii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
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58
EXHIBIT A
PRINCIPAL TERMS OF CONTINGENT PAYMENT RIGHTS
GENERAL: The Rights will be cash settlement
"earn-out" rights which will pay
specified amounts if, and only if,
(i) a "Change of Control" of the
Company occurs prior to December 31,
1997 and (ii) the Company achieves
certain levels of Company Sales (as
defined below) during the
Measurement Period (as defined
below). The Rights will be issued
by the Company as a dividend on the
Common Shares, consisting of one
Right per share outstanding on the
record date. One Right will also be
issued (i) upon exercise of an
option outstanding on the record
date with respect to each Common
Share issued upon exercise thereof
and (ii) upon the cash-out of any
vested option outstanding on the
record date in connection with a
"Change of Control" with respect to
each Common Share that would have
been issuable upon exercise of such
vested option. The Rights will be
issued pursuant to a Rights
Agreement between the Company and a
major financial institution, as
Rights Agent.
DIVIDEND RECORD DATE: July __, 1997 [15 business days
after declaration].
DIVIDEND PAYMENT DATE: September __, 1997 [60 days after
record date].
MEASUREMENT PERIOD: January 1, 1998 to December 31,
1998.
COMPANY SALES: All net sales of the Company and its
subsidiaries during the Measurement
Period, calculated in accordance
with generally accepted accounting
principles.
59
CASH PAYMENT AMOUNT: The payment made per Right will be
an amount in cash equal to:
(a) $5.00, if Company Sales are
$149 million or greater;
(b) $3.50, if Company Sales are
$141 million;
(c) $2.25, if Company Sales are
$134 million; or
(d) $1.00, if Company Sales are
$127 million.
(e) $0.00 if less than $122
million.
If the Company Sales fall between
two of the levels specified above,
the amount of the payment made per
Right shall be determined by
interpolation. No payment shall be
made if Company Sales are less than
$122 million.
CASH PAYMENT DATE: March 31, 1999.
EXPIRATION DATE: The Rights shall expire without any
payment on December 31, 1997 if no
"Change of Control" of the Company
has occurred prior to such date. If
a "Change of Control" has occurred
prior to December 31, 1997, but
Company Sales are less than $122
million, the Rights shall expire
without any payment on April 1,
1999.
OPTIONAL REDEMPTION: The Rights may be redeemed at the
option of the Company at any time
after a "Change of Control" of the
Company, in whole or in part, at a
redemption price of $5.00 per Right.
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