Exhibit 2.1
PLAN AND AGREEMENT OF MERGER
BY AND AMONG
PPC HOLDINGS, INC., XXXXX ACQUISITION CORP.
AND
XXXX'X, INCORPORATED
AS OF OCTOBER 17, 1997
TABLE CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. ARTICLES OF INCORPORATION
AND DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . 2
2.1 Articles of Incorporation and By-Laws . . . . . . . . . . . . . . . 2
2.2 Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. CONVERSION AND EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Stock of Newco: Parent Capital Stock. . . . . . . . . 3
3.2 Conversion of Company Common Stock. . . . . . . . . . . . . . . . . 3
3.3 Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Adjustments to Consideration. . . . . . . . . . . . . . . . . . . . 5
3.5 Post-Closing Audit. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Exchange of Certificates: Receipt of Cash;
Creation of Indemnity Escrow. . . . . . . . . . . . . . . . . . . . 9
3.7 No Further Transfers. . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 11
4.1 Representations and Warranties of the Company . . . . . . . . . . . 11
4.1.1 Corporate Organization and Good Standing;
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 11
4.1.2 Capitalization of the Company and Subsidiaries. . . . . . . 12
4.1.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.4 Financial Information . . . . . . . . . . . . . . . . . . . 13
4.1.5 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 14
4.1.6 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 14
4.1.7 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1.9 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1.10 Governmental Authorizations; Compliance with Laws . . . . . 15
4.1.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1.12 Brokers; Finders. . . . . . . . . . . . . . . . . . . . . . 17
4.1.13 Absence of Certain Changes. . . . . . . . . . . . . . . . . 17
4.1.14 Properties and Assets . . . . . . . . . . . . . . . . . . . 17
4.1.15 Material Contracts. . . . . . . . . . . . . . . . . . . . . 18
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4.1.16 Intellectual Property Rights. . . . . . . . . . . . . . . . 19
4.1.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.18 No Consent. . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.19 Authorization . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.20 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 21
4.1.21 Environmental Matters . . . . . . . . . . . . . . . . . . . 24
4.1.22 Company Action. . . . . . . . . . . . . . . . . . . . . . . 26
4.1.23 Books and Records . . . . . . . . . . . . . . . . . . . . . 26
4.1.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Representations and Warranties of Parent and Newco. . . . . . . . . 26
4.2.1 Newco's Corporate Status . . . . . . . . . . . . . . . . . . 26
4.2.2 Authority for Agreement; No Conflict . . . . . . . . . . . . 26
4.2.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2.4 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . 27
4.2.5 Buyer's Investigation. . . . . . . . . . . . . . . . . . . . 27
4.2.6 Financial Ability to Perform . . . . . . . . . . . . . . . . 28
4.2.7 Financial Condition. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Access and Information; Confidentiality . . . . . . . . . . . . . . 28
5.2 Conduct of Business of the Company. . . . . . . . . . . . . . . . . 29
5.3 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Financial Information . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Authorization of Agreement and Merger . . . . . . . . . . . . . . . 30
5.7 HSR Notification. . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8 Treatment of Employees. . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Port City Press . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.10 Directors' and Officers' Insurance and
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.11 Post-Closing Operations of the Company. . . . . . . . . . . . . . . 31
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS
OF PARENT AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . 33
6.1 Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Representations and Warranties True . . . . . . . . . . . . . . . . 34
6.4 Performance by the Company. . . . . . . . . . . . . . . . . . . . . 34
6.5 Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . 34
6.11 Demands of Dissenting Stockholders. . . . . . . . . . . . . . . . . 34
6.12 Information; No Adverse Change. . . . . . . . . . . . . . . . . . . 35
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ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS
OF COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.1 Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Representations and Warranties True . . . . . . . . . . . . . . . . 36
7.4 Performance by Parent and Newco . . . . . . . . . . . . . . . . . . 36
7.5 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6 Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.8 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Limited Responsibility for Company Warranties . . . . . . . . . . . 36
8.2 Indemnification of Parent . . . . . . . . . . . . . . . . . . . . . 37
8.3 Notice of Claim: Right to Defend. . . . . . . . . . . . . . . . . . 39
8.4 Action by Company Stockholders. . . . . . . . . . . . . . . . . . . 40
8.5 Sole and Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . 40
8.6 Indemnification of Stockholders . . . . . . . . . . . . . . . . . . 40
ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 [Intentionally Omitted]
9.3 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 41
9.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.5 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . 42
9.6 Assignment: Successors. . . . . . . . . . . . . . . . . . . . . . . 42
9.7 Amendment and Modification: Waivers . . . . . . . . . . . . . . . . 42
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.9 Further Assurances: Records . . . . . . . . . . . . . . . . . . . . 44
9.10 Headings; Entire Agreement; Counterparts; Governing La. . . . . . . 44
GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ANNEXES
Annex I Certain Definitions
Annex II Officers and Directors of Company and Subsidiaries
Annex III Determination of Adjusted Working Capital at August 31, 1997
Annex IV Items to be Included in Current Liabilities
COMPANY SCHEDULES
Schedule 4.1.1. Organization of the Company and each Subsidiary
Schedule 4.1.2. Authorized, issued and outstanding capital stock and the
record and beneficial ownership of the Company and each
Subsidiary
Schedule 4.1.4. Financial Statements
Schedule 4.1.5. Undisclosed Liabilities
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Schedule 4.1.6. Accounts Receivable
Schedule 4.1.7. Inventory
Schedule 4.1.8. Insurance
Schedule 4.1.9. Litigation
Schedule 4.1.10. Governmental Authorizations
Schedule 4.1.11. Tax Matters
Schedule 4.1.13. Certain Changes
Schedule 4.1.14. Properties and Assets
Schedule 4.1.15. Material Contracts
Schedule 4.1.16. Intellectual Property
Schedule 4.1.17. Labor Matters
Schedule 4.1.18. Consents
Schedule 4.1.20. ERISA
Schedule 4.1.21. Environmental Matters
PARENT/NEWCO SCHEDULES
Schedule 4.2.2 Material Consents
Schedule 4.2.3 Litigation
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B-1 Certificate of Incorporation of the Surviving Corporation
Exhibit B-2 By-laws of the Surviving Corporation
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PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER (this "AGREEMENT") is made as of
October 17, 1997 by and among PPC Holdings, Inc. a Delaware corporation
("PARENT"), Xxxxx Acquisition Corp. Inc., a Maryland corporation ("NEWCO"),
and Xxxx'x, Incorporated, a Maryland corporation (the "COMPANY"). Newco and
the Company, the only parties to the merger hereby contemplated, are
sometimes referred to herein as the "CONSTITUENT CORPORATIONS", and the
Company as the surviving Constituent Corporation upon the merger with Newco
is sometimes referred to herein as the "SURVIVING CORPORATION". Capitalized
terms used in this Agreement and not otherwise defined herein shall have the
respective meanings assigned thereto in ANNEX I hereto.
RECITALS
A. The Company was incorporated in the State of Maryland on March 26,
1976 as a holding company for the Subsidiaries herein defined. Its principal
executive offices are located at 0000 Xxxxxxxxx Xxxxx, X.X., Xxxxxxxxxx, X.X.
00000. The authorized capital stock of the Company consists of Two Million,
Five Hundred Thousand (2,500,000) shares of common stock, par value $1.00 per
share (the "COMPANY COMMON STOCK"), and Five Hundred Thousand (500,000)
shares of Director Designated Preferred Stock, par value $100 per share
("COMPANY PREFERRED STOCK"), and One Hundred Thousand (100,000) shares of 7%
Preferred Stock, par value $10.00 per share ("7% PREFERRED STOCK"). As of
September 30, 1997, 270,592 shares of the Company Common Stock were issued
and outstanding and entitled to vote, no shares of the Company Preferred
Stock were issued or outstanding and 620 shares of 7% Preferred Stock were
issued and outstanding.
B. Newco was incorporated in the state of Maryland on October 17,
1997. The authorized capital stock of Newco consists of One Thousand (1,000)
shares of common stock, par value $.001 per share (the "NEWCO COMMON STOCK"),
of which 1,000 shares are issued and outstanding, entitled to vote and owned
by Parent.
C. The respective Boards of Directors of the Constituent Corporations
and of Parent have approved this Agreement and deem it advisable and in the
best interests of their respective corporations and their stockholders that
Newco merge with and into the Company on the terms and conditions herein set
forth (the "MERGER"), whereby the holders of the shares of the Company Common
Stock outstanding at the Effective Time shall receive cash in the amounts and
in the manner set forth in ARTICLE III and upon the terms and conditions
otherwise set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the premises, representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto
agree as follows:
ARTICLE I.
MERGER
1.1 MERGER. As soon as practicable after all of the conditions to the
Merger shall have been satisfied or waived, and subject to the rights of
termination and abandonment hereinafter set forth, a Certificate of Merger,
substantially in the form attached as EXHIBIT A to this Agreement (the
"CERTIFICATE OF MERGER"), shall be filed with the Secretary of State of the
State of Maryland, in accordance with the laws of the State of Maryland.
Effective as of the date and time of the filing of the Certificate of Merger,
Newco shall merge with and into the Company, which as the Surviving
Corporation shall continue its corporate existence under the laws of the
State of Maryland under the name of Xxxx'x, Incorporated. The date and time
of the filing of the Certificate of Merger, when the Merger shall become
effective in accordance with SECTIONS 3-105, 3-107 and 3-114 of the
Corporations and Associations Article of the Annotated Code of Maryland ("MD
GCL"), shall be referred to herein as the "EFFECTIVE TIME".
1.2 EFFECT OF THE MERGER. The Merger shall have the effect set forth
in SECTION 3-114 of the Md GCL.
1.3 CLOSING. The closing of the merger of the Company and Newco (the
"CLOSING") will take place at the offices of Xxxxxxx Breed Xxxxxx & Xxxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M. E.S.T. on or
before December 12, 1997, or at such other time and date as the parties
hereto may agree in writing (the "CLOSING DATE").
ARTICLE II.
ARTICLES OF INCORPORATION
AND DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION AND BY-LAWS. At the Effective Time the
articles of incorporation and the by-laws of the Surviving Corporation shall
be amended to read in their entirety as set forth in EXHIBITS B-1 AND B-2
(the "AMENDED ARTICLES" and "AMENDED BY-LAWS," respectively). As so amended,
such articles of incorporation and by-laws shall be the articles and by-laws
of the Surviving Corporation until further amended in accordance with law.
2.2 DIRECTORS AND OFFICERS. The directors and officers of Newco at the
Effective Time shall be the directors and officers of the Surviving
Corporation and shall hold office as provided in the Amended By-Laws of the
Surviving Corporation.
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ARTICLE III.
CONVERSION AND EXCHANGE OF SHARES
3.1 CONVERSION OF STOCK OF NEWCO: PARENT CAPITAL STOCK. At the
Effective Time, each issued and outstanding share of Newco Common Stock
shall, by virtue of the Merger, and without any action on the part of the
holder thereof, be converted into one share of Common Stock, par value One
Dollar ($1.00) per share, of the Surviving Corporation. The Merger and the
transactions contemplated by this Agreement shall effect no change in the
shares of Parent capital stock and none of such shares shall be converted as
a result thereof.
3.2 CONVERSION OF COMPANY COMMON STOCK. (a) At the Effective Time,
each issued and outstanding share of Company Common Stock, other than shares
of the Company Common Stock issued and held in the treasury of the Company or
Dissenting Shares in respect of which appraisal rights are properly exercised
and perfected, shall be converted into and shall become, by virtue of the
Merger and without any further action by the holder thereof, the right to
receive that number of dollars in cash determined as described in this
ARTICLE III.
(b) Each share of Company Common Stock issued and held in the
treasury of the Company immediately prior to the Effective Time shall
automatically be canceled and retired without any conversion thereof, and no
cash shall be exchangeable therefor.
3.3 MERGER CONSIDERATION.
(a) The aggregate price payable in exchange for the issued and
outstanding shares of Company Common Stock shall be that amount remaining
after (i) deducting from the sum of One Hundred Three Million Dollars
($103,000,000), (x) the difference between (A) the Funded Indebtedness of the
Company (hereinafter defined) immediately prior to the Effective Time and (B)
the amount of cash, marketable securities and other cash equivalents of the
Company immediately prior to the Effective Time, and (y) Ten Million Two
Hundred Fifty Thousand Dollars ($10,250,000), subject to adjustment as
provided in ANNEX IV, to be deposited in escrow pursuant to SECTION 3.3(c)
hereof (the "Escrow Amounts," which consists of (A) Five Hundred Thousand
Dollars ($500,000), subject to adjustment as provided in ANNEX IV, to be held
pending the final determination of the Adjustment Amount pursuant to SECTION
3.4 hereof (the "Adjustment Escrow Amount"), (B) Four Million Seven Hundred
Fifty Thousand Dollars ($4,750,000), which shall constitute the "Indemnity
Escrow Amount" and shall be disbursed as provided hereinafter, and (C) Five
Million Dollars ($5,000,000), which shall constitute the "Additional Escrow
Amount" and shall be disbursed as provided in SECTION 8.2"), and (ii)
deducting from or adding to such amount, as the case may be, the Estimated
Adjustment Amount (as defined in SECTION 3.4(b) below) (the result of the
foregoing adjustments being the "NOMINAL CONSIDERATION"). The result
obtained by dividing the Nominal Consideration by the number of issued and
outstanding shares of Company Common Stock immediately prior to the Effective
Time shall be referred to
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herein as the "NOMINAL PER SHARE CASH AMOUNT". Each holder of Company Common
Stock on the Closing Date (individually a "Stockholder" and collectively the
"Stockholders") shall be entitled to receive that portion of the Nominal
Consideration equal to the Nominal Per Share Cash Amount multiplied by the
number of shares of Company Common Stock held by such Stockholder (such
holder's "NOMINAL AGGREGATE PER SHARE CASH AMOUNT"), PROVIDED that the
Nominal Aggregate Per Share Cash Amount attributable to all holders of
Dissenting Shares (the "AGGREGATE DISSENTING SHARES AMOUNT") shall be held by
the Exchange Agent for distribution pursuant to SECTION 3.8 hereof.
(b) At the Closing, the Company shall provide to Parent and Newco
a certificate (the "CERTIFICATE OF INDEBTEDNESS") of the President and the
Vice President of the Company which states the total amount of Funded
Indebtedness of the Company immediately prior to the Effective Time. For
purposes of this Agreement, "FUNDED INDEBTEDNESS" shall mean all indebtedness
of the Company to third parties (other than trade indebtedness arising in the
Ordinary Course of Business), including the banks and financial institutions
listed in SCHEDULE 4.1.15(c) hereto, holders of preferred stock of the
Company and the Subsidiaries, holders of Senior Subordinated Notes, holders
of Series A and Series B debenture bonds and holders of treasury stock notes,
including the amount of any and all prepayment penalties, premiums, fees or
other amounts due and payable to any such person in connection with the
repayment of any such indebtedness, including accrued interest expense net of
the Company's accrued interest income. The Certificate of Indebtedness shall
also state the amount of such indebtedness owed to each such person or entity
as of the Closing Date. The amount of Funded Indebtedness at the date of this
Agreement (assuming full repayment on the date hereof) is approximately
$49,600,000. Immediately after the Effective Time, Parent shall cause the
Surviving Corporation to repay or otherwise retire all Funded Indebtedness.
(c) At or immediately prior to the Effective Time, Parent shall
deposit the Escrow Amounts with an escrow agent reasonably acceptable to the
Company and Parent (the "ESCROW AGENT"). The Adjustment Escrow Amount, the
Indemnity Escrow Amount and the Additional Escrow Amount shall be held by the
Escrow Agent in separate accounts referred to herein as the "Adjustment
Escrow Fund", the "Indemnity Escrow Fund" and the "Additional Escrow Fund",
respectively, and shall be distributed to Parent and/or for the benefit of
the Stockholders in accordance with the terms hereof and of an escrow
agreement in the form agreed to by the Company and Parent, which agreement
shall be consistent in all respects with the terms and conditions of this
Agreement (the "ESCROW AGREEMENT").
(d) In the event that the Merger is approved by the Stockholders,
effective upon such vote and without the further act of any Stockholder, Xxxx
X. Xxxxxxxxx and Xxxxxx X. Xxxxxx shall be appointed, ratified and confirmed
as agents for and on behalf of each Stockholder (the "STOCKHOLDER AGENTS"),
in connection with the determination of the Adjustment Amount and the
distribution of the Adjustment Escrow Fund, including without limitation
conferring the authority to act (unanimously unless only one shall survive or
be legally competent, in which case that person shall have authority to act
alone) on behalf of each of the Stockholders in giving and receiving
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notices and communications, to authorize delivery to Parent and/or the
Stockholders of monies from the Adjustment Escrow Fund and the Indemnity
Escrow Fund in satisfaction of the Adjustment Amount (as defined below), to
review and object to the determination of the Adjustment Amount, to agree to,
negotiate, enter into settlements and compromises of and comply with orders
of courts and awards of arbitrators with respect to determinations regarding
and payments of the Adjustment Amount, and to take all actions necessary or
appropriate in the judgment of the Stockholder Agents for the accomplishment
of the foregoing. No bond shall be required of the Stockholder Agents, and
the Stockholder Agents shall not receive any compensation for services
rendered. A decision, act, consent or instruction of the Stockholder Agents
shall constitute a decision of all of the Stockholders and shall be final,
binding and conclusive upon each of the Stockholders, and the Escrow Agent
and Parent may rely upon any such decision, act, consent or instruction of
the Stockholder Agents as being the decision, act, consent or instruction of
each and every Stockholder. The Escrow Agent and Parent are hereby relieved
from any liability to any person for any acts done by them in accordance with
any such decision, act, consent or instruction of the Stockholder Agents.
3.4 ADJUSTMENTS TO CONSIDERATION.
(a) The Nominal Consideration shall be subject to adjustment as
follows: (i) if (x) the current assets of the Company and the Subsidiaries
excluding cash, marketable securities and cash equivalents, minus (y) the
current liabilities of the Company and the Subsidiaries (including without
limitation all Company Transaction Expenses) but excluding that portion of
Funded Indebtedness included in current liabilities, determined (with the
exception of such adjustments required by the provisions of the last sentence of
this SECTION 3.4(a)) in accordance with generally accepted accounting principles
applied consistently with the past practices of the Company, subject to normal,
recurring year-end adjustments as if the Company's and the Subsidiaries' fiscal
year-end ended on the Closing Date (as so determined, the "ADJUSTED WORKING
CAPITAL") immediately prior to the Effective Time prior to giving effect to the
Merger, is less than $13,893,000 (the "TARGET WORKING CAPITAL"), the Nominal
Consideration shall be reduced by an amount equal to such deficiency; and (ii)
if the Adjusted Working Capital immediately prior to the Effective Time prior to
giving effect to the Merger is in excess of the Target Working Capital, the
Nominal Consideration shall be increased by an amount equal to such excess. The
amount of such adjustment to the Nominal Consideration is hereinafter referred
to as the "ADJUSTMENT AMOUNT." By way of illustration, the Adjusted Working
Capital of the Company and its Subsidiaries, determined in the manner required
in this SECTION 3.3(a) based on the Unaudited Financial Statements, was
$14,055,000 as set forth on Annex III attached hereto, in which case the
Adjustment Amount would be $162,000 if August 31, 1997 were the Closing Date,
and the Nominal Consideration would be increased by such amount.
Notwithstanding the foregoing provisions of this Section 3.4, Parent and the
Company agree that, for purposes of determining the Adjustment Amount, current
liabilities shall include the items set forth on ANNEX IV attached hereto in the
amounts as determined in accordance with Annex IV.
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(b) Not less than five (5) business days prior to the Closing Date,
the Company shall deliver to Parent a consolidated balance sheet for Company and
the Subsidiaries as of the end of the most recent interim accounting period (the
"PRE-CLOSING BALANCE SHEET"), together with a calculation of the Adjustment
Amount determined based upon the Pre-Closing Balance Sheet (the "ESTIMATED
ADJUSTMENT AMOUNT"). The Target Working Capital as increased or decreased by
the Estimated Adjustment Amount is referred to herein as the "ADJUSTED TARGET
WORKING CAPITAL." The Pre-Closing Balance Sheet shall be prepared in accordance
with the same conditions as are applicable to the preparation of the Interim
Balance Sheet, as described in SECTION 4.1.4 below, subject to the adjustments
set forth in SECTION 3.4(a) above, including the reference therein to ANNEX IV.
(c) In the event that there is any difference between the Estimated
Adjustment Amount and the Adjustment Amount (as calculated pursuant to SECTION
3.5 below), the amount of such difference shall be paid to Parent in the event
that the Adjusted Working Capital is less than the Adjusted Target Working
Capital or by Parent in the manner directed by the Stockholder Agents for
disbursement to the Stockholders in accordance with the Exchange Agreement in
the event that the Adjusted Working Capital is more than the Adjusted Target
Working Capital, in accordance with this SECTION 3.4(c).
(i) Any amount to be paid to Parent on behalf of the
Stockholders hereunder shall be satisfied out of the Adjustment Escrow
Amount, PROVIDED that if the amount in the Adjustment Escrow Fund is less
than the amount required to be paid to Parent hereunder, then such
additional amount shall be satisfied out of the Indemnity Escrow Fund
(without regard to the limitation set forth in Section 8.2(b)(iii)) by
certified check or by wire transfer of such amount from the Escrow Agent at
the same time the amount in the Adjustment Escrow Fund is transferred to
Parent from the Adjustment Escrow Fund.
(ii) To the extent that Parent owes additional consideration to
the Stockholders pursuant to this SECTION 3.4(c), Parent shall pay such
amount by certified check or wire transfer of funds in the manner directed
by the Stockholder Agent on or before the fifth business day following the
final determination of the Adjustment Amount under SECTION 3.5(c) hereof
for disbursement to the Stockholders in the manner directed by the
Stockholder Agent.
(iii) After satisfaction of any payment obligation to Parent
pursuant to clause (i) above and the payment to the Independent Accountant,
if any, of certain expenses pursuant to SECTION 3.5(c), any amount
remaining in the Adjustment Escrow Fund shall be disbursed by the
Adjustment Escrow Agent in the manner directed by the Stockholder Agent for
distribution to the Stockholders of the Company in accordance with the
Exchange Agreement.
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3.5 POST-CLOSING AUDIT.
(a) The determination of the Adjustment Amount shall be made in
accordance with generally accepted accounting principles, applied consistently
with the practices applied in the preparation of the Financial Statements,
subject to normal year-end adjustments as if the fiscal year of the Company and
the Subsidiaries ended on the Closing Date prior to giving effect to the Merger
but subject to the adjustments set forth in SECTION 3.4(a) above, including the
reference therein to ANNEX IV.
(b) The Surviving Corporation will prepare and deliver to Parent and
the Stockholder Agent, within ninety (90) calendar days after the Closing Date,
a balance sheet of the Company immediately prior to the Effective Time (the
"CLOSING BALANCE SHEET"), and the Surviving Corporation's calculation of
Adjusted Working Capital immediately prior to the Effective Time (the "SURVIVING
CORPORATION'S COMPUTATION"), all as reviewed by Deloitte & Touche LLP (the
"SURVIVING CORPORATION'S ACCOUNTANT"). The Stockholder Agents will have thirty
(30) days after receipt of the Surviving Corporation's Computation to review and
deliver a written notice of objection (the "Objection Notice") to the Surviving
Corporation. The Objection Notice shall state each item to which the
Stockholder Agents take exception as not being in accordance with Section 3.5(a)
or as having computational errors, specifying in reasonable detail the nature
and amount of any such exception. Any amounts not disputed in the Objection
Notice shall be paid promptly in accordance with Section 3.4(c). In connection
with such review, the Stockholder Agents and Xxxx Xxxxxx & Company, P.C. (the
"STOCKHOLDERS' ACCOUNTANT") will have the right to review the methods used in
the preparation of the Closing Balance Sheet, including the right to review all
work papers related to the review by the Surviving Corporation's Accountant, and
to confer with the Surviving Corporation and the Surviving Corporation's
Accountant. If the Stockholder Agents do not provide an Objection Notice to the
Surviving Corporation within such thirty (30) days after receipt of the Closing
Balance Sheet and the Surviving Corporation's Computation, the Stockholder
Agents will be deemed to have accepted and agreed to the Surviving Corporation's
Computation on behalf of each Stockholder as the Adjustment Amount. If the
Stockholder Agents deliver an Objection Notice to the Surviving Corporation
within such time period, then within thirty (30) days after the Objection Notice
is received by the Surviving Corporation, the Stockholder Agents, the Surviving
Corporation and Parent will (i) meet to consider such objections and may agree
to revise the Surviving Corporation's Computation, in which case the amount so
agreed will be the Adjustment Amount and will be binding on the Surviving
Corporation, Parent and the Stockholders, or (ii) specify that Price Waterhouse
(the "INDEPENDENT ACCOUNTANT") will review the Surviving Corporation's
Computation and the Objection Notice and report to the Surviving Corporation,
Parent and the Stockholder Agents the Independent Accountant's determination of
the Adjustment Amount, which determination will be made within thirty (30) days
after the date that the Independent Accountant receives the Surviving
Corporation's Computation and the Objection Notice. Such determination by the
Independent Accountant will be final and binding on the Surviving Corporation,
Parent and the Stockholders.
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(c) The Stockholders and the Surviving Corporation shall each pay
one-half of the fees and expenses of the Independent Accountant for its
services. Any such expenses owed by the Stockholders shall be satisfied out of
the Adjustment Escrow Fund before any amount is disbursed to Parent or the
Exchange Agent pursuant to SECTION 3.4.
(d) Notwithstanding the foregoing provisions of this Section 3.5,
Parent accepts and agrees to instruct the Company's Accountant to accept and
use the amounts for accounts receivable or paper which are the subject of
claims ("Best Claims") by the Company in IN RE BEST PRODUCTS CO., INC., Case
No. 96-35267-T filed in the United States Bankruptcy Court in the Eastern
District of Virginia, Richmond Division, against the bankruptcy estate ("Best
Estate") and the amounts reserved for the collectibility thereof
(collectively, the "Best Reserves") which are established as provided in
SECTION 3.4(a). The Company has also made the subject of its claims an
amount for manufacturing under the contract which was in effect at the time
of the bankruptcy filing by Best Products Co., Inc., but which manufacturing
had not been accomplished (the "Manufacturing Claim"). The Manufacturing
Claim represents losses based in part on scheduled press time not able to be
rescheduled for other customers. For purposes of this subsection, the
Manufacturing Claim is included in the Best Claims. The difference between
the Best Claims and the Best Reserves is hereinafter referred to as the "Net
Best Amount". Parent agrees that after the Closing Date it shall, and shall
cause the Surviving Corporation to use, commercially reasonable efforts to
collect the Best Claims, including without limitation selling the paper
identified to the Best Products account and for which a claim for payment has
been made (the "Best Paper"). After (i) the Best Claims have been settled
or finally adjudicated and payments, if any, made by the Best Estate
(including without limitation any payments by the Best Estate with respect to
the Best Paper) and (ii) all of the Best Paper has been sold and payments
therefor been made, but not later than the date which is twelve (12) months
following the Closing Date ("Close-out Date"), if the aggregate amount
collected by the Surviving Corporation in respect of the Best Claims is less
than the Net Best Amount, the difference shall be deducted from the Indemnity
Escrow Amount and paid to the Surviving Corporation or Parent, as Parent may
direct, and the Surviving Corporation shall assign to the Stockholder Agents,
as agents for the Stockholders, the remaining unpaid Best Claims and the
remaining unsold Best Paper. Such remaining unsold Best Paper, if any, may
remain in storage at storage facilities of the Surviving Corporation for a
period not to exceed ninety (90) days. If, at the Close-out Date, the
aggregate amounts collected by the Surviving Corporation is greater than the
Net Best Amount, the difference shall be paid promptly by the Surviving
Corporation or Parent in the manner directed by the Stockholder Agents for
disbursement to the Stockholders.
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3.6 EXCHANGE OF CERTIFICATES: RECEIPT OF CASH; CREATION OF INDEMNITY
ESCROW.
(a) After the Effective Time, each Stockholder upon surrender of a
certificate evidencing shares of Company Common Stock to Exchange Agent as
provided in SECTION 3.6(c) hereof, shall be entitled to receive in exchange
therefor cash in the amount of the Nominal Per Share Cash Amount for each share
of Company Common Stock represented by such certificate as provided in this
ARTICLE III, without any interest thereon.
(b) Parent shall deposit with the Exchange Agent, in trust for the
benefit of the Stockholders, as promptly as practicable and in no event later
than immediately prior to the Effective Time, the total Nominal Consideration
(in immediately available funds) to which the Stockholders shall be entitled
pursuant to SECTION 3.3. The Exchange Agent may invest portions of the cash
deposited with it only in (i) direct obligations of the United States of America
or agencies thereof, including mortgage-backed securities issued by such
agencies, or (ii) commercial paper rated A-I or better by Standard & Poor's
Corporation and P-1 or better by Xxxxx'x Investors Service, Inc. and only as
directed by Parent. Any net profit resulting from, or interest or income
produced by, investments of cash deposited with the Exchange Agent shall be
payable to Parent or the Surviving Corporation, as Parent shall direct. Should
the funds remaining with the Exchange Agent at any time within one year after
the Effective Time be less than the aggregate amount of cash to which the
Stockholders shall then be entitled pursuant to this ARTICLE III, Parent shall
promptly deposit with the Exchange Agent the amount of such difference. Any
funds remaining with the Exchange Agent one year after the Effective Time shall
be released and repaid by the Exchange Agent to Parent or the Surviving
Corporation, as Parent shall direct, after which time persons entitled thereto
(including, without limitation, any Stockholder who has not yet surrendered
certificates for shares of the Company Common Stock) may and shall look, subject
to applicable abandoned property, escheat and other similar laws, only to Parent
or the Surviving Corporation for payment and shall have no greater rights
against Parent or the Surviving Corporation than may be accorded to general
creditors thereof under applicable law.
(c) As soon as practicable after the Effective Time, the Exchange
Agent shall send a notice and a transmittal form to each Stockholder (other than
the Company with respect to certificates formerly representing shares of Company
Common Stock to be canceled pursuant to SECTION 3.2(b) and the holders of
certificates representing Dissenting Shares) advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent such certificates for exchange. Each Stockholder, upon proper surrender
of one or more certificates representing the Company Common Stock owned by such
Stockholder to the Exchange Agent, together and in accordance with such
transmittal form, shall be entitled to receive in exchange therefor the holder's
Nominal Aggregate Per Share Cash Amount, without interest thereon.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a Stockholder for any amount which may be required to be paid
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
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(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Stockholder
claiming such certificate to be lost, stolen or destroyed, the Exchange Agent
will pay in exchange for such lost, stolen or destroyed certificate the Nominal
Per Share Cash Amount for each share of Company Common Stock represented
thereby, without interest thereon. When authorizing the payment of any Nominal
Per Share Cash Amount with respect to any allegedly lost, stolen or destroyed
certificate, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the Exchange Agent's payment thereof,
require the owner of such lost, stolen or destroyed certificate to give the
Surviving Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Surviving Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
(e) Adoption of this Agreement by the Stockholders shall constitute,
as an integral part of the Merger, ratification of the appointment of the
Exchange Agent or any successor thereto.
3.7 NO FURTHER TRANSFERS. After the Effective Time, there shall be no
registration of transfers of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time on the stock transfer books
of the Company.
3.8 DISSENTING SHARES. (a) Notwithstanding anything in this Agreement to
the contrary, no share of the Company Common Stock which is issued and
outstanding immediately prior to the Effective Time and which is held by a
Stockholder who has properly exercised and perfected appraisal rights under
SECTIONS 3-202 and 3-203 of the Md GCL (the "DISSENTING SHARES") shall be
converted into or be exchangeable for the right to receive the Nominal Per Share
Cash Amount, but such Stockholder shall be entitled to receive such
consideration as shall be determined pursuant to SECTION 3-211 of the Md GCL
with respect to such share (the "PER SHARE APPRAISAL AMOUNT"); PROVIDED,
HOWEVER, that if any such Stockholder shall have failed to perfect or shall have
effectively withdrawn or otherwise lost his or her rights to appraisal under the
Md GCL, such Stockholder's Dissenting Shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Nominal Aggregate Per Share Cash Amount for all
such shares, without any interest thereon, and such shares shall no longer be
Dissenting Shares.
(b) In the event that the aggregate Per Share Appraisal Amount
payable with respect to all Dissenting Shares as finally determined pursuant to
Md GCL Section 3-211 exceeds the Aggregate Dissenting Shares Amount held by the
Exchange Agent pursuant to Section 3.3(a) above, then the amount of such excess
shall be paid out of the Indemnity Escrow Fund by the Escrow Agent to the
Exchange Agent for distribution to the holders of the Dissenting Shares together
with the Aggregate Dissenting Shares Amount. In the event that all funds held
by the Exchange Agent have been released to Parent pursuant to Section 3.6(b) at
the time that the Per Share Appraisal Amount is finally determined, then the
amount of such excess shall be paid by the Escrow Agent to the Surviving
Corporation for distribution to the holders of Dissenting Shares in
substantially the same manner as set forth in the Exchange Agreement.
-10-
(c) In the event that the aggregate Per Share Appraisal Amount
payable with respect to all Dissenting Shares as finally determined pursuant to
Md GCL Section 3-211 is less than the Aggregate Dissenting Shares Amount held by
the Exchange Agent pursuant to Section 3.3(a) above, then the amount of such
difference shall be distributed by the Exchange Agent to the Stockholders other
than the holders of Dissenting Shares in accordance with the Exchange Agreement.
In the event that all funds held by the Exchange Agent have been released to
Parent pursuant to Section 3.6(b) at the time that the Per Share Appraisal
Amount is finally determined, then the amount of such difference shall be
distributed directly by Parent, or the Surviving Corporation on Parent's behalf,
to Stockholders in substantially the same manner as set forth in the Exchange
Agreement.
(d) Regardless of whether any payments are made pursuant to
Section 3.8(b) or 3.8(c) above, in the event that the Surviving Corporation
is assessed with any costs, fees, expenses or appraisers' compensation in
connection with a determination of the value of Dissenting Shares pursuant to
Md GCL Section 3-211, then the aggregate amount of all such expenses shall be
paid to the Surviving Corporation out of the Indemnity Escrow Fund.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Parent and Newco as follows:
4.1.1 CORPORATE ORGANIZATION AND GOOD STANDING; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland and has all corporate
power and authority to own or lease its properties and to carry on its business
as presently conducted. The Company has delivered to Parent and Newco complete
and correct copies of the articles of incorporation and bylaws of the Company
and all amendments thereto. The Company is duly qualified and in good standing
as a foreign corporation duly authorized to do business in all jurisdictions in
which the failure to be so qualified could reasonably be expected to have a
material adverse effect on (i) the properties, assets, operations, business or
financial condition of the Company and its Subsidiaries taken as a whole, (ii)
the properties, assets, operations, business or financial condition of
Shenandoah Valley Press or Port City Press, respectively or (iii) the ability of
the Company to consummate the transactions contemplated hereby (any of the
foregoing, a "MATERIAL ADVERSE EFFECT"). SCHEDULE 4.1.1(a) accurately sets
forth all jurisdictions in which the Company is so qualified.
(b) The Company does not own directly or indirectly any shares of
capital stock of any corporation other than the corporations listed on SCHEDULE
4.1.1(b) hereto (the "SUBSIDIARIES" and each a "SUBSIDIARY"). SCHEDULE 4.1.1(b)
accurately sets forth the jurisdiction of incorporation of each Subsidiary and
all jurisdictions in which each Subsidiary is qualified to do business. Each
Subsidiary is a corporation duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all corporate power and authority
to own or lease its properties and to carry its business as presently
conducted. The Company has caused each Subsidiary to deliver to Parent and
Newco complete and correct copies of its articles of incorporation and bylaws
and all amendments thereto. Each Subsidiary is duly qualified and in good
standing as a foreign corporation duly authorized to do business in all
jurisdictions in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
4.1.2 CAPITALIZATION OF THE COMPANY AND SUBSIDIARIES.
(a) The authorized, issued and outstanding capital stock of the
Company, and the record and beneficial ownership thereof, is as set forth on
SCHEDULE 4.1.2(a) hereto. All issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable. No options, warrants, conversion or other rights, agreements or
commitments of any kind obligating the Company, contingently or otherwise, to
issue or sell any shares of its capital stock of any class or any securities
convertible into or exchangeable for any such shares, are outstanding, and no
authorization therefor has been given. Except as set forth on SCHEDULE 4.1.2(a)
hereto, the Company is not obligated to repurchase or redeem any shares of its
capital stock.
(b) The authorized, issued and outstanding capital stock of each of
the Subsidiaries, and the record and beneficial ownership thereof, is as set
forth on SCHEDULE 4.1.2(b). All issued and outstanding shares of capital stock
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and non-assessable. No options, warrants, conversion or other rights,
agreements or commitments of any kind obligating any of the Subsidiaries,
contingently or otherwise, to issue, sell, repurchase or redeem any shares of
its capital stock of any class or any securities convertible into or
exchangeable for any such shares, are outstanding, and no authorization therefor
has been given. All Capital Stock of any Subsidiary held by the Company is held
free and clear of any security interests, liens, charges, encumbrances,
equities, claims, options, limitations or restrictions of whatever nature
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock).
(c) There are no preemptive or similar rights, and there are no
claims or any basis therefor, in either case whether by contractual agreement,
under applicable law or otherwise, on the part of any holder or former holder of
any class of securities of the Company or of any Subsidiary in connection with
any transactions between the Company and any such holder involving any of the
securities of the Company.
4.1.3 NO CONFLICT. The execution and delivery of this Agreement by
Company, the consummation by the Company and its Subsidiaries of the
transactions contemplated herein in the manner contemplated herein and
compliance by the Company and its Subsidiaries with any of the provisions hereof
or thereof, will not (a) conflict with or result in any violation of or default
under any provision of the respective articles of incorporation or bylaws of the
Company or any Subsidiary, (b) result in a breach of, or
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a default under, or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement, lease or other similar
instrument or obligation to which the Company or any Subsidiary is a party or
by which any of the businesses, properties or assets of the Company or any
Subsidiary may be bound, except for such breaches or defaults or rights of
termination, cancellation or acceleration as to which requisite waivers or
consents have been obtained or will be obtained prior to the Closing Date or
which could not reasonably be expected to have a Material Adverse Effect or
(c) violate any order, judgment, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any Subsidiary, or any of the
businesses, properties or assets of the Company or any Subsidiary.
4.1.4 FINANCIAL INFORMATION.
(a) The Company has delivered to Parent and Newco the consolidated
balance sheets of the Company and the Subsidiaries as of December 31, 1996 and
December 31, 1995, and the related consolidated statements of income, retained
earnings, and statements of cash flow for the years then ended, together with
the notes thereto, audited and reported upon by Xxxx Xxxxxx & Company, P.C. (the
"FINANCIAL STATEMENTS"). The Financial Statements are included as SCHEDULE
4.1.4(a) hereto. The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
present fairly the financial condition of the Company and the Subsidiaries at
the date indicated and the results of their operations for the period indicated.
(b) The Company has delivered to Parent and Newco the unaudited
consolidated balance sheet of the Company and the Subsidiaries as of August 31,
1997 (the "INTERIM BALANCE SHEET"), and the related consolidated statements of
income, and statements of cash flows for the eight month period then ended
("UNAUDITED INTERIM FINANCIALS"). The Unaudited Interim Financials are included
as SCHEDULE 4.1.4(b) hereto. The Unaudited Interim Financials have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis and present fairly the financial condition of the Company and
the Subsidiaries at the date indicated and the results of their operations for
the period indicated, subject, however, to normal, recurring year-end
adjustments consistent with past practices (which will not be material in the
aggregate) for preparation of the Company's interim financial statements;
PROVIDED, however, the Unaudited Interim Financials omit footnotes required
under generally accepted accounting principles.
4.1.5 UNDISCLOSED LIABILITIES. The Company and its Subsidiaries have
no liabilities or obligations (absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise), except (i) as set forth in SCHEDULE 4.1.5 or on any
other Schedule hereto, or reflected in either the Financial Statements (or the
notes thereto) or the Interim Balance Sheet; and (ii) for liabilities or
obligations which have not had, and could not reasonably be expected to have, a
Material Adverse Effect.
-13-
4.1.6 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 4.1.6,
the accounts receivable and all other receivables shown on the Financial
Statements and the Interim Balance Sheet and all receivables acquired or
generated by the Company and its Subsidiaries since August 31, 1997 (in each
case subject to reserves for non-collectibility as reflected on the books and
financial statements of the Company and its Subsidiaries and as adjusted, in
the ordinary course of business of the Company and its Subsidiaries in
connection with their respective businesses, consistent with past custom and
practice (the "ORDINARY COURSE OF BUSINESS"), for operations and transactions
through the Closing Date), (a) are reflected properly on the books and
financial statements of the Company and its Subsidiaries and (b) are valid
receivables subject, to the knowledge of the Company, to no set-offs or
counterclaims. The reserves for non-collectibility referenced above have
been reflected on the books and financial statements of the Company and its
Subsidiaries in accordance with generally accepted accounting principles.
The Company has provided Parent with an accurate schedule of the twenty (20)
largest customers of the Company and its Subsidiaries, in terms of sales
volume, for the year-to-date period ended August 31, 1997.
4.1.7 INVENTORY. Except as set forth in SCHEDULE 4.1.7, the
inventories reported on the Financial Statements and the Interim Balance Sheet
are stated at the lower of cost (first in, first out method) or market in
accordance with generally accepted accounting principles applied on a consistent
basis. Except as set forth in SCHEDULE 4.1.7, all inventories used in or
relating to the conduct of the respective businesses of the Company and its
Subsidiaries are usable or saleable in the Ordinary Course of Business (subject
to reserves for obsolescence as reflected on the books and financial statements
of the Company and its Subsidiaries and as adjusted, in the Ordinary Course of
Business, for operations and transactions through the Closing Date) and are
owned by the Company and its Subsidiaries free and clear of any mortgage,
security interest, pledge, lien, conditional sale agreement, charge or other
encumbrance (each, an "ENCUMBRANCE"). Such reserves have been reflected on the
books and financial statements of the Company in accordance with generally
accepted accounting principles. SCHEDULE 4.1.7 sets forth all paper supplied to
the Company and its Subsidiaries by its customers as of September 28, 1997.
4.1.8 INSURANCE. SCHEDULE 4.1.8 hereto completely and accurately
lists all primary, excess and umbrella policies, bonds and other forms of
insurance currently owned or held by or on behalf of and/or providing
insurance coverage to the Company, any Subsidiary or their respective
properties, assets and operations, or any of their respective directors,
officers, agents or employees. SCHEDULE 4.1.8 also sets forth the following
information for each such policy: type(s) of insurance coverage provided;
name of insurer; effective dates; policy number; per occurrence and annual
aggregate deductibles or self-insured retentions; per occurrence and annual
aggregate limits of liability and the extent, if any, to which the limits of
liability have been exhausted. No notice of termination or cancellation of
any such policy has been received by the Company or any Subsidiary, all such
policies are in full force and effect and, with respect to all such policies,
all premiums currently payable or previously due have been paid. Except as
set forth on SCHEDULE 4.1.8., none of such policies contains any provision
that would permit the termination, limitation, lapse, exclusion or change in
the
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terms of coverage (including, without limitation, a change in the limits of
liability) by reason of the consummation of the transactions contemplated by
this Agreement. Complete and accurate copies of all such policies and
related documentation have been made available to Parent and Newco.
4.1.9 LITIGATION. Except as set forth on SCHEDULE 4.1.9 hereto,
neither the Company nor any Subsidiary has received written notice of any
action, suit, proceeding or investigation at law, in equity or admiralty, or
before or by any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or threatened against,
or affecting the properties, assets or operations of the Company or any
Subsidiary that if adversely determined could reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect. There are
no orders, judgments, writs, injunctions or decrees currently in force (a) which
could reasonably be expected, either individually or in the aggregate, (i) to
result in any material liability on the part of the Company or any of its
Subsidiaries or (ii) to have a Material Adverse Effect; (b) with respect to
which the Company or any Subsidiary is in default; or (c) which questions the
validity of this Agreement or of any action taken or to be taken in connection
herewith or the consummation of the transactions contemplated herein.
4.1.10 GOVERNMENTAL AUTHORIZATIONS; COMPLIANCE WITH LAWS. (a) The
Company and each Subsidiary owns, holds or possesses in its own name, all
governmental licenses, franchises, permits, approvals and other governmental
authorizations, other than those the absence of which could reasonably be
expected to have a Material Adverse Effect (collectively, "GOVERNMENTAL
AUTHORIZATIONS"), which are necessary to entitle it to use its corporate name,
to own or lease, operate and use its assets and properties and to carry on and
conduct its business and operations as presently conducted. All such
Governmental Authorizations, and the relevant issuing agency, are listed on
SCHEDULE 4.1.10 hereto. Each Governmental Authorization listed on SCHEDULE
4.1.10 is valid, subsisting and in full force and effect and, to the best of the
Company's knowledge, no suspension or cancellation of any such Governmental
Authorization is pending or threatened and there is no basis for believing that
any such Governmental Authorization subject to renewal will not be renewed upon
expiration.
(b) Except as set forth on SCHEDULE 4.1.10 hereto, neither the
Company nor any Subsidiary is in violation of or default under any Governmental
Authorization, any statute, law, ordinance, rule or regulation applicable to it,
which could reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect.
4.1.11 TAX MATTERS. (a) The Company and each Subsidiary have filed or
will have filed prior to the Closing Date all federal, state, local and foreign
Tax Returns (as hereinafter defined) required to have been filed by each of them
on or before the Closing Date, and each such return is or will be true, correct
and complete in all material respects. The Company and each Subsidiary have
paid all Taxes (as hereinafter defined) due to any federal, state, local or
foreign taxing authority with respect to all periods prior to the date hereof
shown as due on said returns. The reserves for Taxes reflected in the Financial
Statements and the Interim Balance Sheet are sufficient for the payment of all
-15-
unpaid Taxes (whether or not currently disputed) accrued through the date
thereof. Since December 31, 1996, neither the Company nor any Subsidiary has
incurred any liability for Taxes other than in the Ordinary Course of Business.
Except as set forth on SCHEDULE 4.1.11 hereto, the Company has not received
written notice that the Internal Revenue Service or any other taxing authority
has asserted against the Company or any Subsidiary any deficiency or claim for
additional Taxes which has not been fully paid or finally settled, and any such
deficiency or assessment shown on such SCHEDULE 4.1.11 is being contested in
good faith through appropriate proceedings. No issue has been raised in writing
by any federal, state, local or foreign taxing authority in any examination of
the Company or any Subsidiary which, by application of the same or similar
principles to similar transactions by the Company or any Subsidiary could
reasonably be expected to result in a proposed deficiency for any period. To
the Company's knowledge, no state of facts exists or has existed which would
constitute grounds for the assessment of any liability for Taxes with respect to
the periods prior to the Closing Date which have not been audited by any taxing
authority. No power of attorney has been executed by the Company or any
Subsidiary with respect to any matter relating to Taxes which is currently in
force. Neither the Company nor any Subsidiary is a party to any agreement,
contract, or other arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE").
None of the Company or any Subsidiary has filed (or will file prior to the
Effective Time) a consent pursuant to Section 341(f) of the Code or has or will
have agreed to have Section 341(f) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any Subsidiary. Except as set forth on SCHEDULE 4.1.11,
neither the Company nor any Subsidiary has granted or requested, as the case may
be, any waiver of any statute of limitations with respect to, or any extension
of a period for the assessment or filing of, any federal, state, county,
municipal or foreign tax.
(b) For purposes of this Agreement, "TAXES" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state or local or any foreign taxing authority, including but
not limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, and including any interest,
penalties or additions attributable thereto, regardless of whether such
interest, penalties or additions are attributable to a taxable period ending
before, on or after the Closing Date.
(c) For purposes of this Agreement, "TAX RETURN" shall mean any
return, report, information return, schedule or other document (including any
related reporting information) filed or required to be filed with any taxing
authority with respect to any Taxes.
4.1.12 BROKERS; FINDERS. Other than Xxxxxxxx Xxxxxxx & Company
("BM&C"), whose fees and expenses will be paid by the Company at or prior to the
Closing, the Company has not retained any broker or finder in connection with
the transactions contemplated herein so as to give rise to any valid claim for
any brokerage or finder's commission, fee or similar compensation.
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4.1.13 ABSENCE OF CERTAIN CHANGES. Except as set forth on
SCHEDULE 4.1.13, (a) since December 31, 1996, no event, occurrence or
development has occurred with respect to the Company or any Subsidiary which has
had, or could reasonably be expected to have, a Material Adverse Effect or (b)
since the date of the Interim Balance Sheet, neither the Company nor any
Subsidiary has taken any action which, if taken after the date of this Agreement
without Parent's prior written consent, would violate SECTION 5.2 hereof.
4.1.14 PROPERTIES AND ASSETS. SCHEDULE 4.1.14 hereto sets forth a
complete and correct list of (a) all real property owned by the Company or a
Subsidiary, (b) any lease pursuant to which the Company or a Subsidiary is the
lessee of real property and (c) each item of tangible personal property used in
or relating to the conduct of the businesses of the Company and its Subsidiaries
that has been capitalized for accounting purposes. The Company and the
Subsidiaries have (a) good and valid title to all of their respective personal
property, including, without limitation, all those reflected in the Financial
Statements or acquired after the date of the Interim Balance Sheet (except for
inventories and other assets sold or otherwise disposed of in the Ordinary
Course of Business since such date), and (b) good and marketable title to all
the real property listed in SCHEDULE 4.1.14 as owned by them, and valid
leasehold interests in all real properties listed in SCHEDULE 4.1.14 as leased
by them, in each case free and clear of all mortgages, liens, charges,
encumbrances, easements, security interests or title imperfections other than
(i) those reflected in the Financial Statements or listed in SCHEDULE 4.1.14 and
(ii) those which do not, individually or in the aggregate, (x) materially
interfere with the operation of their businesses as presently conducted or
(y) otherwise have, or could reasonably be expected to have, a Material Adverse
Effect. The Company and each Subsidiary enjoys peaceful and undisturbed
possession under all real property leases under which it operates. The Company
has not received written notice that the ownership or lease of real property by
the Company and the Subsidiaries and the use thereof, as presently used by the
Company and the Subsidiaries, violates any local zoning or similar land use laws
or governmental regulations. The Company has not received written notice of
violation of or noncompliance with any covenant, condition, restriction, order
or easement affecting the real property owned or leased by the Company or the
Subsidiaries. Neither the Company nor any Subsidiary has received written
notice of condemnation or threatened condemnation affecting the real property
owned or leased by the Company or any Subsidiary. The Company has made
available to Parent and Newco complete and correct copies of the lease
agreements referred to in SCHEDULE 4.1.14. The personal property, equipment,
plants, buildings, structures, facilities and all other assets and properties
that will be owned or leased by the Surviving Corporation and/or the
Subsidiaries at the Effective Time will include all personal property,
equipment, plants, buildings, structures, facilities and all other assets and
properties necessary to permit the Surviving Corporation and each Subsidiary to
conduct their respective businesses as presently conducted, except for such
changes as are permitted by SECTION 5.2.
4.1.15 MATERIAL CONTRACTS. SCHEDULE 4.1.15 hereto lists all of the
Material Contracts (as hereinafter defined) to which the Company or a Subsidiary
is a party, or by which any of them is bound. As used in this SECTION 4.1.15,
the term "MATERIAL
-17-
CONTRACTS" shall mean any oral or written (a) lease or other agreement under
which the Company or a Subsidiary is lessee of, or holds or operates, any
machinery, equipment, vehicle or other tangible personal property owned by a
third party and which entails annual payments, in the case of any such lease
or other agreement, in excess of $50,000, (b) contract and agreement to which
the Company or a Subsidiary is a party and which are (i) outstanding
contracts with its present or former officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors, sales
agents or dealers other than (x) contract involving payments of $10,000 or
less which by their terms are cancelable by the Company or any Subsidiary
with notice of not more than 60 days and without cancellation penalties,
severance or other termination payments and (y) contract which provides for
payments based solely on commissions and require no minimum payments which by
their terms are cancelable by the Company or any Subsidiary with notice of
not more than 60 days and without cancellation penalties, severance or other
termination payments, (ii) pension, profit-sharing, bonus, retirement, stock
option or employee benefit plan or other similar plan or arrangement of the
Company or a Subsidiary, (c) mortgage, indenture, security agreement, pledge,
note, loan agreement or guaranty relating to the Company or any Subsidiary,
(d) contract and agreement between the Company and its stockholders or
between the Company and any person controlled by, controlling or under common
control with the Company or any Subsidiary, (e) guaranty of any obligation
for borrowings or performances, or guaranty or warranty of products or
services, excluding endorsements or guaranties of instruments made in the
Ordinary Course of Business in connection with the deposit of items for
collection and express product and statutory warranties, (f) contract for the
purchase of any real estate, machinery, equipment or other capital assets
with a purchase price exceeding $50,000, (g) contract pursuant to which it is
or may be obligated to make payments, contingent or otherwise, on account of
or arising out of prior acquisitions or sales of businesses, assets, or stock
of other entities, (h) sales commitment which continues for a period of more
than twelve (12) months, (i) contract or agreement which restricts the
Company's or any Subsidiary's ability to do business in any geographic area,
with any particular person or persons, or in any particular line of business
or industry and (j) other contracts and agreements to which the Company or a
Subsidiary is a party (other than (i) Governmental Authorizations listed in
SCHEDULE 4.1.10 and (ii) leases of real property listed in SCHEDULE 4.1.14)
with respect to which the aggregate annual amount reasonably expected to be
received or paid by the Company or a Subsidiary thereunder exceeds $50,000.
The Company has made available to Parent and Newco true, complete and correct
copies of all Material Contracts. Neither the Company nor any Subsidiary or,
to the knowledge of the Company, any other person is in default under any
Material Contract which default has had, or could reasonably be expected to
have a Material Adverse Effect. To the Company's knowledge, there is no
basis for any default or claim under any Material Contract that could
reasonably be expected to have a Material Adverse Effect, or event which,
with the passage of time, could reasonably be expected to have a Material
Adverse Effect.
4.1.16 INTELLECTUAL PROPERTY RIGHTS. (a) There are no trade names,
trademarks, patents, copyrights, service marks, patent applications or patent
licenses owned by or registered in the name of the Company or any of its
Subsidiaries or necessary to the respective businesses of the Company or any of
its Subsidiaries other
-18-
than those listed in SCHEDULE 4.1.16(a) hereto, which also lists (i) the
federal or foreign registration (or application) number and the date of
registration (or application) concerning registrations of any such trade
names, trademarks, copyrights, patents and any other registered trade right,
and any and all applications for any of the foregoing. The Company has
delivered to Parent and Newco true and complete copies of all registrations,
applications and related documents set forth on SCHEDULE 4.1.16(a).
(b) SCHEDULE 4.1.16(b) (i) lists all material intellectual property
rights owned by any third party which are not generally commercially available
and are currently used by the Company or any of its Subsidiaries in the conduct
of their respective businesses and (ii) states whether such use is or will be
pursuant to license, sublicense, agreement or permission. The Company has
delivered to Parent and Newco true and complete copies of all agreements and
other documents relating to the intellectual property rights set forth on
SCHEDULE 4.1.16(b).
(c) The Company and each Subsidiary owns or possesses adequate and
enforceable licenses or other rights to use (i) all intellectual property rights
listed on SCHEDULES 4.1.16(a) and 4.1.16(b), (ii) all computer software used by
the Company and any Subsidiary in the conduct of their respective businesses and
(iii) all other trade names, trademarks, patents, copyrights, service marks, all
applications for any of the foregoing, and all other trade secrets, designs,
plans, specifications and other intellectual property rights of every kind
(whether or not registered) that are used in, possessed by or necessary for the
conduct of their respective businesses (all of the items referred to in this
SECTION 4.1.16(c) being the "INTELLECTUAL PROPERTY").
(d) Entry into this Agreement and consummation of the transactions
contemplated hereby will not impair either the Company's or any Subsidiary's
ownership or use of the Intellectual Property. No person has a right to receive
a royalty or similar payment in respect of any item of Intellectual Property
pursuant to any contractual arrangements entered into by the Company or any
Subsidiary other than as set forth on SCHEDULE 4.1.16(b) hereto. Neither the
Company nor any Subsidiary has granted any license, sublicense or other similar
agreement relating in whole or in part to any Intellectual Property other than
as set forth on Schedule 4.1.16(b) hereto. Neither the Company nor any
Subsidiary has received written notice that the Company's and/or any
Subsidiary's use of any item of Intellectual Property is interfering with,
infringing upon or otherwise violating the rights of any third party in or to
such Intellectual Property, and no written notice has been received by the
Company or any Subsidiary alleging that the use or proposed use of any item of
Intellectual Property by the Company or any Subsidiary infringes upon or
otherwise violates any rights of a third party in or to such Intellectual
Property and, to the knowledge of the Company, no proceedings have been
instituted against the Company or any Subsidiary alleging any such claim. The
Company has no knowledge of any infringement, interference or other violation by
any third person of the Company's or any Subsidiary's rights in and to any of
the Intellectual Property.
4.1.17 LABOR MATTERS. Except as set forth on SCHEDULE 4.1.17, there
are (a) not in existence or, to the knowledge of the Company, threatened any
labor strikes, disputes, slowdowns, lockouts or work stoppages by employees of
the Company or any
-19-
of its Subsidiaries, and during the past five (5) years there has not been
any such action in existence or, to the knowledge of the Company, threatened,
(b) no collective bargaining agreements to which the Company or any
Subsidiary is a party, nor any side letter agreement or other writing, or
work rules or practices agreed to, with any labor organization or employee
association, (c) no grievance or arbitration proceedings arising out of any
arrangements, formal or informal, to which the Company or any Subsidiary is a
party relating to employment policies or (d) no unfair labor practice charges
or complaints against the Company or any of its Subsidiaries pending or, to
the knowledge of the Company, threatened, before the National Labor Relations
Board or any similar state or foreign agency, (e) no charges with respect to
or relating to the Company or any Subsidiary pending or, to the knowledge of
the Company, threatened before the Equal Employment Opportunity Commission or
any other state or foreign agency responsible for the prevention of unlawful
employment practices, (f) no representation of the employees of the Company
or any Subsidiary by any labor organization and, to the knowledge of the
Company, no union organizing activities among such employees nor, to the
Company's knowledge, any question concerning such representation concerning
such employees, (g) no written notices received by the Company or any
Subsidiary of the intent of any federal, state, local or foreign agency
responsible for the enforcement of any labor or employment laws to conduct an
investigation with respect to or relating to the Company or any Subsidiary,
nor, to the Company's knowledge, is any such investigation in progress, (h)
no written personnel policies, rules or procedures applicable to any
employees of the Company or any Subsidiary, except as set forth in employee
handbooks, complete and accurate copies of which have been made available to
Parent and Newco, nor any representation regarding longevity of employment to
any such employee, (i) no instances of noncompliance by the Company or any
Subsidiary with any applicable law or regulation respecting employment or
employment practices, terms and conditions of employment, wages, hours of
work and, to the Company's knowledge, occupational safety and health, except
where such noncompliance would not individually or in the aggregate have, or
could not reasonably be expected to have, a Material Adverse Effect. Since
the enactment of the Worker Adjustment and Retraining Notification Act of
1988 (the "WARN ACT"), neither the Company nor any Subsidiary has effectuated
or experienced (x) a "plant closing" (as defined in the WARN Act) affecting
any site of employment or one or more facilities or operating units within
any site of employment or facility used by the Company or any Subsidiary or
(y) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility used by the Company or any Subsidiary, nor has the
Company or any Subsidiary been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger
application of any similar state, local or foreign law.
4.1.18 NO CONSENT. Other than as set forth on SCHEDULE 4.1.18 hereto
and for compliance with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 and the rules and regulations thereunder (the
"HSR ACT"), no consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person
("CONSENT") is required to be obtained by the Company in connection with the
execution and delivery of this Agreement by the Company, or the consummation by
the Company of the Merger and the other transactions contemplated herein, or the
performance by the Company and its
-20-
Subsidiaries of any of the provisions hereof, other than any Consent where
the failure of the Company to obtain such Consent, either in any case or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
4.1.19 AUTHORIZATION. The Company has all requisite corporate power
and authority to enter into and perform this Agreement and to consummate the
transactions contemplated herein, and this Agreement has been duly executed and
delivered by the Company pursuant to all necessary corporate authorization and
is the legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforcement may be limited by equitable
principles limiting the right to obtain specific performance or other equitable
remedies, or by applicable bankruptcy or insolvency laws and related decisions
affecting creditors' rights generally.
4.1.20 COMPLIANCE WITH ERISA. (a) SCHEDULE 4.20 contains a complete
and accurate list of each employee pension benefit plan (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (each a "PENSION PLAN"), including without limitation any
multiemployer plan as defined in Section 3(37) of ERISA (each a "MULTIEMPLOYER
PLAN"); employee welfare benefit plan (as defined in Section 3(1) of ERISA (each
a "WELFARE PLAN"); or any other written or oral plan, contract, or other
arrangement of benefit to any group of employees, including without limitation,
profit-sharing, deferred compensation, stock purchase, stock option, severance
or termination pay, supplemental unemployment benefits or similar arrangement
("OTHER BENEFIT PLANS") contributed to or required to be contributed to by the
Company or any Subsidiary or by any trade or business, whether or not
incorporated (an "ERISA AFFILIATE"), that together with the Company or any
Subsidiary would be deemed as of the Closing Date a "single employer" within the
meaning of section 4001 of ERISA, in each case maintained as of the Closing
Date, for the benefit of any employee or terminated employee of the Company or
any Subsidiary for work performed for the Company or any Subsidiary or for such
persons' beneficiaries.
(b) With respect to each Pension Plan, the Company has heretofore
delivered or will prior to the Closing Date deliver to Parent and Newco true and
complete copies of each of the following documents:
(i) a copy of each current Pension Plan document, including
all amendments;
(ii) a copy of the most recent summary plan description of each
Pension Plan and any summaries of material modifications thereto;
(iii) a copy of the most recent report prepared with respect
thereto, if any, in accordance with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for Pensions;
(iv) a copy of the three (3) most recent Forms 5500, 5500-C or
5500-R required to be filed for each Pension Plan; and
-21-
(v) with respect to each Pension Plan that has received a
determination letter from the Internal Revenue Service regarding its
qualified status under Section 401(a) of the Code, a copy of the most
recent Internal Revenue Service determination letter and any subsequently
filed determination letter request.
(c) To the knowledge of the Company, each Pension Plan has been
operated and administered in all material respects in accordance with its terms
and with ERISA and the Code.
(d) Each Pension Plan (or its prototype) which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable letter from the Internal Revenue Service regarding its tax-qualified
status.
(e) To the knowledge of the Company, none of the Pension Plans or
their fiduciaries has engaged in a non-exempt "prohibited transaction" (within
the meaning of ERISA and the Code) which might, directly or indirectly, subject
such Pension Plan, the Company or any Subsidiary to liability for any losses,
expenses, damages, penalties or excise Taxes.
(f) Except as set forth in SCHEDULE 4.20, neither the Company nor any
Subsidiary has "withdrawn" from any Multiemployer Plan. All contributions
required to be made to any Multiemployer Plan so listed have been made on or
before their due dates.
(g) Each Pension Plan that the Company, any Subsidiary or any ERISA
Affiliate maintains, or to which the Company, any Subsidiary or an ERISA
Affiliate is obligated to contribute, other than any Pension Plan that is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA),
is, as of the respective last annual valuation date for each such Pension Plan
in compliance with Section 412 of the Code. None of such Pension Plans has an
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived.
(h) Except as set forth in SCHEDULE 4.1.20, no Welfare Plan or Other
Benefit Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
of the Company or any Subsidiary for work performed for the Company or any
Subsidiary beyond their retirement or other termination of service (other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any Pension Plan, (iii) deferred compensation benefits accrued as
liabilities on the books of the Company and its Subsidiaries, or (iv) benefits
the full premium cost of which is borne by the current or former employee (or
his beneficiary)).
(i) With respect to the employees and former employees of the Company
or any Subsidiary, their spouses and their dependents, the Company and each
Subsidiary is in compliance in all material respects with the notice and
continuation
-22-
coverage requirements of Section 4980B(f) of the Code and regulations
thereunder ("COBRA").
(j) No Welfare Plan contains any provisions expressly limiting the
right of the Company or any Subsidiary to amend or terminate such Welfare Plan,
and to the Company's knowledge no communications have been made to employees
that would have the effect of preventing the Company or any Subsidiary from
amending or terminating any Welfare Plan.
(k) Except as set forth in SCHEDULE 4.1.20, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or officer of the Company or any Subsidiary to severance pay,
except as expressly provided in this Agreement or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
(l) There are no pending or, to the knowledge of the Company,
anticipated or threatened claims by or on behalf of any Pension Plan, by any
employee or beneficiary covered under any such Pension Plan, or otherwise
involving any such Pension Plan (other than routine claims for benefits).
4.1.21 ENVIRONMENTAL MATTERS. (a) Except as set forth or referred to
in SCHEDULE 4.1.21, the Company and each Subsidiary and the properties and
assets used in their respective businesses are in compliance with all applicable
Environmental Laws (as defined below) and, to the knowledge of the Company,
there are no circumstances of a significant nature which may materially prevent
or interfere with compliance in the future. Except as set forth or referred to
in SCHEDULE 4.1.21, in the last five (5) years, neither the Company nor any
Subsidiary has received any communication (whether written or, to the knowledge
of the Company, oral), whether from a governmental authority, citizen group,
employee or otherwise, that alleges that the Company, any Subsidiary, or any of
the properties or assets used in their respective businesses is not in full
compliance with Environmental Laws. The Company and the Subsidiaries hold all
permits, licenses, registrations and other governmental authorizations currently
held by the Company or any Subsidiary pursuant to Environmental Laws
(collectively, "PERMITS") necessary for the conduct of their business and
operations as currently conducted prior to the Closing Date. The Company has
made available to Parent and Newco the Permits. Except as set forth on
SCHEDULE 4.1.21, the Company and each Subsidiary is, and has been for the last
five (5) years, in compliance with all Permits except where the failure so to
comply could not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary has been notified by any relevant
governmental authority that any Permit will be modified, suspended or revoked or
cannot be renewed in the ordinary course of business.
(b) Except as set forth or referred to in SCHEDULE 4.1.21, there is
no Environmental Notice (as defined below) that is pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary. Neither the
Company nor any Subsidiary has received any written notice with respect to any
Environmental Notice
-23-
pending or threatened against any person or entity whose liability for such
Environmental Notice may have been retained or assumed by or could reasonably
be imputed or attributed, in whole or in part, to the Company or any
Subsidiary.
(c) Except as set forth or referred to in SCHEDULE 4.1.21, there are
no past or present actions, activities, circumstances, conditions, events or
incidents arising from the operation, ownership or use of any property currently
or, formerly owned, operated or used by the Company or any Subsidiary (or, to
the knowledge of the Company, any entity formerly an affiliate of the Company or
any Subsidiary), including, without limitation, the release, emission, discharge
or disposal of any Material into the Environment (each as defined below), that
could reasonably be expected to form the basis of any Environmental Notice
against or with respect to the Company or any Subsidiary.
(d) Except as set forth or referred to in SCHEDULE 4.1.21, to the
knowledge of the Company, there have been no suspected or acknowledged releases
of Materials at, from or onto any property adjacent to any property currently or
formerly owned, operated or used by the Company or any Subsidiary (or any entity
formerly an affiliate of the Company or any Subsidiary).
(e) Without in any way limiting the generality of the foregoing, to
the knowledge of the Company or any Subsidiary, (i) all underground storage
tanks, and the capacity and contents of such tanks, located on property owned,
leased or used by the Company or any Subsidiary are set forth or referred to in
SCHEDULE 4.1.21, (ii) except as set forth or referred to in SCHEDULE 4.1.21,
there is no asbestos contained in or forming part of any building, building
component, structure or office space owned, leased or used by the Company or any
Subsidiary, (iii) except as set forth or referred to in SCHEDULE 4.1.21, no
polychlorinated biphenyls (PCB's) are used or stored on any property owned,
leased or used by the Company or any Subsidiary, and (iv) all locations
currently or formerly owned, leased or used by the Company or any Subsidiary (or
any former affiliate of the Company or any Subsidiary) at which any Material
generated, used, owned or controlled by the Company or any Subsidiary or any
former affiliate of the Company or any Subsidiary (or by any previous owner or
operator) may have been disposed of or released into the Environment (as defined
below) are set forth or referred to in SCHEDULE 4.1.21.
(f) The Company has identified for Parent and Newco all
environmental audits, assessments, inspections, or occupational health
studies of which the Company has knowledge relating to the properties and
assets used in the businesses or the conduct of the businesses undertaken by,
or at the direction of, any governmental authority, the Company or any
Subsidiary, any predecessor-in-interest or any prior potential purchaser.
(g) For purposes of this Agreement:
(i) "ENVIRONMENT" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and
any indoor workplace.
-24-
(ii) "ENVIRONMENTAL NOTICE" means any written notice by any
person or entity alleging potential civil or criminal liability (including,
without limitation, potential liability for investigatory costs, cleanup
costs, governmental costs, harm or damages to person, property, natural
resources or other fines or penalties) arising out of, based on or
resulting from (a) the emission, discharge, treatment, storage, disposal,
release or threatened release in or into the Environment of any Material or
(b) circumstances forming the basis of any violation, or alleged violation,
of any applicable Environmental Law or Permit provision.
(iii) "ENVIRONMENTAL LAWS" means all national, state, local
and foreign laws, codes, regulations, common law, requirements, directives,
orders, and administrative or judicial interpretations thereof, all as in
effect on the date hereof or on the Closing Date, that may be enforced by
any governmental agency or court, relating to pollution, the protection of
the Environment, or the emission, discharge, treatment, storage, disposal,
release or threatened release of Materials in or into the Environment.
(iv) "MATERIALS" means pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes, as such terms are
defined in any applicable Environmental Law, and includes, without
limitation, petroleum products and their constituent parts.
4.1.22 COMPANY ACTION. The Board of Directors of the Company, at a
meeting duly called and held, has by the unanimous vote of all directors
(i) determined that the Merger is fair and in the best interests of the Company
and its stockholders, (ii) adopted this Agreement in accordance with the
provisions of the Md GCL, and (iii) directed that this Agreement and the Merger
be submitted to the stockholders of the Company for their adoption and approval
in accordance with the Md GCL and resolved to recommend that stockholders of the
Company vote in favor of the adoption of this Agreement, the transactions
contemplated herein and the approval of the Merger.
4.1.23 BOOKS AND RECORDS. The minute books and other similar records
of the Company and each Subsidiary contain true and complete records of all
actions taken at any meetings of the stockholders of the Company, Board of
Directors or any committee thereof and of all written consents executed in lieu
of the holding of any such meeting, except for those occurring before March 26,
1976.
4.1.24 DISCLOSURE. The representations and warranties by the Company
and its Subsidiaries in this Agreement and the statements contained in the
schedules, certificates, exhibits, instruments and other writings furnished and
to be furnished by the Company and its Subsidiaries to Parent and Newco pursuant
to this Agreement do not and will not contain any untrue statement of a material
fact, and do not and will not omit to state any material fact necessary to make
the statements herein or therein not misleading.
- 25 -
4.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO. Parent and Newco
represent and warrant to the Company as follows:
4.2.1 NEWCO'S CORPORATE STATUS. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Newco is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland. Each of Parent and Newco has
all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein and perform its
obligations hereunder. Each of Parent and Newco has delivered to the Company
complete and correct copies of its articles of incorporation and bylaws and all
amendments thereto.
4.2.2 AUTHORITY FOR AGREEMENT; NO CONFLICT. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein have been duly authorized by each of Parent and Newco. This Agreement
has been duly executed and delivered by each of Parent and Newco and constitutes
the valid, legal and binding obligation of each, enforceable in accordance with
its terms, except as enforcement may be limited by equitable principles limiting
the right to obtain specific performance or other equitable remedies, or by
applicable bankruptcy or insolvency laws and related decisions affecting
creditors' rights generally. The execution and delivery of this Agreement by
each of Parent and Newco and the consummation by each of the transactions
contemplated herein do not and will not conflict with or result in any violation
of or default under any provision of its respective articles of incorporation or
by laws or of any material provision of note, mortgage, indenture, deed of
trust, loan agreement or other agreement to which each is a party or under any
other material instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to either of Parent or Newco or any of their respective properties. Except as
set forth on SCHEDULE 4.2.2 hereto, no Consent is required to be obtained by
Parent or Newco in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated herein, except where the
failure to obtain such Consent, either individually or in the aggregate, does
not have a material adverse effect on the ability of Company or Newco to
consummate the transactions contemplated herein.
4.2.3 LITIGATION. Except as set forth on SCHEDULE 4.2.3 hereto,
neither Parent nor Newco has received written notice of any action, suit,
proceeding or investigation pending or threatened against Parent or Newco and
there are no orders, writs, injunctions or decrees currently in force which (a)
could reasonably be expected, either individually or in the aggregate, to result
in any material liability on the part of Parent or Newco that are not adequately
covered by insurance, or (b) question the validity of this Agreement or of any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated herein.
4.2.4 BROKERS; FINDERS. Neither Parent nor Newco has retained any
broker or finder in connection with the transactions contemplated herein so as
to give rise to any valid claim for any brokerage or finder's commission, fee or
similar compensation.
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4.2.5 BUYER'S INVESTIGATION. Each of Parent and Newco has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the merger of Newco and the Company. Parent
and Newco each confirm that Parent and Newco have conducted inspections of the
properties and financial and other records of the Company and the Subsidiaries
and have engaged in other due diligence with respect to the Company and the
Subsidiaries and their business, financial affairs, and operations. Parent and
Newco have had an opportunity to ask questions of the Company, certain of the
Company's Stockholders, certain employees (as requested) and the officers of the
Company relating to the business, management and financial affairs of the
Company and the Subsidiaries, Parent and Newco have had an opportunity to
acquire such additional information and documents about the business and
financial condition of the Company and the Subsidiaries as Parent or Newco has
requested and all such information and documents have been received by Parent or
Newco; and Parent and Newco have had an opportunity to examine all books and
records of the Company and the Subsidiaries.
4.2.6 FINANCIAL ABILITY TO PERFORM. Parent and Newco have sufficient
funds, and credit arrangements or financing commitments with responsible
financial institutions to deliver the aggregate Consideration described in
ARTICLE III hereof and the other amounts payable by it hereunder at the Closing
and to take such other actions as may be required by it to consummate the
transactions contemplated herein. Parent and Newco have provided to the Company
a copy of such financing commitments pursuant to which it intends to enter into
agreements (the "FINANCING AGREEMENTS") to provide Parent and/or Newco and/or
the Surviving Corporation with sufficient funds to consummate the transactions
contemplated herein.
4.2.7 FINANCIAL CONDITION. Parent has heretofore delivered to the
Company the audited financial statements for its operating subsidiary, Perry
Graphic Communications, Inc., a Delaware corporation (the "OPERATING COMPANY")
for the year ended December 31, 1996 (the "OPERATING COMPANY FINANCIALS"). The
Operating Company Financials are true, correct, and complete in all material
respects and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and present fairly the financial
condition of the Operating Company at the date indicated and the results of its
operations for the period indicated.
ARTICLE V.
CERTAIN COVENANTS
5.1 ACCESS AND INFORMATION; CONFIDENTIALITY. The Company will give to
Parent and Newco and their representatives (upon reasonable advance notice and
during normal business hours) full and complete access to its properties, books,
records, contracts and commitments and will furnish all such information and
documents relating to its properties and business as Parent or Newco may
reasonably request. Notwithstanding the foregoing, such access, investigation,
analysis and evaluation of the Company by Parent and Newco shall not release the
Company and its Subsidiaries from any of their respective representations,
warranties, covenants or agreements contained in or
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contemplated by this Agreement, nor be deemed to constitute a waiver or
compromise of Parent's and Newco's rights to enforce against the Company and
its Subsidiaries any provision of this Agreement. Parent and Newco will
furnish to the Company and its representatives all such information and
documents relating to Newco and Parent as the Company may reasonably request.
Each of the parties will treat, and will cause its representatives to treat,
all information that is received under this SECTION 5.1, if not in the public
domain, as confidential, PROVIDED that during the term of this Agreement
Parent and Newco may in good faith show any such information to any potential
lender or equity participant or other advisors who first agree to treat such
information as confidential. If the Closing shall not occur as contemplated
hereby, Parent and Newco will return to the Company, and the Company will
return to Parent and Newco, all documents containing any such information
delivered to Parent and Newco or the Company and their representatives and
all copies thereof.
5.2 CONDUCT OF BUSINESS OF THE COMPANY. (a) From the date hereof to the
Closing, the Company will, and will cause each Subsidiary to, (i) conduct its
operations and business only in the Ordinary Course of Business, (ii) maintain
and keep its properties and equipment in good repair, working order and
condition, except for ordinary wear and tear, (iii) keep in full force and
effect all insurance now maintained, (iv) perform in all material respects all
of its obligations under all Material Contracts, (v) use commercially reasonable
efforts to maintain and preserve all material Intellectual Property, (vi) use
commercially reasonable efforts to maintain and preserve its business
organization intact, to retain its present employees so that they may be
available after the Closing, and to maintain its relationships with suppliers
and customers so that they may be preserved after the Closing, (vii) maintain
its books of account and records in the usual and regular manner, (viii) comply
in all material respects with all laws and regulations applicable to it and to
the conduct of its business, and (ix) promptly advise Parent and Newco in
writing of any event or development that has, or could reasonably be expected to
have, a Material Adverse Effect, including without limitation any damage,
destruction or loss of any property or assets (whether or not covered by
insurance) and any breach, default, termination, or any notice thereof, under
any Material Contract.
(b) In addition, from and after the date hereof, neither the Company
nor any Subsidiary shall, without the prior written consent of Parent, (i)
issue, sell or deliver, or agree to issue, sell or deliver any additional shares
of its capital stock or any options, warrants or rights to acquire any such
capital stock, or securities convertible into or exchangeable for such capital
stock, (ii) mortgage, pledge or subject to any lien, lease, security interest or
other charge or encumbrance, its assets, tangible or intangible, other than in
the Ordinary Course of Business, (iii) dispose of any assets or properties
having a fair market value, individually or in the aggregate, in excess of
$50,000, or enter into any agreement or other arrangements for any such
disposition, other than in the Ordinary Course of Business, (iv) declare, make,
pay or set apart any sum for any dividend or other distribution to its
stockholders or purchase or redeem any shares of its capital stock or any
option, warrant or right to purchase any of its capital stock, or reclassify its
capital stock, (v) increase the wages, salaries, compensation, pension or other
benefits payable to any employee or grant any severance or termination pay
(except such as shall have occurred in the Ordinary Course of Business,
including normal periodic
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performance review and related compensation and benefit increases), or enter
into any employment agreement with any officer or salaried employee which is
not terminable by the employer, without cause and without penalty, upon
notice of 30 days or less, (vi) forgive or cancel any material debts or
claims or waive, amend, cancel or terminate any rights of material value,
(vii) incur any indebtedness for borrowed money, except in the Ordinary
Course of Business, (viii) amend its articles of incorporation or by laws,
(ix) merge or consolidate with or agree to merge or consolidate with, or
purchase substantially all of the assets of, or otherwise acquire, any
business or any business organization or division thereof or (x) amend or
modify any agreement, understanding, arrangement or policy respecting
indemnification of its directors or officers.
5.3 BEST EFFORTS. Each of the Company, Parent and Newco shall use its
reasonable best efforts to take or cause to be taken all actions required to
consummate the Merger and the other transactions contemplated hereby including,
without limitation, such actions as may be necessary to obtain prior to the
Closing all necessary governmental or other third-party approvals and consents
required to be obtained by them in connection therewith. In addition, the
Company shall use, and cause each Subsidiary to use, its reasonable best efforts
to assist Parent in obtaining or establishing all licenses, permits, benefits,
plans, programs or contractual arrangements, including welfare benefit plans,
necessary for the Surviving Corporation to conduct the businesses of the Company
and its Subsidiaries in substantially the manner in which they were conducted
prior to the Closing.
5.4 NO SOLICITATION. Unless and until this Agreement shall have been
terminated pursuant to SECTION 9.1, the Company shall not directly or
indirectly, through any of its officers, directors, agents, brokers (including
without limitation BM&C) (a) solicit, initiate or encourage the submission of
inquiries, proposals or offers (each, a "PROPOSAL") from, or engage in any
discussions with, any corporation, partnership, person, or other entity or group
relating to any transaction involving the sale of the assets or shares of stock
of the Company or any Subsidiary, or relating to or involving any merger,
consolidation or business combination involving the Company or any Subsidiary,
(b) except as customary in the Ordinary Course of Business, disclose any
information to any person concerning the business and assets of the Company or
any Subsidiary, or afford any person access to the properties, books and records
of the Company or any Subsidiary, (c) otherwise assist any person or facilitate
their efforts in connection with any of the foregoing or (d) cause or permit any
Subsidiary, directly or indirectly through its officers, directors, agents,
brokers (including without limitation BM&C) to do any of the foregoing. The
Company shall immediately give notice to Parent and Newco upon the Company's or
any Subsidiary's receipt of any written or oral Proposal, and the terms and
conditions thereof, and shall consult with Parent prior to any response thereto.
5.5 FINANCIAL INFORMATION. Prior to the Closing, the Company shall provide
to Parent and Newco, as soon as such information becomes available, financial
statements for the Company and its Subsidiaries for each accounting period of
the Company, and such other financial information as Parent and Newco may
reasonably request. Such financial statements shall be prepared in the same
form and in accordance with the same conditions as the Unaudited Interim
Financial Statements.
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5.6 AUTHORIZATION OF AGREEMENT AND MERGER. As promptly as practicable
after the date hereof, the Company shall take all necessary and appropriate
corporate actions necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated herein by the
Company, and the consummation of the Merger, including without limitation
using its best efforts to solicit and obtain the consent of its stockholders
thereto. The materials submitted to the Company's stockholders shall be
subject to review and approval by Parent and Newco, and shall include without
limitation, information regarding the Company, the terms of the Merger and
this Agreement, the recommendation of the Board of Directors of the Company
in favor of the Merger and this Agreement, the existence and procedures for
exercise of stockholders' dissenters' rights and all other information
required under applicable law.
5.7 HSR NOTIFICATION. As soon as practicable, the Company and Newco will
file, or cause to be filed by their appropriate parent entities, with the
Federal Trade Commission and with the Antitrust Division of the Department of
Justice the notification and documentation material required to be filed under
the HSR Act, in connection with the Merger of the Company and Newco pursuant to
this Agreement. Thereafter, the parties will promptly file any additional
information requested as soon as practicable after receipt of a request for
additional information and will use all reasonable efforts to obtain early
termination of the applicable waiting period under said Act.
5.8 TREATMENT OF EMPLOYEES. Parent shall (i) give each employee of the
Company and the Subsidiaries credit for all past service for all purposes
(including for purposes of determining eligibility, vesting, computation of
Benefits and any applicable waiting and entitlement periods) and (ii) waive any
pre-existing condition restricting benefits in connection with its employee
benefit plans to the same extent as if such employees had been employees of
Parent during the times of their respective employment by the Company or the
Subsidiaries, as the case may be.
5.9 PORT CITY PRESS. Parent shall cause the Surviving Corporation to hold
as a subsidiary of the Surviving Corporation, and shall cause the Surviving
Corporation to operate, Port City Press for a reasonable period of time
following the Closing Date sufficient to evaluate the business conducted by Port
City Press, and shall provide to Port City Press working capital and management
support at a level which is at least consistent with the current operations of
Port City Press prior to the Closing.
5.10 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. Parent or
the Surviving Corporation shall purchase a "tail" which extends the discovery
period under the Company's existing officers' and directors' liability insurance
issued by National Union Fire Insurance Company of Pitts., Pa., Policy Number
000-00-00 ("D&O POLICY") for a period of not less than three years after the
Effective Time. The Company has heretofore furnished a copy of the D & O Policy
to Parent.
5.11 POST-CLOSING OPERATIONS OF THE COMPANY. (a) Without limiting
the generality or specificity of any provision of this Agreement, Parent agrees
that it shall cause the Surviving Corporation after the Closing Date to:
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(i) Continue in effect any leases relating to vehicles under
lease ("Auto Leases") and made available to the employees listed in
SCHEDULE 5.11 hereto for either the duration of such Auto Lease or until
the termination of such employee's employment by the Surviving Corporation
or a Subsidiary, whichever first occurs, and upon either such event, the
employee shall have the right to buy out the lease or purchase the vehicle,
as the case may be, in accordance with the terms and conditions of the
applicable Auto Lease or the plan under which such Auto Lease was written.
In the case of Xxxx-Xxx Xxxxxx, the Surviving Corporation shall continue at
the level immediately prior to the Closing Date the payments being made in
lieu of providing a vehicle under lease for the same period, as set forth
on SCHEDULE 5.11.
(ii) Continue in effect the monthly payments of unfunded
pension benefits to the three retired Xxxx & Xxxxxxxxx employees for their
respective lives (an aggregate of $3,600 per year for the three employees)
and to Xxxxxxxx Xxxxxxx ("Xxxxxxx") through February 28, 1998, which is the
date on which the Company's obligation to Xxxxxxx expires (a total of
$2,252.64 per year).
(iii) Continue in effect through December 31, 1997 the
Company's Pension Plan and its 401(k) Plan for all eligible employees and
to make all contributions for calendar year 1997 required to be made by the
Company thereunder and to match employee contributions as required by such
plans.
(iv) Continue in effect through December 31, 1997 the Company's
Profit Sharing, Management Incentive Bonus, and Christmas Bonus plans in
accordance with the terms, conditions and eligibility requirements in
effect for each such plan at the date of this Agreement, including without
limitation the funding by the Company under each such plan. Without
limiting the generality of the foregoing, the Christmas Bonus will be paid
to each eligible employee at its normal time; distribution of amounts, if
earned, for Profit Sharing and under the Management Incentive Bonus Plan
shall be made to eligible individuals not later than March 15, 1998, and
any employee terminating employment after the Merger has occurred but prior
to actual distribution of any such amount to which such employee may have
become entitled shall receive the employee's full share under such plan as
if such person had been employed on December 31, 1997. The amounts to be
distributed and the persons to whom such amounts will be distributed under
each such plan shall be determined jointly by the Surviving Corporation and
by Xxxx'x Compensation Committee ("Compensation Committee") as constituted
as of the date of this Agreement, of which Xxxx X. Xxxxxxxxx is Chairman,
whether or not the persons on the Compensation Committee are employed by
the Surviving Corporation or any Subsidiary on March 15, 1998.
(v) Continue in effect through December 31, 1997 the
Company's Sales Incentive Plans for sales persons for Xxxx'x,
Shenandoah Valley Press, and Port City Press, and any such sums earned
by such
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persons who are employed as of the Closing Date shall be paid
not later than March 15, 1998, regardless of whether such persons are
employed by any of such entities on December 31, 1997.
(b) If the Merger has not occurred prior to December 31, 1997, Parent
agrees that it will not assert that it is excused from performing under this
Agreement as a result of the Company taking actions as may be appropriate to
accomplish and perform any of the foregoing or to obligate the Surviving
Corporation for comparable periods of time.
ARTICLE VI.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PARENT AND NEWCO
All obligations of Parent and Newco to consummate the Merger under
this Agreement are subject to the fulfillment and satisfaction, prior to or at
the Closing (at which the Effective Time is scheduled by the parties to occur),
of each of the following conditions, any one or more of which may be waived by
Parent and Newco in writing.
6.1 STOCKHOLDER APPROVALS. This Agreement and the Merger shall have
been submitted to a vote of the Company's stockholders entitled to vote
thereon at a meeting of such stockholders called for such purpose, in
accordance with the Md GCL (including, without limitation, SECTIONS 3-201 ET
SEQ. thereof respecting dissenting stockholders' rights) and with the
Articles of Incorporation, as amended, and the By-Laws of the Company and
shall have been approved and adopted by the holders of the requisite number
of shares of the Company Common Stock under such applicable law and the
Articles of Incorporation, as amended, and By-Laws of the Company, and all
other corporate action necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation of the
Merger and other transactions contemplated hereby shall have been duly and
validly taken, and the Company shall have full corporate power and authority
to consummate the Merger and perform this Agreement on the terms provided
herein.
6.2 CONSENTS. (a) Other than Consents that if not obtained could not
reasonably be expected to have a Material Adverse Effect, all of the Consents
identified or referred to on SCHEDULE 4.1.18 and any other Consents necessary
for the consummation of the transactions contemplated by this Agreement by the
Company shall have been obtained.
(b) Without limiting the generality of the foregoing, the pre-merger
filing and waiting period requirements applicable to the Merger under the HSR
Act shall have expired or shall have been terminated.
6.3 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of the Company contained in this Agreement and any Schedule or Annex
hereto or instrument, certificate, or agreement delivered to Parent or Newco
pursuant
- 32 -
hereto will be true and correct at and as of the Closing Date as if made on
and as of such date and time, other than any such representations and
warranties which are made as of a specific date, which shall be true and
correct at and as of such date, in each case except to the extent affected by
the transactions contemplated hereby or to the extent that the breach thereof
could not reasonably be expected to have a Material Adverse Effect, and the
Company shall have delivered to Parent a certificate to such effect signed,
on behalf of the Company, by the President and the Chief Financial Officer of
the Company.
6.4 PERFORMANCE BY THE COMPANY. Each of the obligations of the Company to
be performed by it on or before the Closing pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or prior to
the Closing, and the Company shall have delivered to Parent a certificate to
such effect signed, on behalf of the Company, by the President and the Chief
Financial Officer of the Company.
6.5 FUNDED INDEBTEDNESS. Parent shall have received a true, correct,
complete and executed Certificate of Indebtedness, as required under SECTION
3.3(b) hereof.
6.6 ESCROW AGREEMENT. The requisite parties shall have executed and
delivered the Escrow Agreement.
6.7 EXCHANGE AGREEMENT. The requisite parties shall have executed and
delivered the Exchange Agreement.
6.8 OPINION OF COUNSEL. Parent and Newco shall have received a favorable
opinion, addressed to Parent and Newco and dated the Closing Date of the Merger,
of Berliner, Xxxxxxxx & Xxxx, L.L.P., special counsel to the Company, in form
and substance reasonably satisfactory to them.
6.9 MISCELLANEOUS. The Company shall deliver to Parent and Newco such
other certificates, instruments and other documents as are reasonably requested
by Parent and Newco.
6.10 NO PROCEEDING OR LITIGATION. No action, suit, proceeding or
investigation shall have been commenced, nor any law, rule or regulation
enacted, which questions or challenges the validity of this Agreement, of any
action taken or to be taken in connection herewith, the consummation of the
transactions contemplated herein or imposing damages or relief in connection
with any of the foregoing.
6.11 DEMANDS OF DISSENTING STOCKHOLDERS. There shall not be any written
demands or objections made under SECTIONS 3-202 and 3-203 of the Md GCL which
have not been withdrawn or otherwise have become ineffective under the Md GCL by
persons holding in the aggregate more than five percent (5%) of the shares of
the Common Stock outstanding immediately prior to Closing.
6.12 INFORMATION; NO ADVERSE CHANGE. (a) The Company shall have provided to
Parent and Newco, such financial statements, plans of operation, cash flow
analyses,
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projections, and other financial information with respect to the Company and
any Subsidiary as are reasonably requested by Parent and Newco.
(b) Since the date of the Interim Balance Sheet, there shall not have
been any event, occurrence or development with respect to the Company,
Shenandoah Valley Press or Port City Press having, or which could reasonably be
expected to have, a Material Adverse Effect.
ARTICLE VII.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF COMPANY
All obligations of the Company to consummate the Merger and the other
transactions contemplated under this Agreement are subject to the fulfillment
and satisfaction, prior to or at the time of the Closing (at which the Effective
Time is scheduled by the parties to occur), of each of the following conditions,
any one or more of which may be waived by the Company in writing. Obtaining
financing to consummate the Transaction shall not be a condition to performance
under this Agreement.
7.1 STOCKHOLDER APPROVALS. This Agreement and the Merger shall be
submitted to a vote of the Company's stockholders entitled to vote thereon at a
meeting of such stockholders called for such purpose, in accordance with the Md.
Code (including, without limitation, SECTIONS 3-201 ET SEQ. respecting
dissenting stockholders' rights) and with the Articles of Incorporation, as
amended, and ByLaws of the Company and shall have been approved and adopted by
the holders of the requisite number of shares of the Company Common Stock under
such applicable law and the Articles of Incorporation, as amended, and By-Laws
of the Company, and all other corporate action necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the Merger and other transactions contemplated hereby shall have
been duly and validly taken, and the Company shall have full corporate power and
authority to consummate the Merger on the terms provided herein.
7.2 CONSENTS. (a) All Consents listed on SCHEDULE 4.2.2 and any other
Consent necessary for the consummation by Parent and Newco of the transactions
contemplated by this Agreement shall have been obtained.
(b) Without limiting the generality of the foregoing, the pre-merger
filing and waiting period requirements applicable to the Merger under the HSR
Act shall have expired or shall have been terminated.
7.3 REPRESENTATIONS AND WARRANTIES TRUE. At the Effective Time, the
representations and warranties of Parent and Newco contained in this Agreement
or any Schedule or Annex hereto or any certificate delivered to the Company
pursuant hereto or otherwise made in writing to the Company in connection with
the transactions contemplated hereby will be true and correct in all material
respects at and as of such date and time as if made on and as of such date and
time, other than any such
- 34 -
representations and warranties which are make as of a specified date, which
shall be true and correct in all material respects at and as of such date, in
each case, except to the extent affected by the transactions contemplated
hereby and except to the extent waived by the Company, at the Effective Time,
each of Parent and Newco shall have delivered to the Company a certificate to
such effect signed, on behalf of Parent, by the President and Chief Financial
Officer of Parent, and, on behalf of Newco, by an authorized officer of Newco.
7.4 PERFORMANCE BY PARENT AND NEWCO. Each of the obligations of Parent
and Newco to be performed by them on or before the Effective Time (as the case
may be) pursuant to the terms of this Agreement shall have been duly performed
in all material respects at the Effective Time (as the case may be), except to
the extent waived by the Company and, at the Effective Time, each of Parent and
Newco shall have delivered to the Company a certificate to such effect signed,
on behalf of Parent, by the President and Chief Financial Officer of Parent and,
on behalf of Newco, by an authorized officer of Newco.
7.5 ESCROW AGREEMENT. The requisite parties shall have executed and
delivered the Escrow Agreement.
7.6 EXCHANGE AGREEMENT. The requisite parties shall have executed and
delivered the Exchange Agreement.
7.7 OPINION OF COUNSEL. The Company shall have received a favorable
opinion, addressed to it and dated the Effective Time, of Xxxxxxx, Phleger &
Xxxxxxxx, LLP, counsel for Newco and Parent, in form and substance reasonably
satisfactory to it.
7.8 NO PROCEEDING OR LITIGATION. No action, suit, proceeding or
investigation shall have been commenced which questions the validity of this
Agreement or of any action taken or to be taken in connection herewith or the
consummation of the transactions contemplated herein.
ARTICLE VIII.
INDEMNIFICATION
8.1 LIMITED RESPONSIBILITY FOR COMPANY WARRANTIES. The representations,
warranties, covenants and agreements of the Company set forth in SECTION 4.1
hereof (including the confirmation thereof at the Closing pursuant to SECTION
6.3 hereof) and in any Schedule, certificate, document, instrument or other
agreement delivered by the Company or any Subsidiary pursuant hereto (the
"COMPANY WARRANTIES" and individually a "COMPANY WARRANTY") are not and shall
not be deemed to be representations and warranties of the Stockholders. In the
event of breach of any one or more of the Company Warranties, any liability and
responsibility therefor shall be limited to the Indemnity Escrow Amount and the
Additional Escrow Amount as and to the extent provided herein and shall be on
the terms and conditions and within the limitations provided in SECTION 8.2
hereof.
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8.2 INDEMNIFICATION OF PARENT. (a) Subject to the terms, conditions and
limitations hereinafter provided in this SECTION 8.2, the Stockholders, by
virtue of the approval of the Merger, and without the further act of any
Stockholder, hereby agree to indemnify, defend and hold harmless Parent and the
Surviving Corporation from and against any Loss, as hereinafter defined, and
agree to pay to Parent and the Surviving Corporation from the Indemnity Escrow
Fund or the Additional Escrow Fund as provided herein and only therefrom the
amount of any Loss. As used herein, "LOSS" means any and all losses, damages,
liabilities, claims, actions, suits, proceedings, penalties, fines and all other
expenses, including without limitation the costs of defense thereof (including
reasonable attorneys' fees and disbursements), suffered or incurred by Parent or
the Surviving Corporation or any of their respective shareholders, officers,
directors or agents by reason of or arising out of (i) the breach of any Company
Warranty (other than the Company Warranty set forth in SECTION 4.1.24, which
shall not survive the Closing), such breach being determined for purposes of
this ARTICLE VIII without regard to any materiality or Material Adverse Effect
qualification set forth in such Company Warranties (as if such qualifications
were not part of such Company Warranties), and with respect to the Company
Warranties set forth in SECTION 4.1.21, without regard to the matters set forth
on SCHEDULE 4.1.21 (as if such Schedule were not part of this Agreement), or
(ii) the breach of any covenant or agreement made by the Company in this
Agreement (together with breaches under SUBSECTION (i) a "COMPANY BREACH"), but
subject to each and all of the terms, conditions and limitations set forth in
this ARTICLE VIII.
(b) The obligation of the Stockholders to indemnify Parent and the
Surviving Corporation pursuant to this SECTION 8.2 shall be limited in each of
the following respects:
(i) In the event of a breach of the Company Warranty set forth in
SECTION 4.1.2, the Surviving Corporation and Parent shall in good faith
seek recovery for their Losses under the D&O Policy, provided, however,
that the Surviving Corporation and Parent shall not be required to initiate
or pursue any legal action to seek such recovery. To the extent that the
Surviving Corporation and Parent have not recovered their Losses under the
D&O Policy, forty-five cents of each dollar of Loss shall be paid to the
Surviving Corporation or Parent, as the case may be, from each of the
Additional Escrow Fund and the Indemnity Escrow Fund (it being understood
that the Surviving Corporation and Parent shall not be entitled to any
indemnity with respect to ten cents of each dollar of Loss arising out of a
breach of the Company Warranty set forth in SECTION 4.1.2) until such time
as the amount then remaining in the Indemnity Escrow Fund shall have been
fully disbursed, or reserved in respect of a claim with respect to one or
more other Company Breaches or other claims which may be made against the
Indemnity Escrow Fund pursuant to this Agreement, in which case any
remaining Loss shall be paid from the amount then remaining in the
Additional Escrow Fund. In the event of any Loss as a result of any other
Company Breach, the amount finally determined to be due to Parent or the
Surviving Corporation as provided in SECTION 8.3 hereof shall be paid
solely from the amount then remaining in the Indemnity Escrow Fund.
- 36 -
(ii) The amount required to be held in the Indemnity Escrow
Fund and the Additional Escrow Fund shall be reduced by one-third of the
Indemnity Escrow Amount and the Additional Escrow Amount on each of the
first three anniversary dates of the Closing Date less the aggregate Losses
claimed with respect to Company Breaches as to which Parent and/or the
Surviving Corporation shall have in good faith given the Stockholders (or
their duly authorized agent(s) or representative(s)) written notice
specifying the Company Warranty or Warranties or covenant or agreement
alleged to have been breached by reference to a specific subsection or
subsections of this Agreement and/or the relevant Schedule, certificate,
document, instrument or other agreement, together with a description in
reasonable detail of the nature and basis of the asserted breach (a "Notice
of Claim"), and against which a claim can be made by virtue of the terms
hereof that has not been resolved.
(iii) Notwithstanding the foregoing, other than with respect to a
breach of the Company Warranty set forth in SECTION 4.1.2, no
indemnification shall be due from either the Indemnity Escrow Fund or the
Additional Escrow Fund with respect to the first Two Hundred Fifty Thousand
Dollars ($250,000) of aggregate Losses (the "Deductible Amount") resulting
from one or more Company Breaches, provided that no Loss in connection with
a separate claim of less than Twenty Five Hundred Dollars ($2,500) shall
count against the Deductible Amount.
(iv) Unless a Notice of Claim with respect to the breach of any
Company Warranty is made by Parent and received by the Stockholder
Committee in accordance with the provisions of Section 8.3 prior to the
first anniversary of the Closing Date, neither Parent nor the Surviving
Corporation shall have any claim for any Loss resulting from a breach of
such Company Warranty, except that a Notice of Claim may be made for a Loss
arising in respect of the Company Warranties set forth in SECTIONS 4.1.2,
4.1.11 AND 4.1.21 provided it is received by the Stockholder Committee at
any time prior to the third anniversary of the Closing Date.
(v) The Indemnity Escrow Fund and the Additional Escrow Fund
shall be the sole means of providing funds pursuant to this SECTION 8.2.
Parent's recourse for Company Breaches shall be limited to the amount then
remaining in the Indemnity Escrow Fund and the Additional Escrow Fund and
available under the terms hereof with respect to the Loss claimed, and the
Stockholders shall never have personal liability for any obligation of the
Company under this Agreement.
8.3 NOTICE OF CLAIM; RIGHT TO DEFEND. If a third party commences any
action, suit or proceeding or asserts any claim, demand or assessment
(hereinafter individually or collectively referred to as a "THIRD PARTY CLAIM")
in respect of which Parent claims or proposes to claim a Loss, the Stockholder
Committee shall be given prompt notice thereof by Parent. Thereafter, Parent
shall furnish to the Stockholder Committee, in reasonable detail, such
information as it may have with respect to such claim, action, suit
- 37 -
or proceeding, including copies of any summons, complaint, or other pleading
which may have been served or any written claim, demand, invoice, billing or
other document evidencing or asserting the same. Parent shall designate in
writing all information and documents which it furnishes to the Stockholder
Committee pursuant to this SECTION 8.3 as being with respect to a claim,
action, suit or proceeding under this SECTION 8.3. The Stockholders shall
have the right, acting through the Stockholder Committee, subject to the
provisions of this SECTION 8.3, to assume control of the defense, compromise
or settlement thereof if (a) the amount of the Third Party Claim does not
exceed the then remaining amount in the Indemnity Escrow Fund and/or the
Additional Escrow Fund, as the case may be, against which a claim may be
asserted under SECTION 8.2(b) hereof, and (b) the Stockholder Committee
acknowledges the intention of the Stockholders to so defend by written notice
to Parent within twenty (20) days after receipt of the notice of the Third
Party Claim. Parent shall be entitled to defend such claim until it receives
such notice. If the Stockholders are entitled to assume such defense and
control and elect to do so, (i) the defense against the Third Party Claim
shall be conducted by the Stockholder Committee, at the expense of the
Stockholders, with counsel selected by the Stockholder Committee and
reasonably satisfactory to Parent, (ii) Parent shall be entitled to
participate in (but not control) such defense with its counsel and at its
expense, (iii) the Stockholder Committee shall keep Parent fully advised as
to the conduct of the defense if Parent has chosen not to participate in the
defense, and (iv) no compromise or settlement shall be agreed to or made
without Parent's written consent, which shall not be unreasonably withheld,
delayed or conditioned. If the Stockholders elect to assume control of the
defense, but fail to defend against the Third Party Claim as aforesaid,
Parent may assume control of the defense and settle the Third Party Claim at
the Stockholders' expense (up to then remaining amount in the Indemnity
Escrow Fund and/or the Additional Escrow Fund, as the case may be).
If the Stockholders do not elect, or do not have the right, to assume
control of the defense, (x) Parent shall conduct the defense, with counsel
selected by Parent and reasonably satisfactory to the Stockholder Committee, (y)
the Stockholders, acting through the Stockholder Committee, shall be entitled to
participate in (but not control) such defense at their expense, and (z) Parent
shall keep the Stockholder Committee fully advised as to its conduct of such
defense, if the Stockholders have chosen not to participate in the defense.
Parent shall be free to compromise or settle such claim unless the Stockholder
Committee within ten (10) days after receipt of notice of the proposed
compromise or settlement admits in writing that the full amount of such claim if
adversely determined shall constitute a Loss for which indemnity shall be due to
Parent hereunder. If such admission is made, no compromise shall be agreed to
or made without the written consent of the Stockholder Committee, which shall
not be unreasonably withheld.
8.4 ACTION BY COMPANY STOCKHOLDERS. For purposes of this ARTICLE VIII, a
majority in interest of members of the Stockholder Committee, measured by the
number of shares of the Company Common Stock held by them on the date hereof,
shall be entitled to make all decisions required pursuant to this Article VIII
and to take any actions so determined and bind thereby all of the Company
Stockholders. No bond shall be required of the Stockholder Committee, and the
Stockholder Committee shall not
- 38 -
receive any compensation for services rendered. A decision, act, consent or
instruction of the Stockholder Committee shall constitute a decision of all
of the Stockholders on the matters referred to in this ARTICLE VIII and shall
be final, binding and conclusive upon each of the Stockholders, and the
Escrow Agent, Parent and the Surviving Corporation may rely upon any such
decision, act, consent or instruction of the Stockholder Committee as being
the decision, act, consent or instruction of each and every Stockholder. The
Escrow Agent, Parent and the Surviving Corporation are hereby relieved from
any liability to any person for any acts done by them in accordance with any
such decision, act, consent or instruction of the Stockholder Committee.
8.5 SOLE AND EXCLUSIVE REMEDY. The provisions for indemnification as
provided in this ARTICLE VIII shall constitute Parent's and the Surviving
Corporation's sole and exclusive remedy for any Losses sustained by Parent or
the Surviving Corporation or any of their respective shareholders, officers,
directors or agents and shall be limited as provided in this ARTICLE VIII.
8.6 INDEMNIFICATION OF STOCKHOLDERS. Parent shall indemnify, defend, and
hold the Stockholders harmless from and against any claims, expenses, damages,
liabilities, losses, and expenses (including reasonable attorney's fees and
disbursements) by reason of, or arising out of the breach of any representation,
warranty or covenant of Parent or Newco contained in this Agreement or the
conduct of the business and operations of the Company or the Subsidiaries after
the Effective Time. The Stockholder Committee shall act for the Stockholders
with respect to any such claim for indemnification and the provisions of SECTION
8.3 shall apply thereto except that the references to the parties shall be
reversed as appropriate.
ARTICLE IX.
MISCELLANEOUS
9.1 TERMINATION. This Agreement may be terminated, by written notice by
the terminating party to the other parties, at any time prior to the Effective
Time, whether before or after approval by the Company's Stockholders or
authorization by the shareholders of Newco:
(a) by mutual consent of Newco and the Company; or
(b) by Newco if any of the conditions set forth in ARTICLE VI hereof
shall not have been fulfilled on or prior to the date specified for fulfillment
thereof, or shall have become incapable of fulfillment, or Newco shall have
learned of any misrepresentation of a material fact which has a material adverse
effect on the Company and its Subsidiaries taken as a whole, and any of the
foregoing shall not have been waived by Newco; or
(c) by the Company if any of the conditions set forth in ARTICLE VII
hereof shall not have been fulfilled on or prior to the date specified for
fulfillment thereof, or shall have become incapable of fulfillment, or the
Company shall have
- 39 -
learned of any misrepresentation of a material fact, and any of the foregoing
shall not have been waived by the Company; or
(d) by the Company or by Parent if the Effective Time has not
occurred on or before December 12, 1997, unless such failure so to consummate
the merger shall be due to the failure of the party seeking to terminate this
Agreement to perform in all material respects each of its obligations under
this Agreement required to be performed by it on or prior to the Effective
Time pursuant to the terms hereof; provided, however, that the December 12,
1997 date specified herein shall be extended to December 17, 1997 if BT Xxxx
Xxxxx Incorporated shall have entered into a purchase agreement with respect
to at least $100,000,000 of senior subordinated notes of Parent (the "NOTE
OFFERING"), that is scheduled to close on or before December 17, 1997.
If this Agreement is terminated in accordance with the foregoing provisions,
all further obligations of the parties hereunder shall terminate, except that
nothing herein will relieve any party from liability for any breach of this
Agreement which gave rise to such termination.
9.2 [Intentionally Omitted.]
9.3 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges and
agrees that the other would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached and is entitled to enforce
specifically this Agreement and the terms and provisions thereof in any
action instituted in any court of the United States or any state thereof
having jurisdiction over Parent, Newco and the Company and the matter, in
addition to any other remedy to which they may be entitled, at law or in
equity.
9.4 EXPENSES. Except as otherwise provided in this Agreement, the Company
shall assume and bear all expenses, costs and fees incurred or assumed by the
Company Stockholders hereto and the Company in the preparation and execution of
this Agreement and compliance herewith, and Parent shall assume and bear all
expenses, costs and fees incurred or assumed by Newco and Parent in the
preparation and the execution of this Agreement and compliance herewith, in each
case whether or not the merger provided for herein shall be consummated.
9.5 PUBLIC ANNOUNCEMENTS. Except as may otherwise be required by law,
neither Parent nor Newco shall, directly or indirectly, make or cause to be made
any public announcement or issue any notice in any form with respect to this
Agreement or the transactions contemplated herein without the prior written
consent of the Company, and none of the Company or any Subsidiary shall,
directly or indirectly, make or cause to be made any public announcement or
issue any notice in any form with respect to this Agreement or the transactions
contemplated herein without the prior written consent of Parent.
- 40 -
9.6 ASSIGNMENT; SUCCESSORS. This Agreement shall not be assigned by any
party hereto without the prior written consent of all of the other parties;
provided, however, that Parent and the Surviving Corporation may assign this
Agreement as collateral to the financial institutions providing the financing or
the refinancing of the senior credit facilities funding the transactions
contemplated hereby. This Agreement shall inure to the benefit of, and be
binding on and enforceable against, the successors and permitted assigns of the
respective parties hereto.
9.7 AMENDMENT AND MODIFICATION; WAIVERS. This Agreement or any term
hereof may be changed, waived, discharged or terminated only by an agreement in
writing signed by the party against which such change, waiver, discharge or
termination is sought to be enforced. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained herein
shall be effective unless in writing, and no waiver in any one or more instances
shall be deemed to be a further or continuing waiver of any such condition or
breach in any other instances or a waiver of any other condition or breach of
any other term, covenant, representation or warranty.
9.8 NOTICES. All notices, consents, requests, instructions, approvals and
other communications provided for herein and all legal process in regard hereto
shall be validly given, made or served, if in writing and delivered personally
or sent by telecopier, telex (with confirmation copy by any other means herein
provided) or registered or certified mail, postage prepaid, if to the Company at
the following address:
Xxxx'x Incorporated
0000 Xxxxxxxxx Xxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx Xxxxxxxxx
FAX No. 000-000-0000
with copies to:
Berliner, Xxxxxxxx & Xxxx, LLP
0000 00xx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxxxxxx
FAX No. 000-000-0000
if to Newco or Parent at:
Perry Graphic Communications
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
FAX No. 000-000-0000
with a copy to:
- 41 -
Novamil Corporation
0000-X Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
FAX No. 000-000-0000
and to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
FAX No. (000) 000-0000
- 42 -
and if to the Stockholder Agents or the Stockholder Committee at:
Xxxx X. Xxxxxxxxx
00000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
FAX No. 000-000-0000
or, in each case, at such other address as may be specified in writing, but
no such change shall be deemed to have been given until it is actually
received by the parties sought to be charged with its contents. All notices
and other communications given hereunder shall be effective upon delivery if
delivered personally or sent by telecopier or telex and if delivered by mail
shall be effective three business days after deposit in the United States
mail.
9.9 FURTHER ASSURANCES; RECORDS. (a) Each of the parties hereto agrees to
execute all such further instruments and documents and to take all such further
action as any other party may reasonably require in order to effectuate the
terms and purposes of this Agreement. Each party shall provide the other party
or parties with access to all relevant documents and other information
pertaining to the Company and the Subsidiaries which are needed by such other
party or parties for the purposes of preparing tax returns or responding to an
audit by any governmental agency or for any other reasonable purpose. Such
access will be during normal business hours and not subject to time limitations,
except as provided below. Further, for a period extending three years after the
Effective Time, Newco shall not destroy or otherwise dispose of any records of
the Company or the Subsidiaries, or permit the Company or the Subsidiaries to do
so, relating to the period prior to Newco's merger with the Company. After such
three-year period until six years after the Effective Time, Newco may destroy or
otherwise dispose of (or permit the Company or the Subsidiaries to destroy or
other dispose of) such records if Newco, the Company or the Subsidiary shall
have first offered in writing to surrender such records to the members of the
Stockholder Committee and no such person shall have agreed in writing to take
possession thereof during the thirty-day period after such offer is made. After
such six-year period Newco may destroy or otherwise dispose of such records and
may permit the Company or the Subsidiaries to destroy or otherwise dispose of
such records.
(b) The Company shall cooperate with Parent and Newco in connection
with the Note Offering, including, without limitation, providing Parent and
Newco and their representatives with access to such personnel, documents and
other information, in each case as may be reasonably requested in connection
therewith.
9.10 HEADINGS; ENTIRE AGREEMENT; COUNTERPARTS; GOVERNING LAW. The article
and section headings and the table of contents contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement, together with the Schedules,
Annexes and Exhibits hereto, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement may be executed in
any number of counterparts, each
- 43 -
of which shall be deemed an original, and all of which, together, shall
constitute one and the same instrument. This Agreement shall be governed in
all respects, including validity, interpretation and effect, by the law of
the State of New York (other than the law governing conflict of law
questions).
IN WITNESS WHEREOF, the parties have duly executed this Plan and Agreement
of Merger as of the date first above written.
XXXXX ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------
Title: Vice President & Secretary
----------------------------
PPC HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------
Title: Secretary
---------------------------
XXXX'X, INCORPORATED
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------------
Title: President
---------------------------
- 44 -
GUARANTY
In order to induce Xxxx'x, Incorporated (the "Company") to enter into
the above Plan and Agreement of Merger dated as of October 17, 1997 (the
"Agreement") with PPC Holdings, Inc. ("Parent") and Newco ("Newco"), and in
consideration of the benefits and advantages to be derived from the Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Perry Graphic Communications, Inc., a Delaware
corporation ("Perry"), hereby unconditionally and irrevocably guarantees to
the Company and its Stockholders the due and punctual performance of and
compliance with each and every covenant, term and condition contained in the
Agreement to be performed or complied with by Parent and Newco in accordance
with the terms of the Agreement. Such guaranty is an absolute,
unconditional, primary, present and continuing guaranty of performance and
compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce performance or compliance by Parent or
Newco or upon any other action, occurrence, event or circumstance whatsoever.
Upon any default by Parent or Newco punctually to perform or comply with any
covenant, term or condition under the Agreement to be performed or complied
with by Parent or Newco, Perry will promptly perform or comply therewith or
cause the same to be performed or complied with. Upon consummation of the
transactions contemplated by the Agreement at the Effective Time (as defined
in the Agreement), this guaranty shall terminate and be of no force and
effect.
IN WITNESS WHEREOF, this Guaranty has been duly executed by Perry as of the
17th day of October 1997.
PERRY GRAPHIC COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Its:
- 45 -
ANNEX I
In addition to the words and terms elsewhere defined in the Agreement, the
following words and terms as used in this Agreement shall have the following
meanings, unless the context or use indicates another or different meaning or
intent:
ADDITIONAL ESCROW AMOUNT: the meaning specified in SECTION 3.3(a).
ADDITIONAL ESCROW FUND: the meaning specified in SECTION 3.3(a).
ADJUSTED TARGET WORKING CAPITAL: the meaning specified in SECTION 3.4(b).
ADJUSTED WORKING CAPITAL: the meaning specified in SECTION 3.4(a).
ADJUSTMENT AMOUNT: the meaning specified in SECTION 3.4(a).
ADJUSTMENT ESCROW AMOUNT: the meaning specified in SECTION 3.3(a).
ADJUSTMENT ESCROW FUND: the meaning specified in SECTION 3.3(a).
AGGREGATE DISSENTING SHARES AMOUNT: the meaning specified in SECTION
3.3(a).
AGREEMENT: the meaning specified in the introductory paragraph.
AMENDED ARTICLES: the meaning specified in SECTION 2.1.
AMENDED BYLAWS: the meaning specified in SECTION 2.1
BENEFIT PLANS: the meaning specified in SECTION 4.1.17.
BM&C: the meaning specified in SECTION 4.1.12.
CERTIFICATE OF INDEBTEDNESS: the meaning specified in SECTION 3.3(b).
CERTIFICATE OF MERGER: the meaning specified in SECTION 1.1.
CLOSING AND CLOSING DATE: the meanings specified in SECTION 1.3.
CLOSING BALANCE SHEET: the meaning specified in SECTION 3.5(b).
COBRA: the meaning specified in SECTION 4.1.21(i).
CODE: the meaning specified in SECTION 4.1.11(a).
COMPANY: the meaning specified in the introductory paragraph.
COMPANY BREACH: the meaning specified in SECTION 8.2(a).
- 46 -
COMPANY COMMON STOCK: the meaning specified in the Recitals.
COMPANY TRANSACTION EXPENSES: all expenses and other amounts incurred
or accrued by the Company and the Company Stockholders in connection with the
initiation, negotiation, consummation and performance of this Agreement, the
Merger and all other transactions contemplated herein, including without
limitation, the fees and expenses of advisors, consultants, accountants,
lawyers, investment bankers, brokers, agents and other professionals,
including the fee payable to BM&C.
COMPANY WARRANTIES: the meaning specified in SECTION 8.1.
CONSENT: the meaning specified in SECTION 4.1.19.
CONSTITUENT CORPORATION: the meaning specified in the introductory
paragraph.
DISSENTING SHARES: the meaning specified in SECTION 3.8.
D & O POLICY: the meaning specified in SECTION 5.10.
EFFECTIVE TIME: the meaning specified in SECTION 1.1.
ENCUMBRANCE: the meaning specified in SECTION 4.1.7.
ENVIRONMENT: the meaning specified in SECTION 4.1.22(g).
ENVIRONMENTAL LAWS: the meaning specified in SECTION 4.1.22(g).
ENVIRONMENTAL NOTICE: the meaning specified in SECTION 4.1.22(g).
ERISA: the meaning specified in SECTION 4.1.21(A).
ERISA AFFILIATE: the meaning specified in SECTION 4.1.21(a).
ESCROW AGENT: the meaning specified in SECTION 3.3(c.
ESCROW AGREEMENT: the meaning specified in SECTION 3.3(c).
ESCROW AMOUNTS: the meaning specified in SECTION 3.3(a).
ESTIMATED ADJUSTMENT AMOUNT: the meaning specified in SECTION 3.4(b).
EXCHANGE AGENT: the meaning specified in SECTION 3.6(a).
FINANCIAL STATEMENTS: the meaning specified in SECTION 4.1.4(a).
FINANCING AGREEMENTS: the meaning specified in SECTION 4.2.5.
- 47 -
FUNDED INDEBTEDNESS: the meaning specified in SECTION 3.3(b).
GOVERNMENTAL AUTHORIZATIONS: the meaning specified in SECTION 4.1.10.
HSR ACT: the meaning specified in SECTION 4.1.19.
INDEMNITY ESCROW ACCOUNT: the meaning specified in SECTION 8.2(b).
INDEMNITY ESCROW AGREEMENT: the meaning specified in SECTION 8.2(b).
INDEMNITY ESCROW AMOUNT: the meaning specified in SECTION 3.3(a).
INDEMNITY ESCROW FUND: the meaning specified in SECTION 3.3(a).
INDEPENDENT ACCOUNTANT: the meaning specified in SECTION 3.5(b).
INTELLECTUAL PROPERTY: the meaning specified in SECTION 4.1.17(c).
INTERIM BALANCE SHEET: the meaning specified in SECTION 4.1.4(b).
KNOWLEDGE: with respect to an individual making a representation to his or
her "knowledge" or having "knowledge," those facts and circumstances personally
known by such individual; and with respect to an entity making a representation
to its "knowledge" or having "knowledge," those facts and circumstances
personally known by any officer or director of such entity identified on ANNEX
II attached hereto.
LIMITATION DATE: the meaning specified in SECTION 8.2(b)(i).
LOSS: the meanings specified in SECTION 8.2(a).
MATERIALS: the meaning specified in SECTION 4.1.22(g).
MATERIAL ADVERSE EFFECT: the meaning specified in SECTION 4.1.1(a).
MATERIAL CONTRACTS: the meaning specified in SECTION 4.1.16.
MD GCL: the meaning specified in SECTION 1.1.
MERGER: the meaning specified in the Recitals.
MULTIEMPLOYER PLAN: the meaning specified in SECTION 4.1.21(a).
NEWCO: the meaning specified in the introductory paragraph.
NEWCO COMMON STOCK: the meaning specified in the Recitals.
- 48 -
NOMINAL AGGREGATE PER SHARE CASH AMOUNT: the meaning specified in
SECTION 3.3(a).
NOMINAL CONSIDERATION: the meaning specified in SECTION 3.3(a).
NOMINAL PER SHARE CASH AMOUNT: the meaning specified in SECTION 3.3(a).
NOTE OFFERING: the meaning specified in SECTION 9.1.
OBJECTION NOTICE: the meaning specified in SECTION 3.5(b).
OPERATING COMPANY: the meaning specified in SECTION 4.2.6.
OPERATING COMPANY FINANCIALS: the meaning specified in SECTION 4.2.6.
ORDINARY COURSE OF BUSINESS: the meaning specified in SECTION 4.1.6.
ORDINARY COURSE OF BUSINESS: the meaning specified in SECTION 4.1.6.
OTHER BENEFIT PLANS: the meaning specified in SECTION 4.1.21(a).
PARENT: the meaning specified in the introductory paragraph.
PENSION PLAN: the meaning specified in SECTION 4.1.21(a).
PER SHARE APPRAISAL AMOUNT: the meaning specified in SECTION 3.8(a).
PERMITS: the meaning specified in SECTION 4.1.22(a).
PRE-CLOSING FINANCIAL STATEMENTS: the meaning specified in SECTION 3.4(b).
PROPOSAL: the meaning specified in SECTION 5.4.
7% PREFERRED STOCK: the meaning specified in the Recitals.
SHARES: all shares of Common Stock, par value $1.00 per share, of the
Company issued and outstanding immediately prior to the Effective Time.
STOCKHOLDER AGENTS: the meaning specified in SECTION 3.3(d).
STOCKHOLDER COMMITTEE: Xxxx X. Xxxxxxxxx and two persons designated by him
in a written notice delivered to Parent at least two days prior to the Closing
Date.
STOCKHOLDERS: the holders of shares of Common Stock of the Company
immediately prior to the Effective Time.
STOCKHOLDERS' ACCOUNTANT: the meaning specified in SECTION 3.5(b).
- 49 -
SUBSIDIARY: the meaning specified in SECTION 4.1.1(b).
SURVIVING CORPORATION: the meaning specified in the introductory
paragraph.
SURVIVING CORPORATION'S ACCOUNTANT: the meaning specified in SECTION
3.5(b).
SURVIVING CORPORATION'S COMPUTATION: the meaning specified in
SECTION 3.5(b).
TARGET WORKING CAPITAL: the meaning specified in SECTION 3.4(a).
TAX RETURN: the meaning specified in SECTION 4.1.11(c).
TAXES: the meaning specified in SECTION 4.1.11(b).
THIRD PARTY CLAIM: the meaning specified in SECTION 8.3.
UNAUDITED INTERIM FINANCIALS: the meaning specified in SECTION 4.1.4(b).
WARN ACT: the meaning specified in SECTION 4.1.18.
WELFARE PLAN: the meaning specified in SECTION 4.1.21(a).
- 50 -
EXHIBIT A
ARTICLES OF MERGER
OF
XXXXX ACQUISITION CORP.
AND
XXXX'X, INCORPORATED
FIRST: Xxxxx Acquisition Corp. and Xxxx'x, Incorporated, being the
corporations which are the parties to these Articles of Merger, do hereby agree
to effect a merger of said corporations upon the terms and conditions herein set
forth.
SECOND: The name of the successor corporation is Xxxx'x, Incorporated,
which is a corporation incorporated in the State of Maryland under the provision
of the Maryland General Corporation Law and with its principal office in the
State of Maryland located in Baltimore City, and which will continue its
corporate existence under its present name pursuant to the provision of the
Maryland General Corporation Law.
THIRD: The name of the corporation to be merged into the successor
corporation is Xxxxx Acquisition Corp., which is a corporation incorporated in
the State of Maryland under the provisions of the Maryland General Corporation
Law with its principal office in the State of Maryland located in Baltimore
City, and the corporate existence of which will cease upon the effective date of
the merger pursuant to the provisions of the Maryland General Corporation Law.
Xxxxx Acquisition Corp. owns no interest in land in the State of Maryland.
FOURTH: The authorized share structure of each of the corporations which
is a party to these Articles of Merger at the time of execution thereof is as
follows:
XXXXX ACQUISITION CORP. XXXX'X, INCORPORATED
----------------------- --------------------
Total number of
shares of all
classes: 1,000 3,100,000
Number and par 1,000 shares of - 2,500,000 shares
value of shares of Common Stock, $.001 of Common Stock,
each class: par value $1 par value
- 100,000 shares
of 7% Preferred
Stock, $10 par
value
- 500,000 shares
of Director
Classified
Preferred Stock,
$100 par value
XXXXX ACQUISITION CORP. XXXX'X, INCORPORATED
----------------------- --------------------
Number of shares
without par value
of each class: 0 0
----------- -----------
Aggregate par
value of all shares
with par value: $1 $53,500,000
----------- ------------
The merger herein provided for changes in the authorized share structure of
Xxxx'x, Incorporated so that said authorized share structure will be as follows
on the effective date of the merger:
Total number of
shares of all
classes: 1,000 SHARES OF COMMON STOCK
----------------------------
Number and par
value of shares
of each class: 1,000 SHARES OF COMMON STOCK, $.001 PAR VALUE
---------------------------------------------
Number of shares
without par value
of each class: 0
----------- ----------
Aggregate par value
of all shares with
par value: $1
----------- ----------
FIFTH: Each issued share of stock of Xxxxx Acquisition Corp. shall, upon
the effective date of the merger, be converted into one share of stock of
Xxxx'x, Incorporated. The issued shares of stock of Xxxx'x, Incorporated which
are issued as of the effective date of the merger shall be converted into and
shall become, by virtue of the merger and without any further action by the
holders thereof, the right to receive that number of dollars in cash.
SIXTH: The terms and conditions of the merger herein set forth were
advised, authorized, and approved by Xxxxx Acquisition Corp. in the manner and
by the vote required by its charter and the provisions of the Maryland General
Corporation Law, and the said merger was approved in the manner hereinafter set
forth.
The terms and conditions of the merger herein set forth were advised,
authorized, and approved by Xxxx'x, Incorporated in the manner and by the vote
required by its
2
charter and the provisions of the Maryland General Corporation Law, and the
said merger was approved in the manner hereinafter set forth.
SEVENTH: The merger was duly advised by the Board of Directors of Xxxxx
Acquisition Corp. in the following manner. The Board of Directors of the
corporation adopted a resolution declaring that the merger of Xxxxx
Acquisition Corp. into Xxxx'x, Incorporated is advisable on substantially the
terms and conditions set forth or referred to in said resolution. Said
resolution of the Board of Directors was adopted without a meeting by a
written consent dated as of October 17, 1997 by all of the members of the
Board of Directors.
The merger was duly advised by the Board of Directors of Xxxx'x,
Incorporated in the following manner. The Board of Directors of the
corporation adopted a resolution declaring that the merger of Xxxxx
Acquisition Corp. into Xxxx'x, Incorporated is advisable on substantially the
terms and conditions set forth or referred to in said resolution. Said
resolution of the Board of Directors was adopted at a meeting duly held on
October 17, 1997, at which a quorum was present, and at which the Board acted
by at least a majority of its members present thereat.
EIGHTH: The Board of Directors of Xxxxx Acquisition Corp. directed the
Secretary of the corporation to prepare a written notice of the time, place
and purpose of a meeting of stockholders to take action upon the proposed
merger and the aforesaid terms and conditions and to furnish a copy of said
notice to all of the stockholders of the corporation entitled to vote upon
the proposed merger and the aforesaid terms and conditions unless said
stockholders shall duly waive notice of the meeting.
The Board of Directors of Xxxx'x, Incorporated directed the Secretary of
the corporation to prepare a written notice of the time, place, and purpose
of a meeting of stockholders to take action upon the proposed merger and the
aforesaid terms and conditions and to furnish a copy of said notice to all of
the stockholders of the corporation entitled to vote upon the proposed merger
and the aforesaid terms and conditions unless said stockholders shall duly
waive notice of the meeting.
NINTH: The merger and the aforesaid terms and conditions were duly
approved by the stockholders of Xxxxx Acquisition Corp. in the following
manner. All of the stockholders entitled to vote thereon approved the same
without a meeting by a written consent signed by them.
The merger and the aforesaid terms and conditions were duly approved by
the stockholders of Xxxx'x, Incorporated at a meeting of stockholders duly
held on November 17, 1997 pursuant to notice duly given. The stockholders
approved the same by the affirmative vote of at least two-thirds of all of
the votes entitled to be cast thereon.
TENTH: These Articles of Merger shall be effective as of the later of
(i) the time the State Department of Assessments and Taxation accepts these
Articles of Merger or (ii) December ____, 1997.
3
ELEVENTH: The amendments to the charter of Xxxx'x, Incorporated which are
to be effected as part of the merger are to amend and restate the entire
Articles of Incorporation and to substitute therefor the following Amended and
Restated Articles of Incorporation:
* * *
THIS IS TO CERTIFY
FIRST: That the undersigned, XXXXXXX X. XXXXXX, XX., whose
post office address is 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxx, X.X., 00000, being at least eighteen (18) years of age,
does hereby form a corporation under and by virtue of the general laws
of the State of Maryland.
SECOND: The name of the corporation is Xxxx'x, Incorporated.
THIRD: The purposes for which the corporation is formed are as
follows:
(a) To engage in all aspects of the businesses of
printing, publishing, binding, composition, plate making,
publication distribution and direct-mailing, directly or
indirectly, by any and all means and processes.
(b) To purchase, subscribe for, or otherwise acquire
and own, hold, use, sell, assign, transfer, mortgage,
pledge, exchange, or otherwise dispose of real and personal
property of every kind and description, including shares of
stock, bonds, debentures, notes, evidences of indebtedness,
and other securities, contracts, or obligations of any
corporation or corporations, association or associations,
domestic or foreign, and to pay therefor in whole or in part
in cash or by exchanging therefor stocks, bonds, or other
evidences of indebtedness or securities of this or any other
corporation, and while the owner or holder of any such real
or personal property, stocks, bonds, debentures, notes,
evidences of indebtedness or other securities, contracts, or
obligations, to receive, collect, and dispose of the
interest, dividends and income arising from such property,
and to possess and exercise in respect thereof, all the
rights, powers and privileges of ownership, including all
voting powers on any stocks so owned.
(c) To aid either by loans or by guaranty of
securities or in any other manner, any corporation, domestic
or foreign, any shares of stock, or any bonds,
4
debentures, evidences of indebtedness or other securities whereof
are held by this corporation or in which it shall have any
interest, and to do any acts designed to protect, preserve,
improve, or enhance the value of any property at any time held or
controlled by this corporation or in which it at that time may be
interested.
(d) To purchase, receive, lease or otherwise acquire;
to own, hold, use, improve, and otherwise deal in and with;
to sell, convey, mortgage, pledge, lease, exchange, transfer
or otherwise dispose of real and personal property,
mortgages, chattels real and all interest and rights
therein.
(e) To manage, supervise and operate real property,
personal property, buildings and structures; to negotiate
and consummate for itself and for others or both, leases and
other contracts with respect to such property; to enter
contracts, either as principal or as agent, for the
furnishing, maintenance, repair or improvement of any
property the corporation owns, leases, manages, supervises
or operates.
(f) To borrow money and to secure loans by pledge,
mortgage or assignment of its interest in real or personal
property or both and to issue its notes, bonds, debentures,
and other obligations as evidence thereof and the security
therefor.
(g) To purchase, acquire, invest in, manage, exchange,
own or hold the stock or assets of other corporations or
entities and to do every act and thing incident to the
ownership thereof, including the direction of the operations
of any lawful business that such other corporations or
entities may be engaged in through the ownership of stock or
assets therein, or otherwise.
(h) To conduct its business, carry on its operation,
have officers and exercise its corporate powers in any
state, territory, district or possession of the United
States, and in any foreign country.
(i) To such extent as a corporation organized under
the laws of the State of Maryland may now or hereafter
lawfully do, to do, either as principal, agent, or
otherwise, either alone or in association with other
corporations, firms, associations, or individuals, all and
5
everything necessary, suitable, convenient, or proper for,
or in connection with, or incident to, the accomplishment of
any of the purposes or the attainment of any one or more of
the objects herein enumerated, or designed directly or
indirectly to promote the interest of this corporation, or
to enhance the value of its property (including without
limitation effecting any acquisition, consolidation, merger
or other business combination with any other person(s) or
entity or entities); and in general to do any and all things
and exercise any and all powers, rights, and privileges,
which a corporation may now or hereafter be organized to do
or to exercise under the General Corporation Law of the
State of Maryland or under any act amendatory thereof,
supplemental thereto, or substituted therefor.
(j) The purposes, powers, rights and privileges
provided in these Articles of Incorporation are not deemed
to be in limitation of similar, other, or additional
purposes, powers, rights, and privileges granted or
permitted to this corporation by the laws of the State of
Maryland under which this corporation is incorporated.
FOURTH: The duration of the corporation shall be perpetual.
FIFTH: The post office address of the principal office of the
corporation is 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000.
SIXTH: The name and the post address of the resident agent of
the corporation in Maryland are National Registered Agents, Inc. of
MD, 00 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx Xxxx, Xxxxxxxx 00000.
SEVENTH: The corporation has authority to issue One Thousand
(1,000) shares of stock, all of which are of a par value of $.001 each
and classified as Common Stock. The aggregate par value of all the
shares of all classes is $1.
EIGHTH: No holder of any of the shares of the corporation
shall, as such holder, have any right to purchase or subscribe for any
shares of any class which the corporation may issue or sell, whether
or not such shares are exchangeable for any shares of the corporation
of any other class or classes, and whether such shares are issued out
of the number of shares authorized by the Articles of Incorporation of
the corporation as originally filed, or by any amendment thereof, or
out of shares of the corporation acquired by it after the issue
thereof, nor shall any holder of any of the shares of the corporation,
as such holder, have any right to purchase or subscribe for any
obligations which the corporation may issue or sell that shall be
convertible into, or
6
exchangeable for, any shares of the corporation of any class or classes,
or to which shall be attached or shall appertain to any warrant or
warrants or other instrument or instruments that shall confer upon the
holder thereof the right to subscribe for, or purchase from the
corporation any shares of any class or classes.
NINTH: The number of directors of the corporation shall be one
(1), which may be increased or decreased pursuant to the bylaws of the
corporation; and the name of the director who shall act until the
first annual meeting or until his successors is elected and qualified
is Xxxxxx X. Xxxxxxx.
TENTH: The personal liability of all of the directors of the
corporation is hereby eliminated to the fullest extent allowed as
provided by the Maryland General Corporation Law, as the same may be
supplemented and amended.
ELEVENTH: The corporation shall, to the fullest extent legally
permissible under the provisions of the Maryland General Corporation
Law, as the same may be amended and supplemented, indemnify and hold
harmless any and all persons whom it shall have power to indemnify
under said provisions from and against any and all liabilities
(including expenses) imposed upon or reasonably incurred by him in
connection with any action, suit or other proceeding in which he may
be involved or with which he may be threatened, or other matters
referred to in or covered by said provisions both as to action in his
official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director or officer of the corporation. Such indemnification provided
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, Agreement or Resolution
adopted by the stockholders entitled to vote thereon after notice.
* * *
IN WITNESS WHEREOF, these Articles of Merger are hereby signed for and on
behalf of Xxxxx Acquisition Corp. by its Vice-President, who does hereby
acknowledge that said Articles of Merger are the act of said corporation, and
who does hereby state under the penalties for perjury that the matters and facts
set forth therein with respect to authorization and approval of said merger are
true in all material respects to the best of his knowledge, information, and
belief; and these Articles of Merger have been signed for and on behalf of
Xxxx'x, Incorporated by its President, who does hereby acknowledge that said
Articles of Merger are the act of said corporation, and who does hereby state
under the penalties for perjury that the matters and facts stated therein with
respect to authorization and approval of said merger are true in all material
respects to the best of his knowledge, information, and belief.
7
Executed on this ____ day of December, 1997.
XXXXX ACQUISITION CORP.
By ---------------------------------
Xxxxxx X. Xxxxxxx
Vice-President
Attest:
----------------------------------
Xxxxxxx X. Xxxxx
Assistant Secretary
Executed on this ____ day of December, 1997.
XXXX'X, INCORPORATED
By ---------------------------------
Xxxx X. Xxxxxxxxx
President
Attest:
----------------------------------
Xxxxxx X. Xxxxxx
Secretary
8
EXHIBIT B-1
ARTICLES OF INCORPORATION
OF
XXXXX ACQUISITION CORP.
The undersigned, being at least eighteen years of age and acting as
incorporator, does hereby adopt the following Articles of Incorporation for the
purpose of forming a business corporation (hereinafter called the "corporation")
in the State of Maryland, under the provisions of the Maryland General
Corporation Law.
FIRST: The name of the incorporator is Xxxxx X. Le, Esq., whose post
office address is 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000.
SECOND: The name of the corporation is Xxxxx Acquisition Corp.
THIRD: The purposes for which the corporation is formed are as follows:
(a) To engage in all aspects of the businesses of printing,
publishing, binding, composition, plate making, publication
distribution and direct-mailing, directly or indirectly, by any and
all means and processes.
(b) To purchase, subscribe for, or otherwise acquire and own,
hold, use, sell, assign, transfer, mortgage, pledge, exchange, or
otherwise dispose of real and personal property of every kind and
description, including shares of stock, bonds, debentures, notes,
evidences of indebtedness, and other securities, contracts, or
obligations of any corporation or corporations, association or
associations, domestic or foreign, and to pay therefor in whole or in
part in cash or by exchanging therefor stocks, bonds, or other
evidences of indebtedness or securities of this or any other
corporation, and while the owner or holder of any such real or
personal property, stocks, bonds, debentures, notes, evidences of
indebtedness or other securities, contracts, or obligations, to
receive, collect, and dispose of the interest, dividends and income
arising from such property, and to possess and exercise in respect
thereof, all the rights, powers and privileges of ownership, including
all voting powers on any stocks so owned.
(c) To aid either by loans or by guaranty of securities or in
any other manner, any corporation, domestic or foreign, any shares of
stock, or any bonds, debentures, evidences of indebtedness or other
securities whereof are held by this corporation or in which it shall
have any interest, and to do any acts designed to protect, preserve,
improve, or enhance the value of any property at any time held or
controlled by this corporation or in which it at that time may be
interested.
(d) To purchase, receive, lease or otherwise acquire; to own,
hold, use, improve, and otherwise deal in and with; to sell, convey,
mortgage, pledge, lease,
1
exchange, transfer or otherwise dispose of real and personal
property, mortgages, chattels real and all interest and rights
therein.
(e) To manage, supervise and operate real property, personal
property, buildings and structures; to negotiate and consummate for
itself and for others or both, leases and other contracts with respect
to such property; to enter contracts, either as principal or as agent,
for the furnishing, maintenance, repair or improvement of any property
the corporation owns, leases, manages, supervises or operates.
(f) To borrow money and to secure loans by pledge, mortgage or
assignment of its interest in real or personal property or both and to
issue its notes, bonds, debentures, and other obligations as evidence
thereof and the security therefor.
(g) To purchase, acquire, invest in, manage, exchange, own or
hold the stock or assets of other corporations or entities and to do
every act and thing incident to the ownership thereof, including the
direction of the operations of any lawful business that such other
corporations or entities may be engaged in through the ownership of
stock or assets therein, or otherwise.
(h) To conduct its business, carry on its operation, have
officers and exercise its corporate powers in any state, territory,
district or possession of the United States, and in any foreign
country.
(i) To such extent as a corporation organized under the laws of
the State of Maryland may now or hereafter lawfully do, to do, either
as principal, agent, or otherwise, either alone or in association with
other corporations, firms, associations, or individuals, all and
everything necessary, suitable, convenient, or proper for, or in
connection with, or incident to, the accomplishment of any of the
purposes or the attainment of any one or more of the objects herein
enumerated, or designed directly or indirectly to promote the interest
of this corporation, or to enhance the value of its property
(including without limitation effecting any acquisition,
consolidation, merger or other business combination with any other
person(s) or entity or entities); and in general to do any and all
things and exercise any and all powers, rights, and privileges, which
a corporation may now or hereafter be organized to do or to exercise
under the General Corporation Law of the State of Maryland or under
any act amendatory thereof, supplemental thereto, or substituted
therefor.
(j) The purposes, powers, rights and privileges provided in
these Articles of Incorporation are not deemed to be in limitation of
similar, other, or additional purposes, powers, rights, and privileges
granted or permitted to this corporation by the laws of the State of
Maryland under which this corporation is incorporated.
FOURTH: The duration of the corporation shall be perpetual.
FIFTH: The post office address of the principal office of the
corporation is 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000.
2
SIXTH: The name and the post address of the resident agent of the
corporation in Maryland are National Registered Agents, Inc. of MD, 00 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxx Xxxx, Xxxxxxxx 00000.
SEVENTH: The corporation has authority to issue One Thousand (1,000)
shares of stock, all of which are of a par value of $.001 each and classified as
Common Stock. The aggregate par value of all the shares of all classes is $1.
EIGHTH: No holder of any of the shares of the corporation shall, as such
holder, have any right to purchase or subscribe for any shares of any class
which the corporation may issue or sell, whether or not such shares are
exchangeable for any shares of the corporation of any other class or classes,
and whether such shares are issued out of the number of shares authorized by the
Articles of Incorporation of the corporation as originally filed, or by any
amendment thereof, or out of shares of the corporation acquired by it after the
issue thereof, nor shall any holder of any of the shares of the corporation, as
such holder, have any right to purchase or subscribe for any obligations which
the corporation may issue or sell that shall be convertible into, or
exchangeable for, any shares of the corporation of any class or classes, or to
which shall be attached or shall appertain to any warrant or warrants or other
instrument or instruments that shall confer upon the holder thereof the right to
subscribe for, or purchase from the corporation any shares of any class or
classes.
NINTH: The number of directors of the corporation shall be one (1),
which may be increased or decreased pursuant to the bylaws of the corporation;
and the name of the director who shall act until the first annual meeting or
until his successors is elected and qualified is Xxxxxx X. Xxxxxxx.
TENTH: The personal liability of all of the directors of the corporation
is hereby eliminated to the fullest extent allowed as provided by the Maryland
General Corporation Law, as the same may be supplemented and amended.
ELEVENTH: The corporation shall, to the fullest extent legally permissible
under the provisions of the Maryland General Corporation Law, as the same may be
amended and supplemented, shall indemnify and hold harmless any and all persons
whom it shall have power to indemnify under said provisions from and against any
and all liabilities (including expenses) imposed upon or reasonably incurred by
him in connection with any action, suit or other proceeding in which he may be
involved or with which he may be threatened, or other matters referred to in or
covered by said provisions both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director or officer of the corporation. Such
indemnification provided shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, Agreement or Resolution
adopted by the stockholders entitled to vote thereon after notice.
3
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge the same to be my act.
Dated this _____ day of October, 1997.
--------------------------------
Xxxxx X. Le, Incorporator
4
EXHIBIT B-2
BYLAWS
OF
XXXXX ACQUISITION CORP.
ARTICLE I
OFFICES
Section 1. The registered office shall be in Baltimore City,
Maryland.
Section 2. The corporation may also have offices at such other places
both within and without the State of Maryland as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the State of Maryland, at such place as may be fixed
from time to time by the Board of Directors, or at such other place either
within or without the State of Maryland, as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Maryland, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1998, shall be held at such date and time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.
1
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not fewer
2
than ten (10) nor more than sixty (60) days before the date of the meeting,
to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of fifty percent (50%) of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Articles of Incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
3
Section 10. Unless otherwise provided in the Articles of
Incorporation each stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be voted
on after three (3) years from its date, unless the proxy provides for a longer
period.
Section 11. Unless otherwise provided in the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
if the following are filed with the records of stockholders' meetings:
(a) A unanimous written consent which sets forth the action and is
signed by each stockholder entitled to vote on the matter; and
(b) A written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to
vote at it.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board of Directors shall be determined by resolution of the Board of Directors
or by the stockholders at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the entire Board of Directors
4
and the directors so chosen shall hold office until the next annual election
and until their successors are duly elected and shall qualify, unless sooner
displaced. A majority of the remaining directors, whether or not sufficient
to constitute a quorum, may fill a vacancy on the Board of Directors which
results from any cause except an increase in the number of directors. If
there are no directors in office, then an election of directors may be held
in the manner provided by statute.
The stockholders may elect a successor to fill a vacancy on the
Board of Directors which results from the removal of a director. A director
elected by the stockholders to fill a vacancy which results from the removal
of a director serves for the balance of the term of the removed director.
Section 3. The business and affairs of the corporation shall be
managed under the direction of its Board of Directors. All powers of the
corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders of the corporation by
law or by the Articles of Incorporation or these bylaws.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Maryland.
Section 5. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of
5
Directors, or in the event such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written
waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 7. Special meetings of the Board of Directors may be
called by the president on two (2) days' notice to each director by mail or
forty-eight (48) hours notice to each director either personally or by
telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two (2) directors
unless the Board of Directors consists of only one (1) director, in which
case special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of the sole director.
Section 8. At all meetings of the Board a majority of the
directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present.
Section 9. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors or
6
of any committee thereof may be taken without a meeting, if a unanimous
written consent which sets forth the action is:
(a) Signed by each member of the Board of Directors or the committee;
and
(b) Filed with the minutes of proceedings of the Board of Directors
or the committee.
Section 10. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting
of the Board of Directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a
majority of the whole Board of Directors, designate one (1) or more
committees, each committee to consist of one (1) or more of the directors of
the corporation. The Board may designate one (1) or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
7
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of
the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; but no such committee shall have the
power or authority in reference to authorizing dividends on stock, issuing
stock other than as provided in Section 2-411(b) of the Maryland General
Corporation Law, recommending to the stockholders any action which requires
stockholder approval, amending the bylaws, and approving any merger or share
exchange which does not require stockholder approval. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, the Board of Directors shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
8
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the Articles of
Incorporation or by law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of
the Articles of Incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
Board of Directors and shall be a president, a treasurer and a secretary.
The Board of Directors may elect from among its members a Chairman of the
Board and a Vice Chairman. The Board of Directors
9
may also choose one (1) or more vice-presidents, assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the Articles of Incorporation or these bylaws otherwise provide;
PROVIDED, HOWEVER, that a person may not serve concurrently as both president
and vice-president of the corporation. A person who holds more than one (1)
office in the corporation may not act in more than one (1) capacity to
execute, acknowledge, or verify an instrument required by law to be executed,
acknowledged or verified by more than one (1) officer.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a president, a treasurer, and a
secretary and may choose vice presidents.
Section 3. The Board of Directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of
a majority of the Board of Directors, if the Board of Directors in its
judgment finds that the best interests of the corporation will be served by
such removal. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
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CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all
meetings of the Board of Directors and of the stockholders at which he shall
be present. He shall have and may exercise such powers as are, from time to
time, assigned to him by the Board and as may be provided by law.
VICE CHAIRMAN
Section 7. In the absence of the Chairman of the Board, the Vice
Chairman, if any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board
and as may be provided by law.
PRESIDENT AND VICE-PRESIDENTS
Section 8. The president shall be the chief executive officer of
the corporation; and in the absence of the Chairman of the Board and Vice
Chairman he shall preside at all meetings of the stockholders and the Board
of Directors; he shall have general and active management of the business of
the corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 9. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 10. In the absence of the president or in the event of his
inability or refusal to act, the vice-president, if any (or in the event there
be more than one (1) vice-president,
11
the vice-presidents in the order designated by the directors, or in the
absence of any designation, then in the order of their election), shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the corporation
and to attest the affixing by his signature.
Section 12. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary
12
and shall perform such other duties and have such other powers as the Board
of Directors may from time to time prescribe.
TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall be the chief financial officer of
the corporation and shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
Section 14. He shall disburse the funds of the corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all his transactions as treasurer and of the financial condition
of the corporation.
Section 15. If required by the Board of Directors, he shall give
the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
Section 16. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
13
inability or refusal to act, perform the duties and exercise the powers of
the treasurer and shall perform such other duties and have such other powers
as the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by, the chairman of the Board of Directors, the president or a vice-president
and counter-signed by the treasurer, an assistant treasurer, the secretary or
an assistant secretary of the corporation, certifying the number of shares
owned by him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and
the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one (1)
class of stock, the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the corporation is authorized to issue shall be set forth in full
or summarized on the face or back of the certificate which the corporation
shall issue to represent such class, provided that, except as otherwise
provided in section 2-211 of the Maryland General Corporation Law, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class of
stock, a statement that the
14
corporation will furnish without charge to each stockholder who so requests
the required information.
Section 2. Any of or all the signatures on the certificate may be
facsimile.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignation or authority to transfer, it
shall be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
15
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors
may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Maryland.
16
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Articles of Incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums
as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation,
or for such other purposes as the directors shall think conducive to the
interest of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
17
SEAL
Section 5. The Board of Directors may adopt a corporate seal
having inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Maryland". The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced
or otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent authorized
under the laws of the State of Maryland, as those laws may be amended and
supplemented from time to time, indemnify any director or officer made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of being a director or
officer of the corporation or a predecessor corporation or, at the
corporation's request, a director or officer of another corporation;
PROVIDED, HOWEVER, that the corporation shall indemnify any such agent in
connection with a proceeding initiated by such agent only if such proceeding
was authorized by the Board of Directors of the corporation. The
indemnification provided for in this Section 6 shall: (i) not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement or vote of stockholders or disinterested directors
or otherwise, both as to action in their official capacities and as to action
in another capacity while holding such office, (ii) continue as to a person
who has ceased to be a director or officer, and (iii) inure to the benefit of
the heirs, executors and administrators of such a person. The corporation's
obligation to provide indemnification under this Section 6 shall be offset to
the extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the corporation or any other
person.
18
Expenses incurred by a director or officer of the corporation in
defending a civil or criminal action, suit or proceeding by reason of the
fact that he is or was a director or officer of the corporation (or was
serving at the corporation's request as a director or officer of another
corporation) shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of a written
affirmation by the director or officer of his good faith belief that the
standard of conduct necessary for indemnification by the corporation as
authorized in these bylaws and in Section 2-418 of the Maryland General
Corporation Law has been met and a written undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that the standard of conduct has not been met. Notwithstanding the
foregoing, the corporation shall not be required to advance such expenses to
an agent who is a party to an action, suit or proceeding brought by the
corporation and approved by a majority of the Board of Directors of the
corporation which alleges willful misappropriation of corporate assets by
such agent, disclosure of confidential information in violation of such
agent's fiduciary or contractual obligations to the corporation or any other
willful and deliberate breach in bad faith of such agent's duty to the
corporation or its stockholders.
The foregoing provisions of this Section 6 shall be deemed to be a
contract between the corporation and each director or officer who serves in
such capacity at any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any statement of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought based in whole
or in part upon any such statement of facts.
19
The Board of Directors in its discretion shall have the power on
behalf of the corporation to indemnify any person, other than a director or
officer, made a party to any action, suit or proceeding by reason of the fact
that he, his testator or intestate, is or was an employee or agent of the
corporation.
Section 2-418(i) of the General Corporation Law of Maryland ensures
indemnification under this Section 6 of all directors, officers and employees
who have served any employee benefit plan of the corporation.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the Articles of
Incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the Board of Directors by the
Articles of Incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
20
Plan and Agreement of Merger by and among PPC Holdings, Inc., Xxxxx
Acquisition Corp. and Xxxx'x Incorporated dated as of October 17, 1997.
-------------------------------------------------------------------------------
Annexes II - IV and Schedules Omitted In Accordance
With Item 601(b)(2) of Regulation S-K
-------------------------------------
Xxxxx-Xxxx'x Incorporated will furnish supplementally a copy of any
omitted annex, schedule or exhibit to the Securities and Exchange Commission
upon request; provided, however, that Xxxxx-Xxxx'x Incorporated may request
confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any
annex, schedule or exhibit so furnished.
