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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CARLTON COMMUNICATIONS PLC
NEPTUNE ACQUISITION CORP.
AND
NIMBUS CD INTERNATIONAL, INC.
Dated as of June 16, 1998
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
1.01 The Offer.......................................................................................2
1.02 Company Actions.................................................................................3
1.03 Composition of the Board of Directors...........................................................4
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger......................................................................................5
2.02 Conversion of Stock.............................................................................6
2.03 Dissenting Stock................................................................................6
2.04 Surrender of Certificates.......................................................................7
2.05 Payment.........................................................................................8
2.06 No Further Rights of Transfers..................................................................8
2.07 Stock Option and Other Plans....................................................................9
2.08 Certificate of Incorporation of the Surviving Corporation......................................10
2.09 By-Laws of the Surviving Corporation...........................................................10
2.10 Directors and Officers of the Surviving Corporation............................................10
2.11 Closing........................................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company..................................................10
(a) Due Organization, Good Standing and Corporate Power...................................10
(b) Authorization and Validity of Agreement...............................................11
(c) Capitalization........................................................................11
(d) Consents and Approvals; No Violations.................................................13
(e) Company Reports and Financial Statements..............................................13
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(f) Absence of Certain Changes............................................................14
(g) Title to Properties; Encumbrances.....................................................15
(h) Compliance with Laws..................................................................15
(i) Litigation............................................................................16
(j) Employee Benefit Plans................................................................16
(k) Taxes.................................................................................18
(l) Liabilities...........................................................................19
(m) Intellectual Properties...............................................................19
(n) Material Contracts....................................................................19
(o) Proxy Statement and Schedule l4D-9....................................................21
(p) Broker's or Finder's Fee..............................................................22
(q) Environmental Laws and Regulations....................................................22
(r) State Takeover Statutes; Charter Provisions...........................................24
(s) Opinion of Financial Advisor..........................................................24
(t) Rights Agreement......................................................................24
(u) Voting Requirements...................................................................24
3.02 Representations and Warranties of Parent and Sub...............................................25
(a) Due Organization; Good Standing and Corporate Power...................................25
(b) Authorization and Validity of Agreement...............................................25
(c) Consents and Approvals; No Violations.................................................25
(d) Offer Documents, Schedule l4D-9 and Proxy Statement...................................26
(e) Broker's or Finder's Fee..............................................................26
(f) Financing.............................................................................27
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Properties and Records........................................27
4.02 Confidentiality................................................................................27
4.03 Conduct of the Business of the Company Pending the Closing Date................................27
4.04 Proxy Statement................................................................................30
4.05 Stockholder Approval...........................................................................30
4.06 Reasonable Efforts.............................................................................30
4.07 No Solicitation of Other Offers................................................................31
4.08 Notification of Certain Matters................................................................33
4.09 HSR Act........................................................................................33
4.10 Employee Benefits..............................................................................33
4.11 Directors' and Officers' Insurance; Indemnification............................................34
4.12 Guaranty of Performance........................................................................35
4.13 Financing......................................................................................35
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ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub and the Company.............................35
(a) Approval of Company's Stockholders....................................................35
(b) HSR Act...............................................................................35
(c) Injunction............................................................................35
(d) Statutes..............................................................................36
(e) Payment for Common Stock..............................................................36
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination....................................................................................36
6.02 Effect of Termination..........................................................................38
ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses..............................................................................39
7.02 Representations and Warranties.................................................................39
7.03 Extension; Waiver..............................................................................40
7.04 Public Announcements...........................................................................40
7.05 Notices........................................................................................40
7.06 Entire Agreement...............................................................................41
7.07 Binding Effect; Benefit; Assignment............................................................42
7.08 Amendment and Modification.....................................................................42
7.09 Further Actions................................................................................42
7.10 Headings.......................................................................................42
7.11 Counterparts...................................................................................42
7.12 Applicable Law; Jurisdiction...................................................................42
7.13 Severability...................................................................................43
7.14 Certain Definitions............................................................................43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 16, 1998 (this
"Agreement"), by and among Carlton Communications Plc, a company organized under
the laws of England ("Parent"), Neptune Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and Nimbus CD
International, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and determined that it is in the best interests of
their respective companies and stockholders for Sub to acquire the Company;
WHEREAS, in contemplation thereof it is proposed that Sub will
make a tender offer (the "Offer") to purchase all the issued and outstanding
shares of common stock, $0.01 par value, of the Company ("Common Stock"), upon
the terms and subject to the conditions of this Agreement (including the
conditions set forth in Annex A hereto), at a price of 11.50 per share net to
the seller in cash (the "Offer Price");
WHEREAS, to complete such acquisition, the respective Boards
of Directors of Parent, Sub and the Company, have approved the merger of Sub
into the Company, with the Company being the surviving corporation (the
"Merger"), upon the terms and subject to the conditions of this Agreement;
WHEREAS, the Directors of the Company have unanimously
determined that each of the Offer and the Merger are fair to, and in the best
interests of, the holders of Common Stock, approved the Offer and the Merger and
recommended the acceptance of the Offer and approval and adoption of this
Agreement by the stockholders of the Company; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, as a condition and inducement to Parent's and Sub's willingness
to enter into this Agreement, certain stockholders of the Company (the "Selling
Stockholders") are entering into an agreement with Parent and Sub (the
"Stockholder Agreement"), pursuant to which, and upon the terms and subject to
the conditions of which, the Selling Stockholders have agreed to tender (and not
to withdraw) all of the shares of Common Stock currently owned and hereafter
acquired by them pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article VI hereof and so long as none of
the events set forth in Annex A hereto (the "Tender Offer Conditions") shall
have occurred and are continuing, as promptly as practicable, but in no event
later than the fifth business day after the date of this Agreement, Sub shall
commence (within the meaning of Rule 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) the Offer. The
obligations of Sub to accept for payment and to pay for any shares of Common
Stock validly tendered and not withdrawn prior to the expiration of the Offer
shall be subject only to the Tender Offer Conditions, any of which may be waived
by Parent or Sub; provided, however, that neither Parent or Sub shall waive the
Minimum Condition (as defined in Annex A) without the prior written consent of
the Company. The Tender Offer Conditions are for the sole benefit of Parent and
Sub and may be asserted by Parent and Sub regardless of the circumstances giving
rise to any such Tender Offer Conditions and, subject to the immediately
preceding sentence, may be waived by Parent and Sub in whole or in part. Parent
and Sub expressly reserve the right to modify the terms of the Offer, including
without limitation to extend the Offer beyond any scheduled expiration date;
provided, however, without the consent of the Company, Sub shall not (i) reduce
the number of shares of Common Stock to be purchased in the Offer, (ii) reduce
the Offer Price, (iii) add to the Tender Offer Conditions or otherwise modify
the Tender Offer Conditions in a manner that is adverse to the holders of Common
Stock or (iv) change the form of consideration payable in the Offer. Parent and
Sub covenant and agree that, subject to the terms and conditions of this
Agreement, including, but not limited to, the Tender Offer Conditions, unless
the Company otherwise consents in writing, Sub will accept for payment and pay
for the Common Stock in accordance with Rule 14e-1(c) of the Exchange Act;
provided, however, that unless (i) any Person has made an Acquisition Proposal
(as hereinafter defined), or (ii) any of the conditions of the Offer set forth
in Annex A hereto shall not have been satisfied, the expiration date may not be
extended beyond the 10th business day after the initial expiration date of the
Offer without the Company's prior written consent, such consent not to be
unreasonably withheld (it being expressly understood and agreed that, if all of
the conditions set forth in Annex A hereto shall have been satisfied and no
Person has made an Acquisition Proposal, Sub shall have the right, in its sole
discretion, to extend the expiration date (through one or more extensions)
through the 10th business day after the initial expiration date).
(b) As soon as reasonably practicable (and no more than five
business days) after the date hereof, Parent and Sub shall file, and Parent, if
necessary, shall cause Sub to file, with the Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "Schedule 14D-1") with respect to the
Offer. The Schedule 14D-1 shall contain (included
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as an exhibit) or shall incorporate by reference an offer to purchase (the
"Offer to Purchase") and a form of the related letter of transmittal (the
"Letter of Transmittal"), as well as all other information and exhibits required
by law (which Schedule 14D-1, Offer to Purchase, Letter of Transmittal and such
other information and exhibits, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). The
Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the Commission
and the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Sub with respect
to any information supplied by the Company in writing for inclusion in the
Schedule 14D-1 or derived from the Company's Commission Filings. Each of Parent
and Sub agrees promptly to correct any information provided by it for use in the
Offer Documents that shall be, or have become, false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the Commission and
the other Offer Documents as so corrected to be disseminated to holders of
Common Stock, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and Sub agrees to provide the Company and its
counsel with copies (which shall be treated confidentially) of any written
comments Parent and Sub or their counsel may receive from the Commission or its
staff with respect to the Offer Documents promptly after the receipt of such
comments and shall, to extent practicable, provide the Company and its counsel
an opportunity to comment on the proposed response of Parent and Sub to such
comments.
1.02 Company Actions. The Company hereby approves of and
consents to the Offer and the Merger and represents that (a) its Board of
Directors (at a meeting duly called and held) has (i) determined by the
unanimous vote of the Directors that each of the Offer and the Merger is fair
to, and in the best interests of, the holders of Common Stock, (ii) approved the
Offer and the Merger and approved and adopted this Agreement in accordance with
the provisions of the General Corporation Law of the State of Delaware (the
"DGCL"), (iii) recommended the acceptance of the Offer and the approval and
adoption of this Agreement by the stockholders of the Company, (iv) taken all
other applicable action necessary to render Section 203 of the DGCL and all
other applicable state takeover statutes, if any, inapplicable to the Offer, the
Merger and the acquisition of shares of Common Stock by Sub pursuant to the
Stockholders Agreement and the actions contemplated hereby and thereby;
provided, however, that such recommendation may be withdrawn, modified or
amended at any time or from time to time if the Board of Directors of the
Company determines in its good faith judgment after consulting with independent
outside counsel to the Company, that failing to take such action would
constitute a breach of the Board's fiduciary obligations under applicable law;
and (b) Xxxxxxxx Xxxxxxx & Company ("Xxxxxxxx Xxxxxxx") has delivered to the
Board of Directors of the Company its opinion that the consideration per share
of Common Stock to be received by the holders of Common
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Stock (other than Parent and Sub) pursuant to the Offer and the Merger is fair
to the holders of Common Stock from a financial point of view, subject to the
assumptions and qualifications contained in such opinion. The Company shall file
with the Securities and Exchange Commission (the "Commission"), as soon as
practicable after the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule l4D-9")
containing the recommendations referred to in clause (a) of the preceding
sentence and shall disseminate the Schedule 14D-9 as required by Rule 14d-9
under the Exchange Act; provided, however, that such recommendation or other
action may be withdrawn, modified or amended at any time or from time to time if
the Board of Directors of the Company determines in its good faith judgment,
after consulting with independent outside counsel to the Company, that failing
to take such action would constitute a breach of the Board's fiduciary
obligations under applicable law. Parent and Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule l4D-9 prior to its
filing with the Commission. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the Commission and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or Sub in
writing for inclusion in the Schedule 14D-9. The Company agrees to provide
Parent and its counsel with any comments the Company or its counsel may receive
from the Commission or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and shall, to the extent practicable, provide
Parent and its counsel an opportunity to comment on the proposed response of the
Company to such comments.
In connection with the Offer, the Company will promptly
furnish Sub with mailing labels, security position listings and any available
listing or computer list containing the names and addresses of the record
holders of the Common Stock as of the most recent practicable date and shall
furnish Sub with such additional information (including, but not limited to,
updated lists of holders of Common Stock and their addresses, mailing labels and
lists of security positions) and such other assistance as Sub or its agents may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Sub and their respective affiliates,
associates, agents, and advisors, shall keep confidential and use the
information contained in any such labels, listings and files only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
1.03 Composition of the Board of Directors. Promptly upon the
acceptance for payment of, and payment by Sub in accordance with the Offer for,
any shares of Common Stock pursuant to the Offer, Sub shall be entitled to
designate such number of directors on
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the Board of Directors of the Company, rounded up to the next whole number, as
will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock so accepted for payment and paid for or otherwise acquired or
owned by Sub or Parent and the denominator of which shall be the number of
shares of Common Stock then issued and outstanding, and the Company and its
Board of Directors shall, at such time, take any and all such action needed to
cause Sub's designees to be appointed to the Company's Board of Directors
(including to cause directors to resign). Subject to applicable law, the Company
shall take all action requested by Parent which is reasonably necessary to
effect any such election, including mailing to its stockholders the Information
Statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and the Company agrees to make such
mailing with the mailing of the Schedule 14D-9, so long as Sub shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Sub's designees. In
furtherance thereof, the Company will increase the size of the Company's Board
of Directors, or use its reasonable efforts to secure the resignation of
directors, or both, as is necessary to permit Sub's designees to be elected to
the Company's Board of Directors.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. (a) Subject to the terms and conditions of
this Agreement, at the time of the Closing (as defined in Section 2.11 hereof),
a certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by Sub and the Company in accordance with the DGCL and
shall be filed on the Closing Date (as defined in Section 2.11 hereof). The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the
provisions and requirements of the DGCL. The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Sub shall be merged with and into
the Company and the separate corporate existence of Sub shall cease, and the
Company shall continue as the surviving corporation under the laws of the State
of Delaware (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in Section 259 of the DGCL.
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2.02 Conversion of Stock. At the Effective Time:
(a) Each share of Common Stock then issued and outstanding
(other than (i) any shares of Common Stock which are held by any
subsidiary of the Company or in the treasury of the Company, or which
are held, directly or indirectly, by Parent or any direct or indirect
subsidiary of Parent (including Sub), all of which shall be cancelled
and none of which shall receive any payment with respect thereto and
(ii) shares of Common Stock held by Dissenting Stockholders (as defined
in Section 2.03 hereof)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and
represent the right to receive an amount in cash, without interest,
equal to the price paid for each share of Common Stock pursuant to the
Offer (the "Merger Consideration"); and
(b) Each share of common stock, par value $0.01 per share, of
Sub then issued and outstanding shall, by virtue of the Merger and
without any action on the part of the holder thereof, become one fully
paid and nonassessable share of common stock, $0.01 par value, of the
Surviving Corporation.
2.03 Dissenting Stock. Notwithstanding anything in this
Agreement to the contrary but only to the extent required by the DGCL, shares of
Common Stock that are issued and outstanding immediately prior to the Effective
Time and are held by holders of Common Stock who comply with all the provisions
of Delaware law concerning the right of holders of Common Stock to dissent from
the Merger and require appraisal of their shares of Common Stock ("Dissenting
Stockholders") shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the law of the
State of Delaware; provided, however, that (i) if any Dissenting Stockholder
shall subsequently deliver a written withdrawal of his or her demand for
appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any Dissenting Stockholder fails to establish and perfect his or her entitlement
to appraisal rights as provided by applicable law or (iii) if within 120 days of
the Effective Time neither any Dissenting Stockholder nor the Surviving
Corporation has filed a petition demanding a determination of the value of the
shares of Common Stock outstanding at the Effective Time and held by Dissenting
Stockholders, in accordance with applicable law, then such Dissenting
Stockholder or Stockholders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective Time, the Merger
Consideration, without interest. The Company shall give Parent and Sub (A)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal. The Company will not voluntarily make any payment with respect to
any demands for appraisal and will not, except with the prior written consent of
Parent, settle or offer to settle any demand.
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2.04 Surrender of Certificates. (a) Concurrently with or prior
to the Effective Time, Parent shall designate a bank or trust company located in
the United States and reasonably acceptable to the Company to act as paying
agent (the "Paying Agent") for purposes of making the cash payments contemplated
hereby. As soon as practicable after the Effective Time, Sub shall (and if
necessary Parent shall cause Sub to) cause the Paying Agent to mail and/or make
available to each holder of a certificate theretofore evidencing shares of
Common Stock (other than those which are held by any subsidiary of the Company
or in the treasury of the Company or which are held directly or indirectly by
Parent or any direct or indirect subsidiary of Parent (including Sub)) a Letter
of Transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding Common
Stock (the "Certificates") in exchange for the Merger Consideration deliverable
in respect thereof pursuant to this Article II. Upon the surrender for
cancellation to the Paying Agent of such Certificates, together with a Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereon, and any other items specified by the Letter of Transmittal, the Paying
Agent shall promptly pay to the Person (as defined in Section 7.14 hereof)
entitled thereto the Merger Consideration deliverable in respect thereof. Until
so surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Merger Consideration
deliverable in respect thereof to which such Person is entitled pursuant to this
Article II. No interest shall be paid or accrued in respect of such cash
payments.
(b) If the Merger Consideration (or any portion thereof) is to
be delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II; provided that, the Person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, give the Surviving
Corporation a bond in such sum as it may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
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2.05 Payment. Concurrently with or immediately prior to the
Effective Time, Sub or , if necessary, Parent shall deposit in trust with the
Paying Agent cash in United States dollars in an aggregate amount equal to the
product of (i) the number of shares of Common Stock outstanding immediately
prior to the Effective Time (other than shares of Common Stock which are held by
any subsidiary of the Company or in the treasury of the Company or which are
held directly or indirectly by Parent or any direct or indirect subsidiary of
Parent (including Sub) or a Person known at the time of such deposit to be a
Dissenting Stockholder) and (ii) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Sub in direct obligations of the
United States, obligations for which the full faith and credit of the United
States is pledged to provide for the payment of principal and interest,
commercial paper rated of the highest quality by Xxxxx'x Investors Services,
Inc. or Standard & Poor's Ratings Group or certificates of deposit, bank
repurchase agreements or bankers' acceptances of a commercial bank having at
least $500,000,000 in assets (collectively "Permitted Investments") or in money
market funds which are invested in Permitted Investments, and any net earnings
with respect thereto shall be paid to Parent as and when requested by Parent.
The Paying Agent shall, pursuant to irrevocable instructions, make the payments
referred to in Section 2.02(a) hereof out of the Payment Fund. The Payment Fund
shall not be used for any other purpose except as otherwise agreed to by Parent.
Promptly following the date which is six months after the Effective Time, the
Paying Agent shall return to the Surviving Corporation all cash, certificates
and other instruments in its possession that constitute any portion of the
Payment Fund, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the Merger Consideration, without interest,
but shall have no greater rights against the Surviving Corporation or Parent
than may be accorded to general creditors of the Surviving Corporation or Parent
under applicable law. Notwithstanding the foregoing, neither the Paying Agent
nor any party hereto shall be liable to a holder of shares of Common Stock for
any Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat and similar laws.
2.06 No Further Rights of Transfers. At and after the
Effective Time, each holder of a Certificate shall cease to have any rights as a
stockholder of the Company, except for, in the case of a holder of a Certificate
(other than shares to be cancelled pursuant to Section 2.02(a) hereof and other
than shares held by Dissenting Stockholders), the right to surrender his or her
Certificate in exchange for payment of the Merger Consideration or, in the case
of a Dissenting Stockholder, to perfect his or her right to receive payment for
his or her shares pursuant to Delaware law if such holder has validly perfected
and not withdrawn his or her right to receive payment for his or her shares, and
no transfer of shares of Common Stock shall be made on the stock transfer books
of the Surviving Corporation. Certificates presented to the Surviving
Corporation after the Effective Time shall be cancelled and exchanged for cash
as provided in this Article II. At the close of business on the day of the
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Effective Time the stock ledger of the Company with respect to Common Stock
shall be closed.
2.07 Stock Option and Other Plans. Prior to the Effective
Time, the Board of Directors of the Company (or, if appropriate, any Committee
thereof) shall adopt appropriate resolutions and use its reasonable best efforts
to take all other actions necessary to (i) provide for the cancellation,
effective at the Effective Time of all the outstanding stock options and other
rights to purchase shares of Common Stock ("Options") and (ii) terminate, as of
the Effective Time, the Stock Option Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any of its subsidiaries (collectively,
the "Stock Incentive Plans") and (iii) amend, as of the Effective Time, the
provisions in any U.S. or Foreign Employee Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any of its
subsidiaries or any interest in respect of any capital stock of the Company or
its subsidiaries to provide that there shall be no continuing rights to acquire,
hold, transfer or grant any capital stock of the company or its subsidiaries or
any interest in the capital stock of the Company or its subsidiaries.
Immediately prior to the Effective Time, the Company shall use its reasonable
best efforts to ensure that (i) each Option, whether or not then vested or
exercisable, shall no longer be exercisable for the purchase of shares of Common
Stock but shall entitle each holder thereof, in cancellation and settlement
therefor, to payments by the Company in cash (subject to any applicable
withholding taxes, the "Cash Payment"), at the Effective Time, equal to the
product of (x) the total number of shares of Common Stock subject to such Option
whether or not then vested or exercisable and (y) the excess of the Merger
Consideration over the exercise price per share of Common Stock subject to such
Option, each such Cash Payment to be paid to each holder of an outstanding
Option at the Effective Time and (ii) each share of Common Stock previously
issued in the form of grants of restricted stock or grants of contingent shares
shall fully vest in accordance with their respective terms. In addition, any
outstanding stock appreciation rights or limited stock appreciation rights shall
be cancelled immediately prior to the Effective Time without any payment or
other consideration therefor. As provided herein, the Company shall use its
reasonable best efforts to ensure that the Stock Incentive Plans shall terminate
as of the Effective Time. The Company will take all necessary steps to ensure
that neither the Company nor any of its subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its affiliates, to own any capital stock of the
Surviving Corporation or any of its subsidiaries or to receive any payment in
respect thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase shares of Common Stock in respect of such
Options will be to receive the Cash Payment in cancellation and settlement
thereof. Notwithstanding any other provision of this Section 2.07 to the
contrary, payment of the Cash Payment may be withheld with respect to any Option
until the necessary consents are obtained.
-9-
2.08 Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
2.09 By-Laws of the Surviving Corporation. The By-Laws of Sub,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation.
2.10 Directors and Officers of the Surviving Corporation. At
the Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
2.11 Closing. The closing of the Merger (the "Closing") shall
take place at the offices of Xxxxxxxx and Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, as soon as practicable after the last of the conditions set forth in
Article V hereof is fulfilled or waived (subject to applicable law) but in no
event later than the fifth business day thereafter, or at such other time and
place and on such other date as Parent and the Company shall mutually agree (the
"Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Corporate Power. Each
of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each such corporation has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Except
as set forth in Section 3.01(a) of the Company's disclosure letter (the
"Company Disclosure Letter") delivered concurrently with the delivery
of this Agreement, each of the Company and its subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated
-10-
by it or the nature of the business conducted by it makes such
qualification necessary, except where such failure to be so qualified
or licensed and in good standing would not have a material adverse
effect on the business, operations or results of operations, financial
condition (the "Condition") of the Company and its subsidiaries taken
as a whole, or would not be reasonably likely to prevent or materially
delay consummation of the transactions contemplated by this Agreement.
The Company has made available to Parent and Sub complete and correct
copies of the Certificate of Incorporation and By-Laws of the Company
and the comparable governing documents of each of its subsidiaries, in
each case as amended to the date of this Agreement.
(b) Authorization and Validity of Agreement. The Company has
the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company, and the consummation by
it of the transactions contemplated hereby, have been duly authorized
and unanimously approved by its Board of Directors and no other
corporate action on the part of the Company is necessary to authorize
the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby
(other than the approval of this Agreement by the holders of a majority
of the outstanding shares of Common Stock entitled to vote) or the
consummation of the transactions contemplated by the Stockholders
Agreement. This Agreement has been duly executed and delivered by the
Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to
the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(c) Capitalization. (i) The authorized capital stock of the
Company consists of 60,000,000 shares of Common Stock and 2,000,000
shares of preferred stock, par value $0.01. As of June 15, 1998, (1)
39,012,786 shares of Common Stock are issued of which 21,469,754 are
outstanding, (2) 2,164,077 shares of Common Stock are reserved for
issuance pursuant to outstanding Options granted under the Stock Plans,
(3) 17,543,032 shares of Common Stock are held in the Company's
treasury and (4) no shares of preferred stock were issued and
outstanding. All issued and outstanding shares of Common Stock have
been duly authorized, validly issued and are fully paid and
nonassessable and are not subject to, nor were they issued in violation
of any preemptive rights. Except as set forth in this Section 3.01(c)
or in Section 3.01(c) of the Company Disclosure Letter, (i) there are
no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are not as of the date hereof, and at the
Effective Time there will not be, any outstanding or authorized
options, warrants, rights, subscriptions, claims of any character,
-11-
agreements, rights of redemption, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to
Common Stock or any other shares of capital stock of the Company,
pursuant to which the Company is or may become obligated to issue
shares of Common Stock, any other shares of its capital stock or any
securities convertible into, exchangeable for, or evidencing the right
to subscribe for, any shares of the capital stock of the Company. After
the Effective Time, the Surviving Corporation will have no obligation
to issue, transfer or sell any shares of or common stock of the
Surviving Corporation pursuant to any Employee Benefit Plan (as defined
in Section 3.01(j)). Neither the Company nor any of its subsidiaries
has authorized or issued any bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or
convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of the Company or any of its
subsidiaries on any matter.
(ii) Section 3.01(c)(ii) of the Company Disclosure
Letter lists all of the Company's subsidiaries. All of the
outstanding shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, are not subject to, nor were
they issued in violation of, any preemptive rights, and are
owned, of record and beneficially, by the Company, free and
clear of all liens, security interests, rights of first
refusal, charges, security agreements, encumbrances, options,
claims or any other encumbrances of any kind whatsoever
("Encumbrance") except as set forth in Section 3.01(c)(ii) of
the Company Disclosure Letter. No shares of capital stock of
any of the Company's subsidiaries are reserved for issuance or
are held in the treasury of such subsidiary and there are no
outstanding or authorized options, warrants, rights, calls,
subscriptions, claims of any character, agreements,
obligations, rights of redemption, convertible or exchangeable
securities, or other commitments, contingent or otherwise,
relating to the capital stock of any subsidiary, pursuant to
which such subsidiary is or may become obligated to issue any
shares of capital stock of such subsidiary or any securities
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such subsidiary. Other than as
set forth in Section 3.01(c)(ii) of the Company Disclosure
Letter, there are no restrictions of any kind which prevent
the payment of dividends by any of the Company's subsidiaries.
Except for the subsidiaries listed in Section 3.01(c)(ii) of
the Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other equity
interest in any Person or have any direct or indirect equity
or ownership interest in any Person and neither the Company
nor any of its subsidiaries is subject to any obligation or
requirement to provide funds for or to make any investment (in
the form of a loan or capital contribution) to or in any
Person.
-12-
(d) Consents and Approvals; No Violations. Assuming (i) the
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), are made and the waiting period
thereunder has been terminated or has expired, (ii) the requirements of
the Exchange Act relating to the Proxy Statement and the Offer are met,
(iii) the filing of the Certificate of Merger and other appropriate
merger documents, if any, as required by DGCL are made and (iv)
approval of the Merger by holders a majority of the outstanding shares
of Common Stock entitled to vote, if required by the DGCL, is received,
the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby
will not: (1) violate any provision of the Certificate of Incorporation
or By-Laws of the Company or the comparable governing documents of any
of its subsidiaries, in each case, as amended; (2) violate any statute,
code, ordinance, rule, regulation, order or decree (collectively
"Laws") of any court, arbitrator or of any governmental or regulatory
body, agency or authority (each a "Governmental Entity") applicable to
the Company or any of its subsidiaries or their respective properties
or assets; (3) require any filing with, or permit, consent or approval
of, or the giving of any notice to, any Governmental Entity by the
Company; or (4) except as set forth in Section 3.01(d) of the Company
Disclosure Letter, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation,
payment, acceleration or other material right or obligation or
limitation) under, or result in the creation of any Encumbrance upon
any of the properties or assets of the Company or any of its
subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or other instrument or obligation to which
the Company or any of its subsidiaries is a party, or by which it or
any of their respective properties or assets are bound or subject
except for in the case of clauses (3) and (4) above for any such
filings, permits, consents, approvals, violations, breaches or
Encumbrances which, individually or in the aggregate would not have a
material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole, or would not be reasonably likely to
prevent or materially delay consummation of the transactions
contemplated by this Agreement (including the transactions contemplated
by the Stockholders Agreement).
(e) Company Reports and Financial Statements. (i) Since
January 1, 1996 the Company has filed all forms, reports and documents
with the Commission required to be filed by it pursuant to the federal
securities laws and the Commission rules and regulations thereunder,
and all forms, reports and documents filed with the Commission by the
Company have complied in all material respects with all applicable
requirements of the federal securities laws and the Commission rules
and regulations promulgated thereunder. The Company has made available
to Parent true and complete copies of all forms, reports, registration
statements and other filings filed by the Company with the Commission
from January 1, 1996 through the date
-13-
of this Agreement (such forms, reports, registration statements and
other filings, together with any exhibits, any amendments thereto and
information incorporated by reference therein, are sometimes
collectively referred to as the "Commission Filings"). As of their
respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets, and the consolidated
statements of operations, consolidated statements of stockholders'
equity and consolidated statements of cash flows, included in the
Commission Filings, were prepared in accordance with generally accepted
accounting principles ("GAAP") (as in effect from time to time) applied
on a consistent basis, (except as may be indicated therein or in the
notes or schedules thereto) and fairly present, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the results of
their operations and changes in cash flows for the periods then ended.
(ii) The Company shall deliver to Sub and Parent as
soon as they become available true and complete copies of any
report or statement mailed by it to its stockholders generally
or filed by it with the Commission subsequent to the date
hereof and prior to the Effective Time. As of their respective
dates, such reports and statement will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they are made, not misleading and will comply in all material
respects with all applicable requirements of the federal
securities laws and the Commission rules and regulations
thereunder. The consolidated financial statements of the
Company included in such reports and statement will be
prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes or
schedules thereto) and will fairly present in all material
respects the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and
the results of their operations and their cash flows for the
periods then ended (subject in the case of any unaudited
financial statements, to normal year-end adjustments).
(f) Absence of Certain Changes. Except as previously disclosed
in the Commission Filings or as set forth in Section 3.01(f) of the
Company Disclosure Letter, since March 31, 1997 or as specifically
contemplated by this Agreement (i) there has not been any material
adverse change in the Condition of the Company and its subsidiaries
taken as a whole; (ii) the businesses of the Company and each of its
subsidiaries have been conducted only in the ordinary course consistent
with past practice; (iii) neither the Company nor any of its
subsidiaries has incurred any material liabilities (direct, contingent
or otherwise) or engaged in any material
-14-
transaction or entered into any material agreement outside of the
ordinary course of business consistent with past practice; (iv) the
Company and its subsidiaries have not increased the compensation of any
officer or granted any general salary or benefits increase to their
employees, in each case other than in the ordinary course of business
consistent with past practice; (v) neither the Company nor any of its
subsidiaries has taken any action referred to in Section 4.03 hereof,
except as permitted thereby; (vi) there has been no declaration,
setting aside or payment of any dividend or other distribution with
respect to the capital stock of the Company; (vii) there has been no
change by the Company in accounting principles, practices or methods,
except as may have been required by GAAP or applicable Law and (viii)
neither the Company nor any of its subsidiaries has agreed (whether or
not in writing) to do any of the foregoing.
(g) Title to Properties; Encumbrances. The Company and each of
its subsidiaries has good, valid and marketable title to (i) all of its
material tangible properties and assets (real and personal), including,
without limitation, all the properties and assets reflected in the
consolidated balance sheet as of December 31, 1997 except as indicated
in the notes thereto and except for properties and assets reflected in
the consolidated balance sheet as of March 31, 1997 which have been
sold or otherwise disposed of in the ordinary course of business
consistent with past practice after such date, and (ii) all the
material tangible properties and assets purchased by the Company and
any of its subsidiaries since March 31, 1997 except for such properties
and assets which have been sold or otherwise disposed of in the
ordinary course of business consistent with past practice; in each case
subject to no Encumbrance, except for (1) Encumbrances set forth in the
consolidated balance sheet as of March 31, 1997 (including the notes
thereto) or as set forth in Section 3.01(g) of the Company Disclosure
Letter, (2) Encumbrances consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of
real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such
property by the Company or any of its subsidiaries in the operation of
its respective business, (3) statutory liens or liens of landlords,
carriers, warehousemen, mechanics, suppliers, materialmen or repairmen
arising in the ordinary course of business, (4) Encumbrances for
current taxes, assessments or governmental charges or levies on
property not yet due and delinquent and (5) such Encumbrances as,
individually or in the aggregate, would not be reasonably expected to
have a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole. All of the material properties and
assets of the Company and its subsidiaries are in good working order,
normal wear and tear excepted and are suitable for their current uses
in their respective businesses.
(h) Compliance with Laws. Except as set forth in Section
3.01(h) of the Company Disclosure Schedule, the Company and its
subsidiaries are in compliance with applicable Laws except where the
failure to so comply would not have a
-15-
material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or would not prevent or materially delay
consummation of the transactions contemplated by this Agreement.
(i) Litigation. Except as disclosed in the Commission Filings
or as set forth in Section 3.01(i) of the Company Disclosure Letter,
there is no action, suit, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before (or
to the knowledge of the Company any investigation by) any Governmental
Entity, pending, or to the best knowledge of the Company, threatened,
against or affecting the Company or any of its subsidiaries, or any of
their properties, assets or rights which would be reasonably likely to
have a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or would prevent or materially delay
consummation of the transactions contemplated by this Agreement. Except
as disclosed in the Commission Filings, neither the Company nor any of
its subsidiaries is subject to any judgment, order or decree entered in
any lawsuit, arbitration or other proceeding which would have a
material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or on the ability of the Company or any
subsidiary to conduct its business as presently conducted or would
prevent or materially delay consummation of the transactions
contemplated by this Agreement.
(j) Employee Benefit Plans. (i) Each employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained by the Company
and/or any of its United States subsidiaries or to which the Company or
any such subsidiary contributes (or has any obligation to contribute)
(collectively, the "US Employee Benefit Plans") is listed in Section
3.01(j)(i) of the Company Disclosure Letter. Also listed on the
Disclosure Schedule are any bonus, deferred compensation, profit
sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination,
severance, change of control or incentive compensation plan or
agreement maintained by the Company or any of its subsidiaries. Except
as set forth in Section 3.01(j)(i) of the Company Disclosure Letter:
(1) each US Employee Benefit Plan is in material compliance with
applicable law and has been administered and operated in all respects
in accordance with its terms; (2) each US Employee Benefit Plan which
is intended to be "qualified" within the meaning of Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), has
received a favorable determination letter from the Internal Revenue
Service with respect to "TRA" (as defined in Section 1 of Rev. Proc.
93-39) and, to the knowledge of the Company, no event has occurred and
no condition exists which would result in the revocation of any such
determination; (3) no US Employee Benefit Plan is covered by Title IV
of ERISA or subject to Section 412 of the Code or Section 302 of ERISA;
(4) no liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by the Company or any of its subsidiaries
with
-16-
respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, covered by Title IV
of ERISA ("Single Employer Plan") currently or formerly maintained by
any of them, or the Single-Employer Plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or
Section 414(b) or (c) of the Code (an "ERISA Affiliate"); (5) no notice
of a "reportable event", within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has
been required to be filed for any U.S. Employee Benefit Plan covered by
Title IV of ERISA ("Pension Plan") within the 12-month period ending on
the date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement; (6) neither any Pension
Plan nor any Single-Employer Plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver; (7) neither the Company
nor any of its subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any Single-Employer Plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code; (8) under each
Pension Plan which is a Single-Employer Plan, as of the last day of the
most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Plan, and there has been no material change in the financial condition
of such Plan since the last day of the most recent plan year; (9) the
withdrawal liability of the Company and its subsidiaries under each
U.S. Employee Benefit Plan which is a multiemployer plan to which the
Company, any of its subsidiaries or an ERISA affiliate has contributed
during the preceding 12 months, determined as if a "complete
withdrawal", within the meaning of Section 4203 of ERISA, had occurred
as of the date hereof, does not exceed $100,000; (10) neither the
Company nor any of its subsidiaries, nor, to the Company's knowledge,
any other "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any US
Employee Benefit Plan that would result in the imposition of a penalty
pursuant to Section 502 of ERISA, damages pursuant to Section 409 of
ERISA or a tax pursuant to Section 4975 of the Code; (11) no US
Employee Benefit Plan provides for post-employment or retiree health or
life insurance benefits, except to the extent required by Part 6 of
Subtitle B of Title I of ERISA or Section 4980B of the Code; (12) no
litigation or administrative proceeding has been commenced, or, to the
Company's knowledge, threatened with respect to any US Employee Benefit
Plan (other than routine claims for benefits payable in the ordinary
course, and appeals of denied such claims); (13) all contributions
required to be made under the terms of any US Employee Benefit Plan
have been timely made or have been reflected in the Audited Financial
Statements or the Preliminary Financial Statements.
-17-
(ii) Each employee benefit plan other than any US Employee
Benefit Plan maintained or contributed to by any non-United States
subsidiary of the Company is listed in Section 3.01(j)(ii) of the
Company Disclosure Letter (collectively, the "Foreign Employee Benefit
Plans"). Except as set forth in Section 3.01(j)(ii) of the Company
Disclosure Letter: (1) each Foreign Employee Benefit Plan is in
compliance with applicable law and has been administered and operated
in all respects in accordance with its terms; and (2) no litigation or
administrative proceeding has been commenced, or, to the Company's
knowledge, threatened, with respect to any Foreign Employee Benefit
Plan (other than routine claims for benefits payable in the ordinary
course, and appeals of denied such claims); and (3) with respect to
each Foreign Employee Benefit Plan which is a pension plan, the Company
and its subsidiaries have no material unfunded liabilities with respect
to any such pension plan.
(k) Taxes. (i) The Company has filed or caused to be filed, or
will file or cause to be filed on or prior to the Closing Date, all
material federal, state, local and foreign tax returns and tax reports
which are required to be filed by, or with respect to, the Company on
or prior to the Closing Date (taking into account any extension of time
to file granted to or on behalf of the Company) (collectively, the
"Returns"). Except as set forth in Section 3.01(k) of the Company
Disclosure Letter, all material federal, state, local and foreign
income, gross receipts, windfall profits, severance, property, sales,
use, license, excise, franchise, employment, withholding or similar
taxes imposed on the income, properties or operations of the Company,
together with any interest, additions to tax or penalties with respect
thereto and any interest in respect of such additions to tax or
penalties ("Taxes") due and payable by the Company have been, or prior
to the Closing Date will be, paid or fully provided for on the books
and records of the Company in accordance with GAAP, and all material
Taxes not yet due and payable with respect to periods (or portions
thereof) ending on or prior to the Closing Date have been or will be
fully provided for on the books and records of the Company in
accordance with generally accepted accounting principles. Except as set
forth in Section 3.01(k) of the Company Disclosure Letter, (a) all
Returns with respect to periods ending on or before the Closing Date
have been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for assessment
of the Taxes in respect of which such Returns were required to be filed
has expired, (b) no issues have been raised by any relevant taxing
authority in connection with an audit or examination of any such
Returns which are currently pending, and (c) no waivers of statutes of
limitation are in effect with respect to any Taxes of the Company.
(ii) The Company is not, nor was it at any time
during the five-year period ending on the Closing Date, a
"United States real property holding corporation" within the
meaning of Section 897(c) of the Code.
-18-
(iii) Except as set forth in Section 3.01(k) of the
Company Disclosure Letter, none of the Company, Parent or Sub
will be obligated as a result of the transactions contemplated
by this Agreement to make a payment that would be a "parachute
payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code without regard to whether
such payment is reasonable compensation for personal services
performed or to be performed in the future.
(l) Liabilities. Except as set forth in Section 3.01(l) of the
Company Disclosure Letter, neither the Company nor any of its
subsidiaries has any material claims, liabilities or indebtedness
outstanding except (i) as set forth in the consolidated balance sheet
of the Company as of Xxxxx 00, 0000, (xx) for liabilities incurred
subsequent to March 31, 1997, in the ordinary course of business
consistent with past practice, (iii) as set forth in the Commission
Filings.
(m) Intellectual Properties. Except as would not have a
material adverse effect on the Condition of the Company and its
subsidiaries, taken as a whole, the Company and its subsidiaries own or
have valid, binding and enforceable rights to use all patents,
trademarks, trade names, service marks, service names, copyrights,
applications therefor and licenses or other rights in respect thereof
("Intellectual Property") used or held for use in connection with the
business of the Company or its subsidiaries, without any known conflict
with the rights of others. Except as set forth in Section 3.01(m) of
the Company Disclosure Letter, neither the Company nor any of its
subsidiaries has received any notice from any other Person pertaining
to or challenging the right of the Company or any of its subsidiaries
to use any Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or
used by or licensed to the Company or its subsidiaries, except with
respect to rights the loss of which, individually or in the aggregate,
would not be reasonably likely to have a material adverse effect on the
Condition of the Company and its subsidiaries, taken as a whole.
(n) Material Contracts. Except as set forth in Section
3.01(n) of the Company Disclosure Letter, neither the Company nor
any of its subsidiaries has or is bound by:
(i) any agreement, contract or commitment that
involves the performance of services by it of an amount or
value (as measured by the revenue derived therefrom during
1997) in excess of $500,000 annually, unless terminable by the
Company or its relevant subsidiary on not more than 90 days
notice,
-19-
(ii) any agreement, indenture or other instrument
which contains restrictions with respect to payment of
dividends or any other distribution in respect of its capital
stock,
(iii) any agreement, contract or commitment to be
performed relating to capital expenditures in excess of
$100,000 in any calendar year, or in the aggregate require
expenditures in excess of $1,000,000 other than those capital
expenditures approved as part of the Company's fiscal 1999
budget a true and correct copy of which has heretofore been
provided to Parent,
(iv) any agreement, indenture or instrument relating
to indebtedness for borrowed money or the deferred purchase
price of property (excluding trade payables in the ordinary
course of business, intercompany indebtedness and leases for
telephones, copy machines, facsimile machines and other office
equipment),
(v) any loan or advance to (other than advances to
employees in the ordinary course of business in amounts of
$25,000 or less to any individual and $100,000 in the
aggregate), or investment in (other than investments in
subsidiaries), any Person, or any agreement, contract or
commitment relating to the making of any such loan, advance or
investment or any agreement, contract or commitment involving
a sharing of profits (except for bonus arrangements with
employees entered into in the ordinary course of business
consistent with past practice),
(vi) any guarantee or other contingent liability in
respect of any indebtedness or obligation of any Person (other
than in the ordinary course of business, consistent with past
practice or with respect to any indebtedness or obligation of
the Company or any subsidiary),
(vii) any management service, consulting or any other
similar type of contract, involving payments of more than
$250,000 annually, unless terminable by the Company on not
more than 90 days notice,
(viii) any agreement, contract or commitment limiting
the ability of the Company or any of its subsidiaries to
engage in any line of business or to compete with any Person,
(ix) any warranty, guaranty or other similar
undertaking with respect to a contractual performance extended
by the Company or any of its subsidiaries other than in the
ordinary course of business, or
-20-
(x) any material amendment, modification or
supplement in respect of any of the foregoing.
Except as otherwise set forth in Section 3.01(n) of the
Company Disclosure Letter, each contract or agreement set forth in Section
3.01(n) of the Company Disclosure Letter is in full force and effect and (A)
there exists no default or event of default or event, occurrence, condition or
act (including the consummation of Offer or the Merger) on the part of the
Company or any subsidiary which, with the giving of notice, the lapse of time or
the happening of any other event or condition, would become a default or event
of default thereunder and (B) no approval or consent of, or notice to, any
person is needed in order that each such contract or agreement shall continue in
full force and effect in accordance with its terms without penalty, acceleration
or rights of early termination by reason of the consummation of the transactions
contemplated by this Agreement.
(o) Proxy Statement and Schedule l4D-9. The definitive proxy
statement and related materials, if required, to be furnished to the
holders of Common Stock in connection with the Merger pursuant to
Section 4.04 hereof (the "Proxy Statement") will comply in all material
respects with the Exchange Act and the rules and regulations thereunder
and any other applicable laws. If at any time prior to the Effective
Time any event occurs which should be described in an amendment or
supplement to the Proxy Statement, the Company will promptly file and
disseminate, as required, an amendment or supplement which complies in
all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. Prior to its
filing with the Commission, Parent and Sub and their Counsel shall have
a reasonable opportunity to review the amendment or supplement. None of
the information supplied by the Company for inclusion in the Proxy
Statement, will, at the date such information is supplied and at the
Effective Time, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
made, in light of the circumstance under which they are made, not
misleading. None of the information in the Schedule 14D-9, at the
respective times the Schedule 14D-9 is filed with the Commission, will
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made
with respect to any information with respect to Parent, Sub or their
officers, directors or affiliates provided to the Company by Parent or
Sub in writing for inclusion in the Schedule 14D-9. The Schedule l4D-9
will comply in all material respects with the Exchange Act and the
rules and regulations thereunder and any other applicable laws. If at
any time prior to the expiration or termination of the Offer any event
occurs which should be described in an amendment or supplement to the
Schedule l4D-9 or any amendment or supplement thereto, the Company will
promptly file and disseminate, as required, an amendment or supplement
which complies in all material respects with the Exchange Act and the
rules and regulations
-21-
thereunder and any other applicable laws. Prior to its filing with the
Commission, Parent and Sub and their Counsel shall have a reasonable
opportunity to review the amendment or supplement. None of the
information supplied by the Company to Parent or Sub for inclusion or
incorporation by reference in the Offer Documents contained, at the
respective times the Offer Documents were filed with the SEC, any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(p) Broker's or Finder's Fee. Except for Xxxxxxxx Xxxxxxx
(whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm) no agent, broker, Person or
firm acting on behalf of the Company is, or will be, entitled to any
fee, commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by, or under common
control with any of the parties hereto, in connection with this
Agreement or any of the transactions contemplated hereby.
(q) Environmental Laws and Regulations. Except as set forth in
Section 3.01(q) of the Company Disclosure Letter, or as would not have
a material adverse effect on the Condition of the Company and its
subsidiaries, taken as a whole:
(i) Hazardous Materials have not been generated,
used, treated or stored on any Company Property, except for
quantities used or stored at such Property in compliance with
Environmental Laws, required in connection with the normal
operations and maintenance of such Property and as would not
reasonably be expected to result in liability under any
Environmental Law.
(ii) Hazardous Materials have not been released or
disposed of on any Company Property, except for quantities
released on such Property in compliance with Environmental
Laws and required in the normal operation and maintenance of
such Property.
(iii) The Company and its subsidiaries are in
compliance with Environmental Laws and the requirements of
permits issued under such Environmental Laws with respect to
any Company Property.
(iv) There are no pending or threatened Environmental
Claims against the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Property.
(v) neither the Company nor any subsidiary is subject
to any order, decree, injunction or other arrangement with any
Governmental Entity
-22-
or any indemnity or other agreement with any third party
relating to liability under any Environmental Law.
(vi) none of the properties of the Company or any
subsidiary contain any underground storage tanks,
asbestos-containing material, lead products, or
polychlorinated biphenyls.
(vii) there are no other circumstances or conditions
involving the Company or any subsidiary that could reasonably
be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use,
or transfer of any property in connection with any
Environmental Law.
As used in this Section 3.01(q), the following terms shall
have the meanings set forth below:
(i) "Company Property" means any real property and
improvements currently or formerly owned, leased, used,
operated or occupied by the Company or any of its
subsidiaries.
(ii) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any
form that is friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas;
and (b) any chemicals, materials or substances defined as or
included in the definition of "Hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law or otherwise regulated
under any Environmental Law.
(iii) "Environmental Law" means any applicable
federal, state, foreign or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law in
effect and in each case as amended as of the Closing Date, and
any judicial or administrative interpretation thereof as of
the Closing Date, including any judicial or administrative
order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.;
the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 6901 et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean
Air Act, 42 U.S.C. ss. 7401 et seq.; the Occupational Safety
and Health Act, 28 U.S.C. ss. 2412; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Oil
-23-
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; and their
state and local counterparts and equivalents.
(iv) "Environmental Claims" means administrative,
regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or
violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such
Law (hereafter "Claims"), including (a) Claims by governmental
or regulatory authorities for enforcement, investigations,
monitoring, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental
Law, and (b) Claims by any third party relating to any
Environmental Law seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.
(v) "Release" means disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying, seeping, placing and the like, into or
upon any land or water or air, or otherwise entering into the
environment.
(r) State Takeover Statutes; Charter Provisions. Section 203
of the DGCL is inapplicable to the Offer, the Merger, this Agreement
and the Stockholders Agreement and the transactions contemplated hereby
and thereby. No other state takeover statute or similar statute or
regulation applies to the Offer, the Merger or the transactions
contemplated hereby or by the Stockholders Agreement.
(s) Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxxx Xxxxxxx, to the effect that, as of the date of this
Agreement, the consideration per share of Common Stock to be received
in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view, and a
complete and correct signed copy of such opinion has been, or will be,
delivered to Sub and Parent.
(t) Rights Agreement. The Company has not adopted or otherwise
implemented a stockholder rights plan or other similar agreement or
instrument.
(u) Voting Requirements. Unless the Merger is consummated in
accordance with the provisions of Section 253 of the DGCL, the
affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve this Agreement and
the transactions contemplated hereby.
-24-
3.02 Representations and Warranties of Parent and Sub. Each of
Parent and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power.
Parent is a corporation duly organized and validly existing and in good
standing under the laws of its jurisdiction of incorporation. Sub is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of Parent and Sub
has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted except such instances where the failure to have such power
and authority, individually or in the aggregate, would not prevent or
materially delay the consummation of the transactions contemplated by
this Agreement.
(b) Authorization and Validity of Agreement. Each of Parent
and Sub has the corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Sub, and the consummation
by each of them of the transactions contemplated hereby, have been duly
authorized by the Boards of Directors of each of Parent and Sub. No
other corporate action on the part of either of Parent or Sub is
necessary to authorize the execution, delivery and performance of this
Agreement by each of Parent and Sub and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of Parent and Sub and is a valid and binding
obligation of each of Parent and Sub, enforceable against each of
Parent and Sub in accordance with its terms, except that such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, and general equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) the
filings required under the HSR Act are made and the waiting period
thereunder has been terminated or has expired, (ii) the requirements of
the Exchange Act relating to the Proxy Statement and the Offer are met,
and (iii) the filing of the Certificate of Merger and other appropriate
merger documents, if any, as required by the laws of the State of
Delaware, the execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions
contemplated hereby will not: (1) violate any provision of the
Certificate of Incorporation or By-Laws of either Parent or Sub; (2)
violate any statute, ordinance, rule, regulation, order or decree of
any court or of any governmental or regulatory body, agency or
authority applicable to Parent or Sub or by which either of their
respective properties or assets may be bound; (3) require any filing
with, or permit, consent or approval of, or the giving of any notice to
any governmental or regulatory body, agency or authority; or (4) result
in a violation or breach of, conflict with, constitute (with or without
due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation
-25-
or acceleration) under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
the Parent, Sub or any of their subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, agreement, lease or other instrument or
obligation to which Parent or Sub or any of their subsidiaries is a
party, or by which they or their respective properties or assets may be
bound except for in the case of clauses (3) and (4) above for such
filing, permit, consent, approval or violation, which would not prevent
or materially delay consummation of the transactions contemplated by
this Agreement.
(d) Offer Documents, Schedule l4D-9 and Proxy Statement. The
Offer Documents will comply in all material respects with the Exchange
Act and the rules and regulations thereunder and any other applicable
laws. The Offer Documents will not, at the time such Offer Documents
are filed with the Commission or are first published, sent or given to
the Company's stockholders, as the case may be, contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the expiration or
termination of the Offer any event occurs which should be described in
an amendment or supplement to the Schedule l4D-1 or any amendment or
supplement thereto, Sub will file and disseminate, as required, an
amendment or supplement which complies in all material respects with
the Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the Commission, the amendment
or supplement shall be delivered to the Company and its counsel and the
Company shall be given the opportunity to comment thereon. The written
information supplied or to be supplied by Parent and Sub for inclusion
in the Proxy Statement and the Schedule l4D-9 of the Company will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made, in light
of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made
with respect to any information with respect to the Company or its
officers, directors and affiliates provided to Parent or Sub by the
Company in writing for inclusion in the Offer Documents or amendments
or supplements thereto.
(e) Broker's or Finder's Fee. Except for Lazard Freres & Co.
LLC (whose fees and expenses as financial advisor to Parent and Sub
will be paid by Parent or Sub), no agent, broker, Person or firm acting
on behalf of Parent or Sub is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto,
or from any Person controlling, controlled by, or under common control
with any of the parties hereto, in connection with this Agreement or
any of the transactions contemplated hereby.
-26-
(f) Financing. Parent has available to it sufficient funds to
consummate the transactions contemplated hereby. On or prior to the
purchase of shares of Common Stock pursuant to the Offer and Effective
Time Parent shall provide or cause to be provided to Sub the funds
necessary to consummate the transactions contemplated hereby.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Properties and Records.
During the period commencing on the date hereof and ending at the Effective
Time, the Company shall, and shall cause each of its subsidiaries to, upon
reasonable notice, afford Parent and Sub, and their respective counsel,
accountants, consultants and other authorized representatives, reasonable access
during normal business hours to the employees, properties, books and records of
the Company and its subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of the Company and
its subsidiaries and all other information concerning the Company's or its
subsidiaries' business, properties and personnel as Parent and Sub may
reasonably request. The Company shall furnish promptly to Parent and Sub (a) a
copy of each report, schedule, registration statement and other document filed
by it or its subsidiaries during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its or
its subsidiaries' business, properties and personnel as Parent and Sub may
reasonably request. The Company agrees to cause its officers and employees to
furnish such additional financial and operating data and other information and
respond to such inquiries as Parent and Sub shall from time to time reasonably
request.
4.02 Confidentiality. Information obtained by Parent and Sub
and their respective counsel accountants, consultants and other authorized
representatives pursuant to Section 4.01 hereof shall be subject to the
provisions of the Confidentiality Agreement between the Company and Technicolor
Video Cassettes, Inc. dated December 10, 1997.
4.03 Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as specifically permitted,
required or specifically contemplated by or otherwise described in this
Agreement or otherwise consented to or approved by Sub and Parent (which consent
or approval shall not be unreasonably withheld, conditioned or delayed), during
the period commencing on the date hereof and, except with respect to Section
4.03(b)(xiv) which shall survive any termination of this Agreement in accordance
with Section 6.02 hereof, ending at the Effective Time.
(a) The Company and each of its subsidiaries will conduct
their respective businesses and operations only according to their
ordinary course of business
-27-
consistent with past practice and will use their reasonable best
efforts to preserve intact their respective business organization, keep
available the services of their officers and employees and maintain
satisfactory relationships with licensors, suppliers, distributors,
clients, landlords, joint venture partners, employees, agents and
others having business relationships with them;
(b) Neither the Company nor any of its subsidiaries shall (i)
make any change in or amendment to its Certificate of Incorporation or
By-Laws (or comparable governing documents); (ii) distribute, issue or
sell any shares of its capital stock (other than in connection with the
exercise of Options outstanding on the date hereof) or any of its other
securities, or issue any securities convertible into, or options,
warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of, any
shares of its capital stock or any of its other securities, or make any
other changes in its capital structure; (iii) sell or pledge or agree
to sell or pledge any stock owned by it in any of its subsidiaries;
(iv) declare, pay, set aside or make any dividend or other distribution
or payment with respect to, or split or combine, redeem or reclassify,
or purchase or otherwise acquire any shares of its capital stock or its
other securities, other than dividends in the ordinary course,
consistent with past practice by a direct or indirect wholly owned
subsidiary to is parent, (v) (A) enter into any contract or commitment
with respect to capital expenditures in excess of $100,000,
individually or $1,000,000, in the aggregate, other than those capital
expenditures approved as part of the Company's fiscal 1999 budget; (B)
acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business or division thereof; or
(C) enter into, amend, modify, supplement or cancel any material
contract, (vi) except in the ordinary course of business, acquire a
material amount of assets or securities or release or relinquish any
material contract rights; (vii) except to the extent required under
existing employee and director benefit plans, agreements or
arrangements as in effect on the date of this Agreement, (a) increase
the compensation or fringe benefits of any of its directors, officers
or employees, except for increases in salary or wages of employees
(other than officers) of the Company and its subsidiaries in the
ordinary course of business, consistent with past practice, (b) grant
any severance or termination pay not currently required to be paid
under existing severance plans, (c) enter into any employment,
consulting or severance agreement or arrangement with any present or
former director, officer or other employee of the Company or any of its
subsidiaries, or (d) establish, adopt, enter into or amend or terminate
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
present or former directors, officers or employees; (viii) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber
or subject to any lien, any material properties or assets or incur or
-28-
modify any indebtedness or other material liability (other than
indebtedness incurred in the ordinary course under the Amended and
Restated Credit Agreement among the Company, certain of its
subsidiaries and NationsBank, N.A. (the "Existing Credit Facility") or
issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for the obligations of another
Person or, otherwise than in the ordinary course of business,
consistent with past practice make any loan or extend credit; (ix) make
any material tax election or settle or compromise any material tax
liability; (x) except as required by applicable law or generally
accepted accounting principles, make any material change in its method
of accounting; (xi) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger); (xii)
agree to the settlement of any material claim or litigation (including,
but not limited to any claim or litigation in respect of or related to
any Environmental Law), (xiii) permit any material insurance policy
naming it as beneficiary or a loss payable payee to be cancelled or
otherwise terminate without notice to Parent unless such insurance
policy is immediately replaced, with no gaps or lapses in coverage,
with an insurance policy issued by a financially sound and reputable
insurance company in at least such amounts and against at least such
risks as the cancelled policy for a premium not greater than 110% of
the premium for the cancelled or otherwise terminated policy, (xiv)
take any action, including, without limitation, the adoption of any
stockholder rights plan or similar agreement, arrangement or instrument
or amendments to its Certificate of Incorporation (or other
organizational or governing documents), which would, directly or
indirectly, restrict or impair the ability of Parent or Sub to vote, or
otherwise to exercise the rights and receive the benefits of a
stockholder with respect to, securities of the Company that may be
acquired or controlled by Parent or Sub or permit any stockholder to
acquire securities of the Company on a basis not available to Parent or
(xv) agree, in writing or otherwise, to take any of the foregoing
actions; and
(c) The Company shall not, and shall not permit any of its
subsidiaries to, (i) take any action (or knowingly omit to take any
action), engage in any transaction or enter into any agreement which
action, knowing omission, transaction or agreement would cause any of
the representations or warranties set forth in Section 3.01 hereof to
be untrue as of the Closing Date, or (ii) purchase or acquire, or offer
to purchase or acquire, any shares of capital stock of the Company; and
(d) The Company and each of its subsidiaries shall pay all
material Taxes and shall use reasonable best efforts to pay all other
Taxes as the same become due other than Taxes which are being contested
in good faith.
-29-
4.04 Proxy Statement. If stockholder approval of the Merger is
required by law, as promptly as practicable, the Company will promptly prepare
and file a preliminary Proxy Statement with the Commission and will use its
reasonable efforts to respond to the comments of the Commission in connection
therewith and to furnish all information required to prepare the definitive
Proxy Statement (including, without limitation, financial statements and
supporting schedules and certificates and reports of independent public
accountants). Parent, Sub and Company will cooperate with each other in
connection with the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, each of Parent and Sub will furnish to the Company
the information relating to it required by the Exchange Act to be set forth in
the Proxy Statement. Promptly after the expiration or termination of the Offer,
if required by the DGCL in order to consummate the Merger, the Company will
cause the definitive Proxy Statement to be mailed to the stockholders of the
Company and, if necessary, after the definitive Proxy Statement shall have been
so mailed, promptly circulate amended, supplemental or supplemented proxy
material and, if required in connection therewith, resolicit proxies. The
Company will not use any proxy material in connection with the meeting of its
stockholders without providing Parent and Sub with a reasonable opportunity to
review and comment on such proxy material.
4.05 Stockholder Approval. (a) Promptly after the expiration
or termination of the Offer, if required by DGCL in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law, duly call, convene and hold a meeting of the holders of
Common Stock for the purpose of voting upon this Agreement and the Merger and
the Company agrees that this Agreement and the Merger shall be submitted at such
special meeting. The Company shall use its reasonable best efforts to solicit
from its stockholders proxies, and, subject always to the fiduciary obligations
of the Company's directors under applicable law, shall take all other action
necessary and advisable to secure the vote of stockholders required by
applicable law to obtain the approval for this Agreement and the Merger. Subject
to Section 4.07 of this Agreement, the Company agrees that it will include in
the Proxy Statement the recommendation of its Board of Directors that holders of
Common Stock approve and adopt this Agreement and approve the Merger. Parent
will cause all shares of Common Stock owned by Parent and its subsidiaries to be
voted in favor of the Merger.
(b) Notwithstanding the foregoing, in the event that Sub shall
acquire at least 90% of the outstanding Company Common Stock, the Company
agrees, at the request of Parent and Sub, subject to Article V, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
4.06 Reasonable Efforts. Subject to the terms and conditions
provided herein, each of the Company, Parent and Sub shall, and the Company
shall cause each of its subsidiaries to, cooperate and use their respective
reasonable efforts to (a) take, or cause to
-30-
be taken, all appropriate action, to do and cause to be done all things
reasonably necessary, proper and advisable and to make, or cause to be made, all
filings necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, their respective reasonable efforts to obtain, as
promptly as practicable and prior to the Closing Date, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities, regulatory organizations, and other instrumentalities and agencies
and other third parties to contracts with the Company and its subsidiaries as
are necessary in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement and to fulfill the conditions to the Offer and the Merger and (b) as
promptly as practicable, make, or cause to be made, all filings and other
submissions necessary, proper or advisable with respect to this Agreement the
transactions contemplated hereby under (x) the HSR Act and any related
governmental request thereunder and (y) any other applicable laws or
regulations; provided, however, that no loan agreement or contract for borrowed
money shall be repaid except as currently required by its terms, in whole or in
part, and no contract shall be amended to increase the amount payable thereunder
or otherwise to be more burdensome to the Company or any of its subsidiaries in
order to obtain any such consent, approval or authorization without the written
consent of Sub. The Company, Parent and Sub shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company, Parent and Sub shall use their respective
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable law in connection with the transactions contemplated by this
Agreement.
4.07 No Solicitation of Other Offers. (a) The Company and its
affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents ("Agents") shall immediately cease any existing discussions or
negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal (as defined below). Neither the Company nor any of its
subsidiaries shall, directly or indirectly, take (and the Company shall not
authorize or permit its or its subsidiaries' Agents to take) any action to (i)
encourage, solicit or initiate the making of any Acquisition Proposal, (ii)
enter into any agreement with respect to any Acquisition Proposal or (iii)
participate in any way in discussions or negotiations with or furnish or
disclose any information to, any Person (other than Parent or Sub) in connection
with, or take any other action to knowingly facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, except that, the Company may participate in
discussions or negotiations with and, provided such Person enters into a
confidentiality agreement with the Company on terms no more favorable to such
Person than the confidentiality agreement between Technicolor Videocassette
Inc., a wholly owned subsidiary of Parent, and the Company, furnish or
-31-
disclose information to, any Person who has made, in the good faith judgment of
the Board of Directors of the Company after consultation with their financial
advisors, a bona fide offer or proposal (but not an inquiry) regarding a
transaction that would constitute an Acquisition Proposal and that, if agreed
with the Company, would constitute a Superior Proposal, provided such
Acquisition Proposal was not initially solicited, encouraged or knowingly
facilitated by the Company, its subsidiaries or their Agents in violation of
this Agreement after the date hereof, and, provided further, that nothing in
this Section 4.07 shall prevent the Company or Board of Directors from taking
and disclosing to the Company's stockholders a position contemplated by Rule
14d-9 and Rule 14e-2 promulgated under the Exchange Act with respect to any
tender offer or from making such disclosure to the Company's stockholders, upon
the advice of its independent outside legal counsel, as is required under
applicable Federal Securities law. Any actions permitted under, and taken in
compliance with, this Section 4.07 shall not be deemed a breach of any other
covenant or agreement of such party contained in this Agreement.
"Acquisition Proposal" shall mean any inquiry, proposal or
offer from any Person or group relating to any direct or indirect acquisition or
purchase of a substantial amount of assets of the Company or any of its
subsidiaries or of all or any portion of any class of equity securities of the
Company or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning all or any portion of
any class of equity securities of the Company or any of its subsidiaries, any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or any transaction having
similar economic effect involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement. "Superior Proposal" shall
mean a bona fide proposal made by a third party to acquire all or a portion of
the outstanding shares of the Company pursuant to a tender offer, a merger or a
sale of all of the assets of the Company (x) on terms which the Board of
Directors of the Company determines in their good faith reasonable judgment
(after consultation with its independent outside financial and legal advisors)
to be more favorable to the Company and its stockholders than the transactions
contemplated hereby.
(b) Except to the extent that, after consultation with independent
outside counsel to the Company, the Board of Directors determines in good faith
that such actions are required in order for the directors of the Company to
satisfy their fiduciary duties to the Company and its stockholders or to comply
with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act, the Board of
Directors shall not take any action to withdraw or modify in a manner adverse to
Parent or Sub, or take a public position inconsistent with, its approvals or
recommendation of the Offer, the Merger or this Agreement or to recommend
another Acquisition Proposal and shall not resolve to do any of the foregoing.
(c) In addition to the obligations of the Company set forth in
paragraph (a) above, on the date of receipt thereof, the Company shall advise
Parent of any request for information regarding or that may be reasonably likely
to result in, or any other inquiry or proposal
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relating to an Acquisition Proposal, the material terms and conditions of such
request, inquiry or proposal and of any subsequent material amendments or
changes thereto, and the identity of the Person making any such request, inquiry
or proposal.
(d) Immediately following the execution of this Agreement, the Company
will request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of making an Acquisition Proposal
with respect to the Company to return and/or destroy all confidential
information heretofore furnished to such Person by or on behalf of the Company.
4.08 Notification of Certain Matters. The Company shall give
prompt notice to Sub and Parent, and Parent and Sub shall give prompt notice to
the Company, of (a) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur has caused or would be reasonably likely cause
(i) any representation or warranty contained in the Agreement to be untrue in
any material respect or (ii) any of the Tender Offer Conditions to be
unsatisfied, (b) any notice of, or other communication relating to, a default or
event that, with notice or lapse of time or both, would become a default,
received by the Company or any of its subsidiaries under any material contract
to which the Company or any of its subsidiaries is a party or under which any of
their respective assets or properties is bound, or (c) any event, change in
circumstances or other occurrence that has or would be reasonably likely to have
a material adverse effect on the Condition of the Company and its subsidiaries
taken as a whole. Each of the Company on the one hand and Sub and Parent on the
other shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
4.09 HSR Act. The Company and Parent shall, as soon as
practicable and in any event within ten days from the date of this Agreement,
file Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and shall use their reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation.
4.10 Employee Benefits. (a) From and after the Effective Time
until the first anniversary of the Effective Time, the Surviving Corporation
shall (or, if necessary, Parent shall cause the Surviving Corporation to) ensure
that all employees and officers of the Company at the Effective Time receive
benefits in the aggregate substantially comparable to the benefits received by
such individuals under US Employee Benefit Plans and Foreign Employee Benefit
Plans immediately prior to the date hereof. Notwithstanding the foregoing,
following the Effective Time, the Surviving Corporation may terminate the
employment of any employee (subject to the payment of severance benefits payable
to the employee in connection with such termination).
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(b) From and after the Effective Time until the first
anniversary of the Effective Time, the Surviving Corporation shall (or, if
necessary, Parent shall cause the Surviving Corporation to) keep in effect all
severance policies that are applicable to employees and officers of the Company
immediately prior to the date hereof.
(c) Following the Effective Time, (i) the Surviving
Corporation shall (or, if necessary, Parent shall cause the Surviving
Corporation to) ensure that no medical, dental, health or disability plan
adopted by the Surviving Corporation shall have any preexisting condition
limitations and (ii) the Surviving Corporation shall (or, if necessary, Parent
shall cause the Surviving Corporation to) honor all deductibles and
out-of-pocket expenses paid by the employees and officers of the Company and its
U.S. subsidiaries under any medical, dental, health or disability plan of the
Company and its subsidiaries during the portion of the calendar year prior to
the time such employees become eligible to participate in any medical, dental,
health or disability plan adopted by the Surviving Corporation.
(d) Following the Effective Time, for purposes of eligibility
and vesting, the Surviving Corporation (and, if applicable, Parent) shall honor
all service credit accrued by the employees and officers of the Company under
all US Employee Benefit Plans and Foreign Employee Benefit Plans up to (and
including) the Effective Time.
4.11 Directors' and Officers' Insurance; Indemnification. (a)
From and after the Effective Time, the Surviving Corporation shall (or, if
necessary, Parent shall take all necessary action to) ensure that the
Certificate of Incorporation and the By-Laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and By-Laws on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company, unless such modification is required by law.
(b) For six years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current directors'
and officers' liability insurance covering those persons who are currently
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "Indemnified Parties"); provided that the Surviving Corporation may
substitute for such Company policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous and provided that
said substitution does not result in any gaps or lapses in coverage with respect
to matters occurring prior to the Effective Time or (y) cause the Parent's,
directors' and officers' liability insurance then in effect to cover those
persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy;
provided
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that the coverage provided by Parent's insurance shall be no less favorable to
the Indemnified Parties and shall provide no fewer rights than the Company's
directors' and officers' liability insurance policy currently in place.
Notwithstanding anything to the contrary in this Section 4.11, in no event shall
the Surviving Corporation be required to expend in any one year an amount in
excess of 200% of the annual premiums paid by the Company as of the date of this
Agreement for such insurance and if the annual premium for the insurance
coverage that would otherwise be required pursuant to this Section 4.11 would
exceed such amount, the Surviving Corporation shall only be obligated to obtain
a policy with the greatest coverage available for a cost not exceeding 200% of
the annual premiums currently paid by the Company.
4.12 Guaranty of Performance. If Sub fails to perform any of
its obligations under this Agreement, Parent shall, or shall cause another of
its affiliates to, perform such obligations.
4.13 Financing. Parent shall provide Sub with the funds
necessary to consummate the Offer, the Merger and the other transactions
contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub and
the Company. The respective obligations of Parent and Sub, on the one hand, and
the Company, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions:
(a) Approval of Company's Stockholders. To the extent required
by applicable law, this Agreement and the Merger shall have been
approved and adopted by holders of a majority of the outstanding shares
of the Common Stock of the Company entitled to vote in accordance with
applicable law (if required by applicable law) and the Company's
Certificate of Incorporation and By-Laws;
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or been
terminated;
(c) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court or by any governmental
or regulatory agency, body or authority which prohibits the
consummation of the Offer or the Merger and the transactions
contemplated by this Agreement and which is in effect at the Effective
Time, provided, however, that, in the case of a decree, injunction or
other order, each of the parties shall have used reasonable best
efforts to prevent the entry
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of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered;
(d) Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which
prohibits the consummation of the Offer or the Merger or has the effect
of making the purchase of the Common Stock illegal; and
(e) Payment for Common Stock. Sub shall have accepted for
payment and paid for a number of shares of Common Stock tendered
pursuant to the Offer that satisfies the Minimum Condition; provided
that the foregoing shall not be a condition to Parent's and Sub's
obligation to consummate the Merger if Sub's failure to purchase any
shares of Common Stock violates the terms of the Offer.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) by mutual consent of the Company, on the one hand,
and of Parent and Sub, on the other hand;
(b) by either Parent and Sub, on the one hand, or the Company,
on the other hand, if any governmental or regulatory agency shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, shares of Common Stock pursuant to the
Offer or the Merger and such order, decree or ruling or other action
shall have become final and nonappealable;
(c) by Parent and Sub, on the one hand, or the Company, on the
other hand, if the Effective Time shall not have occurred on or prior
to September 30, 1998 (the "Outside Date"), unless the Effective Time
shall not have occurred on or prior to the Outside Date because of a
material breach of any representation, warranty, obligation, covenant,
agreement or condition set forth in this Agreement on the part of the
party seeking to terminate this Agreement;
(d) by Parent and Sub, if the Offer is terminated or expires
in accordance with its terms without Sub having purchased any Common
Stock thereunder due to
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an event or occurrence which would result in a failure to satisfy any
of the conditions set forth on Exhibit A hereto, unless any such
failure shall have been caused by or resulted from the failure of
Parent or Sub to perform in a material respect any covenant or
agreement of either of them contained in this Agreement or the breach
by Parent or Sub in a material respect of any representation or
warranty of either of them contained in this Agreement;
(e) by Parent and Sub, in the event that (A) (i) any one or
more representations, warranties, covenants or agreements of the
Company contained in this Agreement that is qualified as to materiality
shall be untrue, incorrect or breached in any respect except for such
failures as would not be reasonably likely to have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole or (ii) any one or more of such representations, warranties,
covenants or agreements that is not so qualified shall be untrue
incorrect or breached in any material respect which, individually or in
the aggregate, would be reasonably likely to have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole and, (B) in each case, cannot or has not been cured prior to the
earlier of (i) 15 days after the giving of written notice of such
breach to the Company and (ii) two business days prior to the date on
which the Offer expires;
(f) by the Company, if the Board of Directors of the Company
determines that an Acquisition Proposal constitutes a Superior Proposal
and the Board of Directors determines after consulting with independent
outside counsel that a failure to terminate this Agreement and enter
into an agreement to effect the Superior Proposal would constitute a
breach of its fiduciary duties; provided, however, that the Company
shall not be permitted to terminate this Agreement pursuant to this
Section 6.01(f) unless it has provided Parent and Sub with two business
days prior written notice of its intent to so terminate this Agreement
together with a reasonably detailed summary of the terms and conditions
of such Superior Proposal; provided, further, that Parent shall receive
the fees set forth in Section 7.01(b) immediately prior to any
termination pursuant to this Section 6.01(f) by wire transfer in same
day funds;
(g) by Parent and Sub, if (i) the Company or any of its
subsidiaries or their Agents encourages, solicits or initiates the
making of any Acquisition Proposal from any Person other than Parent or
Sub or the Company or any of its subsidiaries or their Agents takes any
other action to knowingly facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (other than as permitted by and taken in
compliance with Section 4.07), (ii) the Company enters into any
agreement with respect to or the making of an Acquisition Proposal or
(iii) if the Company's Board of Directors shall have (A) failed to
recommend to the Company's stockholders that such stockholders tender
their shares of Common Stock pursuant to the Offer and vote to approve
and
-37-
adopt this Agreement or (B) amended, withdrawn or modified such
recommendation in a manner adverse to Parent and Sub.
(h) by the Company, in the event that (A) (i) any one or more
representations, warranties, covenants or agreements of Parent or Sub
contained in this Agreement that is qualified as to materiality shall
be untrue, incorrect or breached in any respect except where such
failures as are not reasonably likely to materially and adversely
affect Parent's or Sub's ability to complete the Offer or Merger or
(ii) any one or more of such representations, warranties, covenants or
agreements that is not so qualified shall be untrue, incorrect or
breached which, individually or in the aggregate would be reasonably
likely to materially and adversely effect Parent's or Sub's ability to
complete the Offer or the Merger and (B) in each case cannot or has not
been cured prior to the earlier of (i) 15 days after the giving of
written notice of such breach to the Parent and Sub and (ii), to the
extent applicable, two business days prior to the date on which the
Offer expires.
(i) by the Company, if Parent or Sub shall have (i) failed to
commence the Offer within 5 business days following the date of this
Agreement, (ii) terminated the Offer or (iii) failed to pay for shares
of Common Stock pursuant to the Offer on or prior to the earlier of (x)
the fifth day after any shares of Common Stock tendered in the Offer
have been accepted for payment and (y) the Outside Date, unless in the
case (i) or (ii) such failure shall have been caused by or resulted
from the failure of the Company to satisfy the Tender Offer Conditions
set forth in Annex A or a material breach by the Company of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
6.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.01 hereof by Parent or Sub, on the one
hand, or the Company, on the other hand, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall become void and have
no effect, and there shall be no liability hereunder on the part of Parent, Sub
or the Company, except that Sections 4.02, 7.01 and this Section 6.02 hereof
shall survive any termination of this Agreement and Section 4.03(b)(xiv) of this
Agreement shall survive termination of this Agreement until the thirtieth day
following the expiration, termination or withdrawal of (without recommencement
or amendment or the execution of any agreement with the Company or any one or
more Selling Stockholders relating to) any Acquisition Proposal made by any
Person prior to the expiration or termination of the Offer. Nothing in this
Section 6.02 shall relieve any party to this Agreement of liability for breach
of this Agreement.
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ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. (a) Except as provided in paragraph
(b) below, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(b) If (w) (i) the Offer shall have remained open for a
minimum of at least 20 business days, (ii) after the date hereof and prior to
December 31, 1998 any Person (other than Parent or Sub) shall have become the
beneficial owner of 50% or more of the outstanding shares of Common Stock and
(iii) the Minimum Condition (as defined in Annex A) shall not have been
satisfied and the Offer is terminated without the purchase of any Shares
thereunder, or (x) Parent and Sub shall have terminated this Agreement pursuant
to Section 6.01(g), or (y) the Company shall have terminated this Agreement
pursuant to Section 6.01(f), then the Company, if requested by Purchaser, shall
promptly, but in no event later than two days after the date of such request,
pay Parent up to $2,000,000 to reimburse Purchaser for the documented fees and
expenses of Parent, Purchaser and Merger Sub related to this Agreement, the
transactions contemplated hereby and any related financing and an additional fee
of $8,000,000, which amounts shall be immediately payable by wire transfer in
same day funds; provided, however, that if the Company shall have terminated
this Agreement pursuant to Section 6.01(f), such amounts shall be paid in
accordance with the provisions of such section. The Company acknowledges that
the agreements contained in this Section 7.01(b) are an integral part of the
transactions contemplated in this Agreement, and that, without these agreements,
Parent and Sub would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amounts due pursuant to this Section 7.01(b) or
Section 6.01(f), and, in order to obtain such payments, Parent or Sub commences
a suit which results in a judgment against the Company for the fees set forth in
this paragraph (b), the Company shall pay to Parent and Sub its reasonably
documented costs and expenses (including reasonably documented attorneys' fees
and expenses) in connection with such suit, together with interest on the amount
of the fee at a rate equal to two percentage points over the prime rate of the
Xxxxxx Guaranty Trust Company of New York on the date such payment was required
to be made.
7.02 Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent and
Sub, on the other hand, contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Company, Parent or Sub
shall be under any liability whatsoever with respect to any such representation
or warranty. This Section 7.02 shall have no effect upon any other obligation of
the parties hereto, whether to
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be performed before or after the Effective Time.
7.03 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Sub, may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
7.04 Public Announcements. The Company, on the one hand, and
Parent and Sub, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and, unless required by
applicable law or regulation or the rules and regulations of any stock exchange
on which any of their securities are traded, shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of a copy of such release or statement.
7.05 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or sent by
telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Nimbus CD International Inc.
000 Xxxxx Xxx Xxxx, Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: L. Xxxxxx Xxxxxx
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
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(b) if to Parent, to it at:
Xxxxxxx Xxxxxxxxxxxxxx Xxx
00 Xxxxxxxxxxxxx
Xxxxxx XX0X 0XX Xxxxxxx
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
(c) if to Sub, to it at:
Neptune Acquisition Corp.
0000 Xxxx Xxxxxxx Xxxx Xxxx.
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
7.06 Entire Agreement. This Agreement and the annex, schedules
and other documents referred to herein or delivered pursuant hereto,
collectively contain the entire understanding of the parties hereto with respect
to the subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
-41-
7.07 Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with respect
to the provisions of Section 4.11 hereof, shall inure to the benefit of the
Persons benefiting from the provisions thereof who are specifically intended to
be third party beneficiaries thereof, and, in each such case, their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
Notwithstanding anything in this Section 7.07 to the contrary, it is expressly
understood that Parent and Sub may assign their respective rights, interests and
obligations under this Agreement to any of their affiliates provided that such
assignment shall not relieve Parent or Sub, as the case may be, from their
obligations pursuant to this Agreement. Except as set forth above, nothing in
this Agreement, expressed or implied, is intended to confer on any Person other
than the parties hereto or their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
7.08 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective Time
(notwithstanding any stockholder approval), by action taken by the respective
Boards of Directors of Parent, Sub and the Company or by the respective officers
authorized by such Boards of Directors; provided, however, that after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval.
7.09 Further Actions. Each of the parties hereto agrees that,
subject to the terms of this Agreement and its obligations under applicable Law,
it will use its reasonable best efforts to fulfill all conditions precedent
specified herein, to the extent that such conditions are within its control, and
to do all things reasonably necessary to consummate the transactions
contemplated hereby.
7.10 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
7.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.12 Applicable Law; Jurisdiction. This Agreement and the
legal relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws rules thereof. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York or any court of the State of New York located in the City
of New York in any action, suit or proceeding arising in connection with this
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Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this Section 7.12 and
shall not be deemed to be a general submission to the jurisdiction of said
Courts or in the State of New York other than for such purposes. EACH PARTY
HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH
ACTION, SUIT OR PROCEEDING.
7.13 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
7.14 Certain Definitions. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
(b) "subsidiary" with respect to the Company, shall mean and
include (x) any partnership of which the Company or any subsidiary is a general
partner or (y) any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests
having by the terms thereof ordinary voting power to elect at least a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of Parent, Sub and the Company has caused this
Agreement to be executed by its respective officers thereunto duly authorized,
all as of the date first above written.
CARLTON COMMUNICATIONS PLC
By___________________________
Name: X.X. Xxxxx
Title: Finance Director
NEPTUNE ACQUISITION CORP.
By___________________________
Name: O.F. Xxxxxxxx
Title: President
NIMBUS CD INTERNATIONAL, INC.
By___________________________
Name: X.X. Xxxxxxxx
Title: President and Chief Executive Officer
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ANNEX A
The capitalized terms used in this Annex A shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
A is appended and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or subject to
any applicable rules and regulations of the Commission, including Rule 14e-1c
under the Exchange Act, pay for any shares of Common Stock tendered pursuant to
the Offer and may terminate or amend the Offer and may postpone the acceptance
of, and payment for, shares of Common Stock, if (i) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock which represent a majority of the total voting power
of all shares of capital stock of the Company outstanding on a fully diluted
basis (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act shall not have expired or been terminated, or (iii) if, at any time on
or after the date of the Merger Agreement and at or before the time of payment
for any such shares of Common Stock (whether or not any shares of Common Stock
have theretofore been accepted for payment or paid for pursuant to the Offer)
any of the following shall occur:
(a) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other Person, domestic or foreign,
before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to or which would be reasonably
likely to make illegal, impede, delay or otherwise directly or
indirectly restrain or prohibit the Offer or the Merger or seeking to
obtain material damages, (ii) seeking to compel Parent or Purchaser to
dispose of, or hold separate (through the establishment of a trust or
otherwise) material assets or properties or categories of assets or
properties or businesses of Parent, the Company or any of their
subsidiaries or to withdraw from one or more lines of business material
to the Condition of Parent, the Company or any of their subsidiaries or
to take any actions that, in the aggregate would be reasonably likely
to materially impair Parent's ability to control, direct or manage on a
day-to-day basis the business or affairs of the Company, (iii) seeking
to impose limitations on the ability of Parent or Purchaser effectively
to exercise full rights of ownership of the shares of Common Stock,
including, without limitation, the right to vote any shares of Common
Stock acquired or owned by Sub or Parent on all matters properly
presented to the Company's stockholders, (iv) seeking to require
divestiture by Parent or Purchaser of any shares of Common Stock or (v)
materially adversely affecting the Condition of the Company and its
subsidiaries taken as a whole;
(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, Purchaser, the
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Company or any subsidiary of the Company or (ii) the Offer or the
Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of
the HSR Act to the Offer or to the Merger, which would directly or
indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change shall have occurred (or any condition, event or
development shall have occurred), that would have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole;
(d) except as to any such representation or warranty which
speaks as of a specific date or for a specific period which must be
true and correct in the following respects only as of such specific
date or period, as of the date of the Merger Agreement and as of the
scheduled expiration date the Offer (i) any one or more
representations, warranties, covenants or agreements of the Company
contained in the Merger Agreement that is qualified as to materiality
shall be untrue, incorrect or breached in any respect except for such
failures as would not be reasonably likely to have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole or (ii) any one or more of such representations, warranties,
covenants or agreements that is not so qualified shall be untrue
incorrect or breached in any material respect which, individually or in
the aggregate, would be reasonably likely to have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole;
(e) (i) the Company or any of its subsidiaries or their Agents
encourages, solicits or initiates the making of any Acquisition
Proposal from any Person other than Parent or Sub or the Company or any
of its subsidiaries or their Agents takes any other action to knowingly
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal other than as permitted by and in compliance with Section
4.07, (ii) the Company enters into any agreement with respect to or the
making of an Acquisition Proposal, or (iii) if the Company's Board of
Directors shall have (A) failed to recommend to the Company's
stockholders that such stockholders tender their shares of Common Stock
pursuant to the Offer and vote to approve and adopt this Agreement or
(B) amends, withdraws or modifies such recommendation in a manner
adverse to Parent and Sub or resolves to do so.
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it and its subsidiaries under the Merger
Agreement; or
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(g) the Merger Agreement shall have been terminated in
accordance with its terms;
which, in the reasonable judgment of Purchaser, in any such case and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions (including those set forth in clauses
(i)-(iii) above) are for the sole benefit of the Parent and the Purchaser and
may be asserted by the Parent or the Purchaser, or may be waived by the Parent
or the Purchaser, in whole or in part at any time and from time to time in its
sole discretion. The failure by the Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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