1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FEDDERS CORPORATION
TI ACQUISITION CORP.
AND
TRION, INC.
DATED AS OF
JULY 12, 1999
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION.......................................................Page 2
Section 1.1 Definitions...............................................Page 2
ARTICLE II
THE OFFER AND MERGER.................................................................Page 13
Section 2.1 The Offer.................................................Page 13
Section 2.2 Company Actions...........................................Page 14
Section 2.3 Directors.................................................Page 16
Section 2.4 The Merger................................................Page 18
Section 2.5 Effective Time............................................Page 18
Section 2.6 Closing...................................................Page 18
Section 2.7 Directors and Officers of the Surviving Corporation.......Page 19
Section 2.8 Subsequent Actions........................................Page 19
Section 2.9 Shareholders' Meetings....................................Page 19
Section 2.10 Merger Without Meeting of Shareholders....................Page 21
ARTICLE III
CONVERSION OF SECURITIES.............................................................Page 22
Section 3.1 Conversion of Capital Stock...............................Page 22
Section 3.2 Exchange of Certificates..................................Page 22
Section 3.3 Dissenting Shares.........................................Page 24
Section 3.4 Company Stock Option Plans................................Page 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................Page 26
Section 4.1 Organization and Good Standing............................Page 26
Section 4.2 Authority; Board Approvals; No Conflict...................Page 26
Section 4.3 Vote Required.............................................Page 29
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Section 4.4 Capitalization and Ownership of Shares....................Page 29
Section 4.5 Subsidiaries and Investments..............................Page 30
Section 4.6 SEC Reports and Financial Statements......................Page 31
Section 4.7 Books and Records.........................................Page 32
Section 4.8 Title to Properties; Leases; Encumbrances.................Page 32
Section 4.9 Condition and Sufficiency of Assets.......................Page 33
Section 4.10 Accounts Receivable.......................................Page 34
Section 4.11 Inventory.................................................Page 34
Section 4.12 No Undisclosed Liabilities................................Page 34
Section 4.13 Taxes.....................................................Page 34
Section 4.14 No Material Adverse Change................................Page 35
Section 4.15 Employee Benefits.........................................Page 35
Section 4.16 Compliance with Legal Requirements; Governmental
Authorizations.......................................................................Page 37
Section 4.17 Legal Proceedings; Orders.................................Page 39
Section 4.18 Absence of Certain Changes and Events.....................Page 40
Section 4.19 Applicable Contracts; No Defaults.........................Page 42
Section 4.20 Insurance.................................................Page 45
Section 4.21 Environmental Matters.....................................Page 47
Section 4.22 Employees.................................................Page 48
Section 4.23 Labor Relations; Compliance...............................Page 49
Section 4.24 Intellectual Property Assets..............................Page 50
Section 4.25 Certain Payments..........................................Page 50
Section 4.26 Relationship with Related Persons.........................Page 51
Section 4.27 Brokers or Finders........................................Page 51
Section 4.28 Opinion of Financial Advisor..............................Page 51
Section 4.29 Year 2000.................................................Page 51
Section 4.30 Products Liability; Recalls...............................Page 53
Section 4.31 Information in Schedule 14D-9.............................Page 53
Section 4.32 Information in Proxy Statement. ..............................Page 54
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER.................................................................Page 54
Section 5.1 Organization and Valid Existence..........................Page 54
Section 5.2 Authority; No Conflict....................................Page 55
Section 5.3 Certain Proceedings.......................................Page 56
Section 5.4 Brokers or Finders........................................Page 56
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Section 5.5 Information in Offer Document. ..........................Page 56
Section 5.6 Information in Proxy Statement. ..........................Page 56
ARTICLE VI
COVENANTS............................................................................Page 57
Section 6.1 Access and Investigation..................................Page 57
Section 6.2 Operation of the Businesses of the Company................Page 57
Section 6.3 Negative Covenant. .......................................Page 58
Section 6.4 Reasonable Efforts........................................Page 59
Section 6.5 Notification; Updating of Schedules.......................Page 60
Section 6.6 No Solicitation of Competing Transaction..................Page 61
Section 6.7 Publicity.................................................Page 63
Section 6.8 Employee Arrangements.....................................Page 63
Section 6.9 Officers' and Directors' Insurance; Indemnification.......Page 64
Section 6.10 Takeover Statutes.........................................Page 64
Section 6.11 Form S-8..................................................Page 65
ARTICLE VII
CONDITIONS...........................................................................Page 65
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger....................................................Page 65
Section 7.2 Conditions to Parent's and Purchaser's Obligations to
Effect the Merger.........................................Page 66
ARTICLE VIII
TERMINATION..........................................................................Page 66
Section 8.1 Termination...............................................Page 66
Section 8.2 Effect of Termination.....................................Page 68
Section 8.3 Interpretation............................................Page 69
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ARTICLE IX
MISCELLANEOUS........................................................................Page 70
Section 9.1 Fees and Expenses.........................................Page 70
Section 9.2 Amendment and Modification................................Page 71
Section 9.3 Nonsurvival of Representations and Warranties.............Page 71
Section 9.4 Notices...................................................Page 72
Section 9.5 Counterparts..............................................Page 73
Section 9.6 Entire Agreement; No Third Party Beneficiaries............Page 73
Section 9.7 Severability..............................................Page 73
Section 9.8 Governing Law.............................................Page 73
Section 9.9 Enforcement...............................................Page 74
Section 9.10 Time of Essence...........................................Page 74
Section 9.11 Extension; Waiver.........................................Page 74
Section 9.12 Assignment................................................Page 74
Annex A Certain Conditions of the Offer..............................................A-1
Annex B Articles of Incorporation of TI Acquisition Corp.............................B-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 12, 1999, by
and among Fedders Corporation ("Parent"), a Delaware corporation, TI Acquisition
Corp. ("Purchaser"), a Pennsylvania corporation and an indirect wholly owned
subsidiary of Parent and Trion, Inc. ("Company"), a Pennsylvania corporation.
WHEREAS, the Board of Directors of each of Parent, Purchaser
and the Company has approved, and deems it advisable and in the best interests
of its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer (as hereinafter defined) and the Merger (as hereinafter defined);
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, each of the Director Shareholders (as hereinafter defined), concurrently
herewith, is entering into a Shareholder Agreement dated as of the date hereof,
with Parent and Purchaser, pursuant to which the Director Shareholders are
agreeing, among other things, to tender the Shares (as hereinafter defined) held
by them in the Offer and to grant Parent an option to purchase such Shares and
to make certain agreements with respect to the voting of such Shares, all upon
the terms and subject to the conditions set forth in the Shareholder Agreements
(as hereinafter defined);
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, (i) Xxxxxx X. Xxxxxx ("Xxxxxx"), concurrently herewith, is entering into
an amended and restated employment agreement dated as of the date hereof with
the Company (the "Xxxxxx Employment Agreement"); and (ii) Xxxxxx X. Xxxxxxxxx
("Xxxxxxxxx" and, together with Xxxxxx, the "Employees"), concurrently herewith,
is entering into an amended and restated employment agreement dated as of the
date hereof with Parent (the "Xxxxxxxxx Employment Agreement" and, together with
the Xxxxxx Employment Agreement, the "Employment Agreements");
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, the
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Company, concurrently herewith, is entering into a stock option agreement, dated
as of the date hereof (the "Stock Option Agreement"), with Parent pursuant to
which the Company has granted Parent an option to purchase up to 19.9% of the
issued and outstanding Shares as of the date hereof, upon the terms and subject
to the conditions, set forth in the Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly requires
otherwise:
"Acquisition Proposal" shall mean any proposal or offer to
acquire all or a substantial part of the business or properties of the Company
or any Company Subsidiary or any capital stock of the Company or any Company
Subsidiary, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the
Exchange Act.
"Agreement" or "this Agreement" shall mean this Agreement and
Plan of Merger, together with the Exhibits and Appendices hereto and the
Schedules.
"Applicable Contract" shall mean any contract (a) under which
the Company or any Subsidiary has or may acquire any rights to receive no less
than $75,000 in any twelve (12) month period following the date of this
Agreement, or (b) under which the Company or any Subsidiary has or may become
subject to any obligation or liability to pay to any other party to such
Contract no less than $75,000 in any twelve (12) month period following the date
of this Agreement.
"Articles" shall have the meaning as set forth in Section 2.9.
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"Articles Amendment" shall mean the proposal to amend the
Articles of Incorporation of the Company to delete section 6 thereof.
"Articles Amendment Proxy Statement" shall have the meaning
set forth in Section 2.9 hereof.
"Best Efforts" shall mean the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"Board Fraction" shall mean a fraction, the numerator of which
shall be the number of Shares which Parent and its Subsidiaries beneficially own
at the time of calculation of the Board Fraction, and the denominator of which
shall be the total number of Shares then outstanding.
"By-laws" shall have the meaning as set forth in Section 2.9.
"Cash Amount" shall have the meaning as set forth in 3.4(d).
"Certificate" shall mean a certificate which immediately prior
to the Effective Time represented Shares which were converted pursuant to
Section 3.1 into the right to receive the Merger Consideration.
"Closing" shall mean the closing referred to in Section 2.6.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" shall mean Trion, Inc., a Pennsylvania corporation.
"Company Board of Directors" shall mean the board of directors
of the Company.
"Company Option" shall mean an option to purchase Shares which
has been granted by the Company and which is outstanding at the Effective Time.
"Company SEC Documents" shall mean each form, report,
schedule, statement and other document required to be filed by the Company since
June 1, 1996
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under the Exchange Act or the Securities Act, including any amendment to such
document, whether or not such amendment is required to be so filed.
"Company Subsidiary" shall mean each Person which is a
Subsidiary of the Company.
"Computer Programs" shall mean:
(i) any and all computer software programs, including all
source and object code,
(ii) databases and compilations, including any and all
data and collections of data, whether machine
readable or otherwise,
(iii) billing, reporting, engineering and other management
information systems,
(iv) all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the
foregoing,
(v) all content contained on any Internet site(s), and
(vi) all documentation, including user manuals and
training materials, relating to any of the foregoing.
"Confidentiality Agreement" shall mean a letter agreement
dated February 25, 1999 between the Company and Parent.
"Consent" shall mean any approval, consent, ratification,
waiver, filing with, registration or other authorization (including any
Governmental Authorization).
"Contract" shall mean any written agreement, contract,
obligation, promise or undertaking that is legally binding.
"Defect" shall mean a defect, whether in design, manufacture,
processing, or otherwise, including, without limitation, any dangerous
propensity associated with any reasonably foreseeable use of a Product, or the
failure to warn of the existence of any defect, or dangerous propensity.
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"Director Shareholder" shall mean Xxxx X. Xxxx, Xxxxxx X.
Xxxxxxx, Xxxxxx Xxxxx, Jr., Xxxxx X. Xxxxx, F. Xxxxx Xxxx, Xxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxx III.
"Dissenting Shares" shall mean any Shares as to which the
holder thereof has demanded appraisal with respect to the Merger in accordance
with the PBCL and as of the Effective Time has neither effectively withdrawn nor
lost his right to such appraisal.
"Effective Time" shall mean the date on which the articles of
merger referred to in Section 2.5 is duly filed with the Secretary of State of
the Commonwealth of Pennsylvania or such other time as is agreed upon by the
parties and specified in such articles of merger.
"Employee" shall have the meaning set forth in the
introduction hereof.
"Employment Agreements" shall have the meaning as set forth in
the introduction hereto.
"Encumbrance" shall mean any mortgage, charge, claim,
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
"Environmental Laws" shall have the meaning set forth in
Section 4.21(a) hereof.
"Expenses" shall have the meaning as set forth in Section 9.1.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Financial Statements" shall mean the financial statements of
the Company included in the Company SEC Documents.
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"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorization" shall mean any written approval,
consent, license, permit, waiver or other authorization issued, granted, given
or otherwise made available by or under the authority of any Governmental Body
or pursuant to any Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, commonwealth,
possession, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or
entity and any court or other tribunal);
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Hazardous Material" shall mean and includes petroleum
(including, without limitation, gasoline, crude oil, fuel oil, diesel oil,
lubricating oil, sludge, oil refuse, oil mixed with wastes and any other
petroleum-related product), flammable explosives, radioactive materials, any
substance defined or designated (a) as a "hazardous substance" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Section 9601), as amended from time to time, and any regulations
promulgated thereunder or (b) as a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901), as amended from
time to time, and any regulations promulgated thereunder, and (c) any other
waste, pollutant or contaminant.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Improvements" shall have the meaning set forth in Section
4.8.
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"Independent Directors" shall mean directors of the Company
who are directors on the date hereof, but who are not employees of the Company.
"Intellectual Property Assets" is defined in Section 4.24(a)
hereof.
"Interim Financial Statements" shall mean the unaudited
interim consolidated balance sheet of the Company as of March 31, 1999 and the
related unaudited statements of income, changes in Stockholder's equity and cash
flow for the three month period then ended, including in each case the notes
thereto.
"Key Employee" shall mean any employee of the Company or any
Subsidiary to whom the Company or any Subsidiary has agreed to pay or expects to
pay an annual salary (including commission payments) of not less than $75,000.
"Knowledge" shall mean, with respect to a particular fact or
other matter, that the directors, officers or employees having responsibility
for the subject matter at issue of such Person are actually aware of such fact
or other matter.
"Legal Requirement" shall mean any federal, state or local
statute, ordinance, regulation, administrative order or principle of common law.
"Material Adverse Change" or "Material Adverse Effect" shall
mean any change or effect (or any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect) that is materially
adverse to the business, properties, assets, prospects, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole or
the ability of the Company to consummate the Transactions.
"Merger" shall mean the merger of Purchaser into the Company
referred to in Section 2.4.
"Merger Consideration" shall mean an amount of cash equal to
the Offer Price, which amount shall not include interest, regardless of when
paid.
"Minimum Condition" shall mean the condition that, pursuant to
the Offer, there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer, not less than that number of Shares which, together
with the Shares owned by Parent and Purchaser on the date hereof, constitutes at
least 80% of the Shares outstanding on a fully diluted basis (after giving
effect to the conversion or exercise of
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all outstanding options, warrants and other rights and securities exercisable or
convertible into Shares, whether or not exercised or converted at the time of
determination).
"Nasdaq" shall mean the Nasdaq Stock Market Inc.
"Notices" shall have the meaning set forth in Section 4.30
hereof.
"NYSE" shall mean the New York Stock Exchange.
"Occurrence" shall mean any accident, happening or event which
is caused or allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship including, without limitation, any
alleged failure to warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or event
otherwise involving, a product (including any parts or components) which results
or is alleged to have resulted in injury or death to any person or damage to or
destruction of property, or other consequential damages, at any time.
"Offer" shall mean the cash tender offer to be made by
Purchaser pursuant to Section 2.1 to acquire any and all shares of the issued
and outstanding common stock, $0.50 par value, of the Company at the Offer
Price.
"Offer Documents" shall mean the Offer to Purchase and a form
of letter of transmittal and summary advertisement filed as exhibits to the
Schedule 14D-1, together with any amendments and supplements thereto.
"Offer Price" shall mean $5.50 per Share net to the seller in
cash, or such increased amount, if any, as Purchaser may offer to pay as
contemplated by Section 2.1(a).
"Offer to Purchase" shall mean the offer to purchase included
in the Schedule 14D-1 filed with the SEC pursuant to Section 2.1(b).
"Option Exchange Ratio" shall mean (x) the Offer Price divided
by (y) the average of the closing prices of Parent Common Stock on the NYSE
during the ten trading days preceding the fifth trading day prior to the Closing
Date.
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"Order" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any arbitrator.
"Organizational Documents" shall mean (a) the articles or
certificate of incorporation and the bylaws or code of regulations of a
corporation; (b) the partnership agreement and any statement of partnership of a
general partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) any charter or similar
document adopted or filed in connection with the creation, formation or
organization of a Person; (e) the articles of organization and the operating
agreement of a limited liability company; and (f) any amendment to any of the
foregoing.
"Parent" shall mean Fedders Corporation, a Delaware
corporation.
"Parent Option" shall mean an option to purchase shares of
Parent Common Stock.
"Parent Common Stock" shall mean shares of Class A Stock, par
value $1.00 per share, of Parent.
"Paying Agent" shall mean the bank or trust company designated
by Parent to act as agent for the holders of the Shares pursuant to Section
3.2(a).
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Govern mental Body.
"Plan" shall mean a plan, program, agreement, arrangement or
program required to be included in the Schedule pursuant to Section 4.16(a).
"Proceeding" shall mean any action, arbitration, audit,
hearing, investigation, demand, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.
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"Product" shall mean any product designed, manufactured,
shipped, sold, marketed, distributed and/or otherwise introduced into the stream
of commerce by or on behalf of the Company or any of its past or present
Subsidiaries.
"Proprietary Rights Agreement" shall have the meaning set
forth in Section 4.22 hereof.
"Proxy Statement" shall mean the proxy statement to be filed
by the Company with the SEC pursuant to Section 2.9(d)(ii), together with all
amendments and supplements thereto and including the exhibits thereto.
"Purchaser Common Stock" shall mean common stock, par value
$1.00 per share, of Purchaser.
"Purchaser" shall mean TI Acquisition Corp., a Pennsylvania
corporation which is an indirect wholly owned subsidiary of Parent.
"Real Property" shall have the meaning set forth in Section
4.8 hereof.
"Recalls" shall have the meaning set forth in Section 4.30
hereof.
"Related Person" shall mean (i) with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity); and
(ii) with respect to a specified Person other than an individual:
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(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
manager, executor or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner, manager or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Representative" shall mean, with respect to a particular
Person, any director, officer, partner, manager, employee, agent, consultant,
advisor or other representative of such Person, including legal counsel,
accountants and financial advisors.
"Schedule" shall mean the schedule of this date herewith
prepared and signed by the Company and delivered to Purchaser simultaneously
with the execution hereof.
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"Schedule 14D-l" shall mean the Schedule 14D-1 filed by
Purchaser with the SEC pursuant to Section 2.1(b), together with all amendments
and supplements thereto and including the exhibits thereto.
"Schedule 14D-9" shall mean the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the SEC pursuant to
Section 2.2(b), together with all amendments and supplements thereto and
including the exhibits thereto.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall have the meaning set forth in Section
4.4.
"Shares" shall mean shares of common stock, par value $0.50,
issued by the Company.
"Shareholder Agreements" shall mean the agreements, dated as
of the date hereof, among a Director Shareholder, Parent and Purchaser, pursuant
to which each Director Shareholder has agreed, among other things, to tender the
Shares held by such Director Shareholder in the Offer and to grant Parent an
option to purchase such Shares and to make certain agreements with respect to
the voting of such Shares upon the terms and subject to the conditions set forth
therein.
"Stock Option Agreement" shall have the meaning set forth in
the introduction hereto.
"Subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect 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 or (b) such party or any other Subsidiary of such party is a
general partner (excluding any such partnership where such party or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Subsidiary Board of Directors" shall mean the board of
directors of a Subsidiary.
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"Superior Proposal" shall mean an unsolicited bona fide
proposal by a Person to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the Shares then outstanding or all
or substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Company Board of Directors determines in good faith to be more favorable to
the Company's shareholders than the Offer and the Merger (based on the advice of
the Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger), which is not subject to the receipt
of any necessary financing, and which, in the good faith reasonable judgment of
the Company Board of Directors, is reasonably likely to be consummated.
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local or
foreign govern mental authority, including, but not limited to, income, gross
receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, and other taxes, and shall include interest,
penalties or additions attributable thereto; and
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Fee" shall mean the sum of $2,000,000 in U.S.
currency.
"Title IV Plan" shall mean a Plan that is subject to Section
302 or Title IV of ERISA or Section 412 of the Code.
"Transactions" shall have the meaning set forth in Section 2.2
hereof
ARTICLE II
THE OFFER AND MERGER
Section 2.1 The Offer.
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(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and none of the events set forth in
Annex A shall have occurred and be existing, as promptly as practicable (but in
no event later than five (5) business days after the public announcement of the
execution of this Agreement), Purchaser shall commence (within the meaning of
Rule 14d-2 promulgated under the Exchange Act) a cash tender offer to acquire
any and all Shares at the Offer Price. Subject to the Minimum Condition and
subject to the other conditions set forth in Annex A hereto, Purchaser shall use
reasonable efforts to consummate the Offer in accordance with its terms and to
accept for payment and pay for Shares tendered pursuant to the Offer as soon as
Purchaser is legally permitted to do so under applicable law. The Offer shall be
made by means of the Offer to Purchase and shall be subject to the Minimum
Condition and the other conditions set forth in Annex A hereto and shall
reflect, as appropriate, the other terms set forth in this Agreement. If on the
initial scheduled expiration date of the Offer, which shall be 20 business days
after the date the Offer is commenced, all conditions to the Offer will not have
been satisfied or waived, Purchaser may, from time to time, in its sole
discretion, extend the expiration date. In addition, Purchaser may increase the
amount it offers to pay per Share in the Offer, and the Offer may be extended to
the extent required by law in connection with such increase, in each case
without the consent of the Company.
(b) As soon as practicable on the date the Offer is commenced,
Parent and Purchaser shall file with the SEC a tender offer statement on
Schedule 14D-1 with respect to the Offer. The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement.
(c) Parent and Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and Purchaser, on the one hand, and the Company,
on the other hand, will promptly correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and Purchaser will take all steps necessary
to cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws.
Section 2.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer
and represents that the Company Board of Directors, at a meeting duly called and
held, has by the unanimous vote of all directors present (i) determined that
each of the Agreement, the Stock Option Agreement, the Offer and the Merger are
fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement, the Stock Option Agreement, the Offer, the acquisition
of Shares pursuant to the Offer, the Shareholder Agreements, the Stock Option
Agreement and the Merger (collectively, the "Transactions"), (iii) approved the
Articles Amendment, directed that the Articles Amendment be submitted to a vote
of the shareholders and resolved to recommend that the shareholders of the
Company approve the Articles Amendment, (iv) received the opinion of Xxxxxx
Xxxxxxxx & Co., financial advisor to the Company, to the effect that the Offer
Price to be received by holders of Shares pursuant to the Offer and the Merger
Consideration pursuant to the Merger is fair to the shareholders of the Company
from a financial point of view, (v) resolved to recommend that the shareholders
of the Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement, the Articles Amendment and the Merger, (vi)
determined to waive any rights the Company may have under any agreement or
otherwise to object to the transfer to Purchaser in the Offer of all Shares held
by the Director Shareholders pursuant to the Shareholder Agreements, (vii)
consented to the transfer to Purchaser of all such Shares, (viii) duly
authorized the Transactions prior to Parent or Purchaser becoming an "interested
shareholder" as defined in Section 2553 of the PBCL and (ix) approved the
Transactions in such manner as to avoid the application of Subchapter F of
Chapter 25 of the PBCL. The Company has taken all necessary corporate action so
that no "business combination," "fair price," "control share acquisition" or
"moratorium" statute or other similar statute or regulation of any state "blue
sky" or securities law statute (including, without limitation, the provisions of
Section 2538 and Subchapters F, G, H, I and J of Chapter 25 of the PBCL (each, a
"Takeover Statute"), but excluding the provisions of Subchapter D of Chapter 15
of the PBCL and Subchapter E of Chapter 25 of the PBCL or any applicable
anti-takeover provision in the Articles (except for Section 6 thereof) or
By-laws is applicable to the Company or the Transactions. None of the aforesaid
actions by the Company Board of Directors has been amended, rescinded or
modified. As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9, which shall contain the recommendation referred to in Section 4.2(b). At
the time the Offer Documents are first mailed to the shareholders of the
Company, the Company shall mail or cause to be mailed to the shareholders of the
Company such Schedule 14D-9 together with such Offer Documents. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares, as and to the extent required by
applicable federal securities laws. Each of the
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Company, on the one hand, and Parent and Purchaser, on the other hand, agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given the opportunity to review the Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, Purchaser and their
counsel with any comments, whether written or oral, that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, lists of holders of the Shares, updated, and their addresses, mailing labels
and lists of security positions) and assistance as Purchaser or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will upon
request of the Company deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
Section 2.3 Directors.
(a) Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, of the Company as is equal to
the product of the total number of directors on such Company Board of Directors
(giving effect to the directors designated by Parent pursuant to this sentence)
multiplied by the Board Fraction. The Directors so designated by Parent shall
take office immediately after (i) the purchase of and payment for any Shares by
Parent or any of its Subsidiaries as a result of which Parent and its
Subsidiaries owns beneficially at least a majority of then outstanding Shares
and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, whichever shall occur later. In furtherance thereof, the
Company shall, upon request of the Parent, use its best efforts promptly either
to
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increase the size of its Board of Directors or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Company Board of
Directors, and the Company shall take all actions available to the Company to
cause such designees of Parent to be so elected or appointed at such time. At
such time, the Company shall, if requested by Parent, also take all action
necessary to cause persons designated by Parent to constitute the same Board
Fraction of (i) each committee of the Company Board of Directors, (ii) each
board of directors (or similar body) of each Company Subsidiary and (iii) each
committee (or similar body) of each such board.
(b) The Company shall promptly take, at its expense, all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder in order to fulfill its obligations under Section 2.3(a),
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected or
appointed to the Company Board of Directors immediately after the purchase of
and payment for any Shares by Parent or any of its Subsidiaries as a result of
which Parent and its Subsidiaries owns beneficially at least a majority of then
outstanding Shares. Parent or Purchaser will supply the Company all information
with respect to either of them and their nominees, officers, directors and
Affiliates required to be disclosed by such Section 14(f) and Rule 14f-1. The
provisions of this Section 2.3 are in addition to and shall not limit any rights
which Purchaser, Parent or any of their Affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise.
(c) In the event that Parent's designees are elected or
appointed to the Company Board of Directors, until the Effective Time, the
Company Board of Directors shall have at least two directors who are Independent
Directors, provided that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there be only one remaining) shall be
entitled to designate persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or, if no Independent
Director then remains, the other directors shall designate two persons to fill
such vacancies who shall not be shareholders, Affiliates or associates of Parent
or Purchaser, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees constitute a majority of the
directors on the Company Board of Directors, the affirmative vote of a majority
of the Independent Directors shall be required after the acceptance for payment
of Shares pursuant to the Offer and prior to the Effective Time, to (a) amend or
terminate this Agreement by the Company, (b)
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exercise or waive any of the Company's rights, benefits or remedies hereunder if
such exercise or waiver materially and adversely affects holders of Shares other
than Parent or Purchaser, or (c) take any other action under or in connection
with this Agreement if such action materially and adversely affects holders of
Shares other than Parent or Purchaser; provided, that if there shall be no such
directors, such actions may be effected by unanimous vote of the entire Company
Board of Directors.
Section 2.4 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Company and Purchaser shall
consummate a merger pursuant to which (a) Purchaser shall be merged with and
into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger and shall continue to be governed by the laws of the Commonwealth
of Pennsylvania, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 2.4. Pursuant to
the Merger, (x) the articles of incorporation of the Company shall be amended in
its entirety to read as set forth in Annex B, and, as so amended, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by law and such articles of incorporation, and (y) the by-laws of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided by
law, by such articles of incorporation or by such by-laws. The Merger shall have
the effects specified in the PBCL.
Section 2.5 Effective Time. Parent, Purchaser and the Company
will cause the articles of merger to be executed and filed on the Closing Date
(or on such other date as Parent and the Company may agree) with the Secretary
of the Common wealth of Pennsylvania as provided in the PBCL. The Merger shall
become effective on the date and at the time when such articles of merger is
duly filed with the Secretary of State of the Commonwealth of Pennsylvania or
such other time as is agreed upon by the parties and specified in such articles
of merger.
Section 2.6 Closing. The closing of the Merger shall take
place at 10:00 a.m. on a date to be agreed upon by the parties, and if such date
is not agreed upon by the parties, the Closing shall occur on the second
business day after satisfaction or waiver of all of the conditions set forth in
Article VI, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
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Section 2.7 Directors and Officers of the Surviving
Corporation. The directors of Purchaser and the officers of the Company at the
Effective Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the articles of incorporation
and the by-laws of the Surviving Corporation. If, at the Effective Time, a
vacancy shall exist on the Company Board of Directors or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
Section 2.8 Subsequent Actions. If at any time after the
Effective Time, the Surviving Corporation will consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, instruments of conveyance, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 2.9 Shareholders' Meetings.
(a) Following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer, the Company shall take all action
necessary in accordance with the PBCL, the Company's articles of incorporation
(the "Articles") and by-laws (the "By-laws") and the Exchange Act to effect the
Articles Amendment. The Articles Amendment shall require the approval of at
least 80% of the voting securities of the Company entitled to vote thereon. In
order to effect the Articles Amendment, the Company, acting through the Company
Board of Directors shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable
following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the
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purpose of considering and taking action upon the approval of the
Articles Amendment;
(ii) if required, prepare and file with the SEC a
preliminary proxy or information statement relating to the Articles
Amendment and use its Best Efforts to obtain and furnish the
information required to be included by the SEC in such proxy statement
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to such proxy statement and cause
a definitive proxy or information statement (the "Articles Amendment
Proxy Statement"), including any amendment or supplement thereto to be
mailed to its shareholders;
(iii) include in the Articles Amendment Proxy
Statement the recommendation of the Company Board of Directors that
shareholders of the Company vote in favor of the approval of the
Articles Amendment; and
(iv) use its Best Efforts to solicit proxies in favor
of the Articles Amendment from holders of Shares and shall take all
other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote or consent of shareholders required by the
PBCL, the Articles and the By-laws to effect the Articles Amendment.
(b) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Articles
Amendment Proxy Statement.
(c) Parent shall vote, or cause to be voted, in favor of the
approval of the Articles Amendment all Shares owned by Parent, Purchaser or any
of Parent's other Subsidiaries.
(d) If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable
following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
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(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its best efforts to obtain and furnish the
information required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
to be mailed to its shareholders, provided that no amendment or
supplement to such Proxy or information statement will be made by the
Company without consultation with Parent and its counsel;
(iii) include in the Proxy Statement the
recommendation of the Company Board of Directors that shareholders of
the Company vote in favor of the approval of the Merger and the
adoption of this Agreement; and
(iv) use its best efforts to solicit from holders of
Shares proxies in favor of the Merger and shall take all other action
necessary or, in the reasonable opinion of Parent, advisable to secure
any vote or consent of shareholders required by the PBCL, the Articles
and the By-laws to effect the Merger.
(e) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
(f) Parent shall vote, or cause to be voted, in favor of the
approval of the Merger and the approval and adoption of this Agreement:
(i) all shares of capital stock of Purchaser, and
(ii) all Shares owned by Parent, Purchaser or any of
Parent's other Subsidiaries.
Section 2.10 Merger Without Meeting of Shareholders.
Notwithstanding Section 2.9, in the event that Parent, Purchaser and any other
Subsidiaries of Parent shall acquire at least 80% of the outstanding Shares,
pursuant to the Offer or otherwise, sufficient to enable Purchaser or the
Company to cause the Merger to become effective without a meeting of
shareholders of the Company, the parties hereto shall, at the request of Parent
and subject to Article VII, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
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without a meeting of shareholders of the Company, in accordance with Section
1924 of the PBCL.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any further action on the part of the
holders of any Shares or holders of Purchaser Common Stock:
(a) Purchaser Common Stock. Each issued and outstanding share
of Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each Share owned by the Company as treasury stock and each Share owned by
Parent, Purchaser or any other wholly owned Subsidiary of Parent (other than
shares in trust accounts, managed accounts, custodial accounts and the like that
are beneficially owned by third parties) shall be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Shares. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 3.1(b) and other
than any Dissenting Shares) shall be converted into the right to receive the
Merger Consideration, payable to the holder thereof, without interest, upon
surrender of the certificate formerly representing such Share in the manner
provided in Section 3.2. From and after the Effective Time, all such converted
Shares shall no longer be outstanding and shall be deemed to be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect to such shares
except the right to receive the Merger Consideration therefor, without interest,
upon the surrender of such certificate in accordance with Section 3.2.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank, trust company
or other Person, reasonably acceptable to the Company, to act as agent for the
holders of the Shares in connection with the Merger to receive in trust the
funds to which holders
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of the Shares shall become entitled pursuant to Section 3.1(c). At the Effective
Time, Parent or Purchaser shall deposit, or cause to be deposited, with the
Exchange Agent for the benefit of holders of Shares the aggregate consideration
to which such holders shall be entitled at the Effective Time pursuant to
Section 3.1(c). Such funds shall be invested as directed by Parent or the
Surviving Corporation pending payment thereof by the Paying Agent to holders of
the Shares. Earnings from such investments shall be the sole and exclusive
property of Purchaser and the Surviving Corporation, and no part of such
earnings shall accrue to the benefit of holders of Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a Certificate or Certificates, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions not
inconsistent with this Agreement as Parent may specify) and (ii) instructions
for use in effecting the surrender of Certificates in exchange for payment of
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 3.2.
(c) Transfer Books; No Further Ownership Rights in the Shares.
At the Effective Time, the stock transfer books of the Company shall be closed,
and thereafter there shall be no further registration of transfers of the Shares
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time
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shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law.
(d) Termination of Fund; No Liability. At any time following
six (6) months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
earnings received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) and
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 3.3 Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time
and that are held by Shareholders who (i) have not voted such shares in favor of
the Merger and (ii) have delivered timely a written demand for appraisal of such
shares in the manner provided in Chapter 15 of the PBCL shall not be cancelled
and converted into the right to receive the Merger Consideration, unless and
until such Shareholder shall have failed to perfect, or effectively shall have
withdrawn or lost, such Shareholder's right to appraisal and payment under the
PBCL, but rather, such Shareholders shall be entitled to payment of the fair
value of their shares determined and payable in accordance with the provisions
of Chapter 15, Subchapter D of the PBCL. If such Shareholder shall have so
failed to perfect, or effectively shall have withdrawn or lost such right, the
Shares owned by such Shareholder shall thereupon be deemed to have been canceled
and converted as described in Section 3.1 at the Effective Time, and each Share
owned by such Shareholder shall represent solely the right to receive the Merger
Consideration, without interest. From and after the Effective Time, no
Shareholder who has demanded appraisal rights as provided in Chapter 15,
Subchapter D of the PBCL shall be entitled to vote his or her Shares for any
purpose or to receive payment of dividends or other distributions with respect
to such shares (except payment of dividends or other distribution payable to
Shareholders of record at a date which is prior to the Effective Time). The
Company shall give Parent prompt notice of all written demands received
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by it for appraisal of Shares and shall not settle or compromise any such demand
without the prior written consent of Parent.
Section 3.4 Company Stock Option Plans.
(a) Immediately prior to the Effective Time, each holder of a
Company Option will be entitled to receive from the Company, and shall receive,
except as provided in Section 3.4(d) hereof, in settlement of each Company
Option a Parent Option. All Company Options shall terminate as of the Effective
Time. Parent shall grant, as of the Effective Time, to the holder of any Company
Option, a Parent Option. With respect to such Parent Options (i) the number of
shares of Parent Common Stock subject to such Parent Option will be determined
by multiplying the number of Shares constituting the Company Option by the
Option Exchange Ratio, rounding any fractional share up to the nearest whole
share, and (ii) the exercise price per share of such Parent Option will be
determined by dividing the exercise price per share applicable to the Company
Option by the Option Exchange Ratio, and rounding the exercise price thus
determined up to the nearest whole cent. Except as provided above, the converted
or substituted Parent Options shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Company Option immediately prior to the
Effective Time; provided, however, that (i) all Company Options shall vest and
become fully exercisable immediately prior to the Effective Time and (ii) any
Company Option that qualifies as an incentive stock option under Code Section
422 (an "ISO") shall, to the extent permitted by applicable Legal Requirements,
be adjusted as provided in Code Section 424(a) so that the resulting Parent
Option qualifies as an ISO.
(b) Except as may be otherwise agreed to by Parent and the
Company, all stock option plans established by the Company or any of its
Subsidiaries shall terminate as of the Effective Time and the provisions in 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 Company
Subsidiary shall be deleted, terminated and of no further force or effect as of
the Effective Time.
(c) If and to the extent necessary or required by the terms of
the plans governing Company Options or pursuant to the terms of any Company
Option granted thereunder, prior to the Effective Time, the Company shall (i)
obtain the consent of each holder of outstanding Company Options and (ii) amend
the terms of the applicable Option Plan, in each case as is necessary to give
effect to the foregoing treatment of such Company Options.
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(d) Without limiting the foregoing, each holder of a Company
Option shall have the right (which right shall be exercised at least 5 days
prior to the Closing Date by written notice to the Company) to elect, in lieu of
the provisions of Section 3.4(a), to convert, at the Effective Time, all or a
portion of his or her Company Options which have not been exercised and which
have not expired prior to the Effective Time into the right to receive the Cash
Amount (the "Cash Election Right"). The Cash Amount shall be equal to the
product of (i) the excess, if any, of the Merger Consideration over the
exercise price per Share of such Company Option and (ii) the number of shares
constituting such Company Option, less any applicable withholding taxes.
Notwithstanding the foregoing, the Cash Election Right shall not be offered to
any holder of a Company Option that qualifies as an ISO.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 4.1 Organization and Good Standing.
(a) Each of the Company and its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation with full corporate power and authority to conduct
its business as it is now being conducted, to own, lease or use the properties
and assets that it purports to own. lease, or use, to execute and deliver this
Agreement and the other agreements contemplated hereby to which the Company or
any Company Subsidiary is a party and to perform all of its obligations
hereunder and thereunder and under the Applicable Contracts. Each of the Company
and its Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which either the
ownership, the lease or the use of properties owned, leased or used by it or the
nature of activities conducted by it require such qualification.
(b) The Company has delivered to Parent true and correct
copies of the Organizational Documents of the Company and its Subsidiaries, as
currently in effect.
Section 4.2 Authority; Board Approvals; No Conflict
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(a) The Company has the requisite corporate power and
authority to enter into this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated by the Stock Option Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding Shares, to consummate the Merger contemplated by this Agreement. The
execution, delivery and performance of this Agreement, the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of the Company, including the approval of the
Merger by the Company Board of Directors, subject to the approval of the
shareholders of the Company with respect to the Merger to the extent required by
applicable law. This Agreement and the Stock Option Agreement have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligation of the Company, enforceable against it in accordance with
their terms. Upon the execution and delivery by the Company of the other
agreements contemplated hereby to which it is a party, such other agreements
will constitute the legal, valid and binding obligations of the Company
enforceable against it in accordance with their respective terms.
(b) The Company Board of Directors, at a meeting duly called
and held, has by the unanimous vote of all directors present (i) determined that
each of the Agreement, the Stock Option Agreement, the Offer and the Merger are
fair to and in the best interests of the shareholders of the Company, (ii)
approved the Transactions, (iii) approved the Articles Amendment, directed that
the Articles Amendment be submitted to a vote of the shareholders and resolved
to recommend that the shareholders of the Company approve the Articles
Amendment, (iv) received the opinion of Xxxxxx Xxxxxxxx & Co., financial advisor
to the Company, to the effect that the Offer Price to be received by holders of
Shares pursuant to the Offer and the Merger Consideration pursuant to the Merger
is fair to the shareholders of the Company from a financial point of view, (v)
resolved to recommend that the shareholders of the Company accept the Offer,
tender their Shares thereunder to Purchaser and approve and adopt this
Agreement, the Articles Amendment and the Merger, (vi) determined to waive any
rights the Company may have under any agreement or otherwise to object to the
transfer to Purchaser in the Offer of all Shares held by the Director
Shareholders pursuant to the Shareholder Agreements, (vii) consented to the
transfer to Purchaser of all such Shares, (viii) duly authorized the
Transactions prior to Parent or Purchaser becoming an "interested shareholder"
as defined in Section 2553 of the PBCL and (ix) approved the Transactions in
such manner as to avoid the application of Subchapter F of Chapter 25 of the
PBCL. The Company has taken all necessary corporate action so that no "business
combina-
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tion," "fair price," "control share acquisition" or "moratorium" statute or
other similar statute or regulation of any state "blue sky" or securities law
statute (including, without limitation, the provisions of Section 2538 and
Subchapters F, G, H, I and J of Chapter 25 of the PBCL (each, a "Takeover
Statute"), but excluding the provisions of Subchapter D of Chapter 15 of the
PBCL and Subchapter E of Chapter 25 of the PBCL or any applicable anti-takeover
provision in the Articles (except for Section 6 thereof) or Bylaws is applicable
to the Company or the Transactions. None of the aforesaid actions by the Company
Board of Directors has been amended, rescinded or modified.
(c) Except as set forth in Schedule 4.2(c), neither the
execution and delivery of this Agreement or the other agreements contemplated
hereby nor the consummation or performance of any of the Transactions or other
transactions contemplated by such agreements will, directly or indirectly (with
or without notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents of the
Company or any Company Subsidiary, or (B) any resolution adopted by the
board of directors or the shareholders of the Company or any Company
Subsidiary;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right
to challenge any of the Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
the Company or any Company Subsidiary or the shareholders of the
Company, or any of the assets owned or used by any of them, may be
subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by the
Company or any Company Subsidiary or that otherwise relates to the
business of, or any of the assets owned or used by, the Company or any
Company Subsidiary;
(iv) cause Parent, Purchaser or the Company or any
Company Subsidiary to become subject to, or to become liable for the
payment of, any Tax;
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(v) contravene, conflict with or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under (with or without
notice or lapse of time, or both), or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Applicable
Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by
the Company or any Company Subsidiary, except for Encumbrances that are
imposed or created as a result of the performance by Parent and/or
Purchaser of their respective obligations under this Agreement or the
Stock Option Agreement.
(d) Except as set forth in Schedule 4.2(d), the Company is not
and will not be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement, the
Stock Option Agreement, or the consummation or performance of any of the
Transactions.
Section 4.3 Vote Required. Except as set forth in Schedule
4.3, the affirmative vote of the holders of a majority of the outstanding Shares
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger. No vote of any class or series of the
Company's capital stock is necessary to approve any of the Transactions other
than the Merger and the Articles Amendment.
Section 4.4 Capitalization and Ownership of Shares. The
authorized capital stock of the Company consists of 20,000,000 shares of common
stock, $0.50 par value per share. As of the date hereof, (i) 7,161,247 shares of
common stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable, (ii) zero (0) shares of common
stock were held in the treasury of the Company or by Company Subsidiaries, (iii)
3,000 shares of common stock were reserved for issuance under the 1995
Non-Employee Director Stock Plan, (iv) 222,524 shares of common stock were
reserved for issuance pursuant to stock options granted and outstanding under
the Company 1985 Stock Incentive Plan and the Company 1995 Stock Incentive Plan
(the "Stock Option Plans") and (v) 169,000 shares of common stock were reserved
for issuance pursuant to options granted under agreements entered into other
than pursuant to the Stock Option Plans. All shares of common stock subject to
issuance as specified above are accounted for in Schedule 4.4 and, all
outstanding shares of capital stock of the Company are, and all shares which may
be issued upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be, when so issued, duly authorized,
validly issued, fully paid and
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35
nonassessable. Other than as set forth in the second sentence hereof or in
Schedule 4.4, there are no outstanding Contracts, subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, repurchase or transfer by
the Company of any securities of the Company, nor are there outstanding or
reserved for issuance, shares of capital stock or other voting securities of the
Company or any securities which are convertible into or exchangeable for any
shares of capital stock of the Company, and neither the Company nor any of its
Subsidiaries has any obligation of any kind to sell or issue any additional
securities or to pay for, repurchase or otherwise acquire any securities of the
Company. There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of the capital stock of the Company or any of the Company Subsidiaries.
The Company has no agreement, arrangement or understandings to register any
securities of the Company or any of its Subsidiaries under the United States
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities law and has not granted registration rights to any person or entity
(other than agreements, arrangements or understandings with respect to
registration rights that are no longer in effect as of the date of this
Agreement).
Section 4.5 Subsidiaries and Investments.
(a) Except as set forth in Schedule 4.5(a), neither the
Company nor any Company Subsidiary owns, directly or indirectly, any capital
stock of or other equity interest in, or in a control position (alone or in
combination with others) with respect to, any Person; and neither the Company
nor any Company Subsidiary has any Contract to acquire by any means, directly or
indirectly, any equity securities or other securities or similar interest of any
Person or any direct or indirect equity or other ownership interest in any
business. Schedule 4.5(a) sets forth a true and complete list of (i) the name
and jurisdiction of incorporation of each Company Subsidiary, (ii) the
jurisdictions in which each Company Subsidiary is duly qualified or licensed to
do business as a foreign corporation, (iii) the authorized capital stock of each
Company Subsidiary, (iv) the number of shares of each class of capital stock
outstanding of each Company Subsidiary, (v) the number of shares of each class
and percentage of outstanding voting stock of each Company Subsidiary owned by
the Company, and (vi) the names, addresses and titles of the directors and
officers of each Company Subsidiary. Except as set forth in Schedule 4.5(a), no
capital stock or any other security (including any debt security) of any Company
Subsidiary is held by any person other than the Company. All of the issued and
outstanding shares of capital stock of each Company Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
issued and outstanding shares of capital stock of the
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36
Company Subsidiaries or other securities of the Company Subsidiaries was issued
in violation of any preemptive rights or any provision of any Company
Subsidiary's articles of incorporation or the Securities Act or any other Legal
Requirement.
(b) No Company Subsidiary has any outstanding securities
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of such Company Subsidiary, and no Company Subsidiary has any
outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or other agreements of any character relating to, or obligating such
Company Subsidiary to issue any shares of, its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock. There are no Contracts, commitments, understandings or
arrangements relating to the issuance, sale or transfer of any shares of capital
stock of any Company Subsidiary or other securities of the Company or the
acquisition by any Company Subsidiary of any of its securities.
(c) Except as set forth in Schedule 4.5(c), the Company is not
subject to any obligation or requirement to provide funds to, or make any
investment in (whether in the form of a loan, capital contribution or otherwise)
any Person.
Section 4.6 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, the Company SEC Documents. As of their respective dates or,
if amended, as of the date of the last such amendment filed prior to the date
hereof, the Company SEC Documents, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC. The
Financial Statements have been prepared from, and are in accordance with, the
books and records of the Company and its consolidated Subsidiaries, comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited consolidated
quarterly financial statements, as permitted by the instructions to Form 10Q
promulgated pursuant to the Exchange Act) applied on a consistent basis during
the period involved (except as may be stated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
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37
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein. No financial statements of any other Person are required by
GAAP to be included in the financial statements of the Company and its
Subsidiaries.
Section 4.7 Books and Records. The books of account, minute
books, stock record books and other records of the Company and its Subsidiaries,
all of which have been made available to Parent, are substantially complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. Except as
set forth in Schedule 4.7, the minute books of the Company and its Subsidiaries
contain accurate and substantially complete records of all meetings held of, and
corporate action taken by, the shareholders, the Company Board of Directors and
standing committees of the Company Board of Directors and Company Subsidiary
Board of Directors, and no meeting of any such shareholders of the Company,
Company Board of Directors or committee has been held for which minutes have not
been prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company and its
Subsidiaries.
Section 4.8 Title to Properties; Leases; Encumbrances.
(a) Schedule 4.8 contains a complete and accurate list of all
real property owned or leased by the Company and its Subsidiaries (the "Real
Property") and all leaseholds and other interests therein owned by the Company
and its Subsidiaries. Except as set forth in Schedule 4.8, the buildings,
structures and improvements included within the Real Property (collectively, the
"Improvements") comply with (or, if not in compliance, are not required to be in
compliance unless a building permit or similar Governmental Authorization is
sought) all applicable restrictions, building ordinances and zoning ordinances
and all regulations of the applicable health and fire departments, and no
alteration, repair, improvement or other work has been performed in respect to
such Improvements within the last 120 days, other than in the ordinary course of
business. Except as set forth in Schedule 4.8, the Real Property and its
continued use, occupancy and operation as currently used, occupied and operated
does not constitute a nonconforming use under any law, code, ordinance, rule,
regulation or order affecting the Real Property, and the continued existence,
use, occupancy and operation of each Improvement, and the right and ability to
repair such Improvement in the event of casualty, is not dependent on any
special permit, exception, approval or variance except, in each case where such
nonconforming use or dependency could not have a Material
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38
Adverse Effect on the Company. There is no condemnation proceeding pending or
threatened with respect to any of the Real Property.
(b) Each of the Company and its Subsidiaries owns and has good
and marketable title to all the properties and assets (whether real, personal or
mixed and whether tangible or intangible) that it purports to own located in the
facilities owned or operated by it or reflected as owned in the books and
records of the Company and its Subsidiaries, including all of the properties and
assets reflected in the Financial Statements (except for assets held under
capitalized leases and equipment leased pursuant to industrial development bond
financing disclosed or not required to be disclosed in Schedule 4.8 and personal
property sold since the date of the Financial Statements, as the case may be, in
the ordinary course of business), and all of the properties and assets purchased
or otherwise acquired by the Company and its Subsidiaries since the date of the
most recent audited Financial Statements (except for personal property acquired
and sold since the date of the most recent audited Financial Statements in the
ordinary course of business), which subsequently purchased or acquired
properties and assets (other than inventory and short-term investments) are
listed in Schedule 4.8.
(c) Except as set forth on Schedule 4.8, all properties and
assets reflected in the Financial Statements are free and clear of all
Encumbrances except (a) security interests shown in the Financial Statements as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) security interests incurred in connection with the purchase
of property or assets after the date of the Interim Financial Statements (such
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (c) liens for current taxes and
assessments not yet due and payable, and (d) security interests of record as
recorded in the jurisdictions set forth in Schedule 4.8. Schedule 4.8(c) sets
forth the locations of all of the properties and assets owned by the Company and
its Subsidiaries, and describes the owner of such properties and assets in each
such jurisdiction.
Section 4.9 Condition and Sufficiency of Assets. Except as set
forth in Schedule 4.9, the equipment of the Company and its Subsidiaries is in
good operating condition and repair and is adequate for the uses to which it is
being put, and none of such equipment is in need of maintenance or repairs
except for ordinary routine maintenance and repairs that are not in the
aggregate material in nature or cost. The equipment of the Company and its
Subsidiaries is sufficient for the continued conduct
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39
of the business of the Company and its Subsidiaries after the Effective Time in
substantially the same manner as conducted prior to the Effective Time.
Section 4.10 Accounts Receivable. Schedule 4.10 contains a
complete and accurate list of all accounts receivable that are reflected in the
Financial Statements or on the accounting records of the Company as of March 31,
1999 (the "Accounts Receivable"), which list sets forth the aging of such
Accounts Receivable. All Accounts Receivable of the Company and its Subsidiaries
as of the Effective Time represent or will represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the Effective Time, the Accounts Receivable
are or will be as of the Effective Time current and collectible net of any
reserves shown in the Financial Statements or on the accounting records of the
Company as of the Effective Time (which reserves will not exceed $400,000 as of
such date), without resort to legal proceedings.
Section 4.11 Inventory. All inventory of the Company and its
Subsidiaries, whether or not reflected in the Financial Statements, consists of
a quality usable and salable in the ordinary course of business, except for
obsolete and slow-moving items and items of below-standard quality, all of which
have been written off or written down to net realizable value in the Financial
Statements in accordance with GAAP or on the accounting records of the Company
and its Subsidiaries as of the Effective Time, as the case may be.
Section 4.12 No Undisclosed Liabilities. Except as set forth
in Schedule 4.12, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) except for liabilities or
obligations reflected or reserved against by the Company and its Subsidiaries in
the Financial Statements and current liabilities incurred in the ordinary course
of business since the respective dates thereof which would not have a Material
Adverse Effect on the Company.
Section 4.13 Taxes. The Company and its Subsidiaries have
filed or caused to be filed on a timely basis all Tax Returns that are or were
required to be filed by or with respect to them, pursuant to applicable Legal
Requirements. The Company and its Subsidiaries have delivered or made available
to Parent copies of, and Schedule 4.13 contains a complete and accurate list of,
all such Tax Returns filed since January 1, 1996. The Company and its
Subsidiaries have paid, or made provision for the payment of, all Taxes that
have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by the Company and its
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40
Subsidiaries, except such Taxes, if any, as are listed in Schedule 4.13 and are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Financial Statements. The
Company shall have no obligation for the payment of any Taxes not yet due and
payable prior to the Effective Time in excess of such Taxes accrued on its books
and records in accordance with GAAP. Neither the Company nor any Company
Subsidiary has received written notice of any claim made by an authority in a
jurisdiction where neither the Company nor any Company Subsidiary files Tax
Returns that the Company or any Company Subsidiary is or may be subject to
taxation by that jurisdiction.
Section 4.14 No Material Adverse Change. Since December 31,
1998 there has not been any Material Adverse Change or Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has taken any of the actions
prohibited by Section 6.2 or otherwise acted in such a way as to impair, prevent
or impede the consummation of the Transactions.
Section 4.15 Employee Benefits.
(a) Schedule 4.15(a) sets forth a complete and correct list of
each "employee benefit plan", as such term is defined in section 3(3) of ERISA,
and each written bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding that provides or may provide
benefits or compensation in respect of any employee or independent contractor or
under which any employee or independent contractor is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Company or its Subsidiaries or any other trade or business,
whether or not incorporated, which, together with the Company or its
Subsidiaries, is treated as a single employer under section 414 of the Code
(such other trades and businesses hereinafter referred to as the "Plan Related
Persons"), or to which the Company or any Plan Related Person contributes or is
or has been obligated or required to contribute or with respect to which the
Company may have any liability (collectively, the "Plans"). With respect to each
such Plan, the Company has provided Parent with complete and correct copies of,
(i) such Plan, if written, or a description of such Plan if not written, and
(ii) to the extent applicable to such Plan, all trust agreements, insurance
contracts or other funding arrangements, the two most recent actuarial and trust
reports, the two most recent Forms 5500 required to have been filed with the IRS
and all schedules thereto, the most recent IRS determination letter, all current
summary plan descriptions, any actuarial study of any post-employment life or
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41
medical benefits provided under any such Plan, if any, statements or other
communications regarding withdrawal or other multi-employer plan liabilities,
if any, and all amendments and modifications to any such document. Except as set
forth on Schedule 4.15(a), the Company has not communicated to any Employee or
any independent contractor any intention or commitment to modify any Plan or to
establish or implement any other employee, retiree or independent contractor
benefit or compensation plan or arrangement. Except as set forth on Schedule
4.15(a), neither the Company, nor any of its Subsidiaries, has any unwritten
Plans.
(b) Each Plan intended to be qualified under section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect such
qualification or tax-exempt status.
(c) (i) Neither the Company nor any Related Person has
incurred (either directly or indirectly, including as a result of an
indemnification obligation) any material liability under or pursuant to
Title I or IV of ERISA or the penalty, excise Tax or joint and several
liability provisions of the Code relating to employee benefit plans.
All material contributions and premiums required to have been paid by
the Company and each Related Person to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) (including each Plan)
under the terms of any such plan or its related trust, insurance
contract or other funding arrangement, or pursuant to any Legal
Requirement have been paid within the time prescribed by any such plan,
agreement or Legal Requirement.
(ii) Each of the Plans has been operated and
administered in all material respects in compliance with its terms, all
Legal Requirements except for any failures so to comply that,
individually and in the aggregate, could not reasonably be expected to
result in a material liability or obligation on the part of the Company
or, following the Closing, Parent or any of its affiliates. There are
no pending or, to the Knowledge of the Company, threatened claims by or
on behalf of any of the Plans, by any employee or independent
contractor or otherwise involving any such Plan or the assets of any
Plan (other than routine claims for benefits).
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(iii) No Plan is a "multi-employer plan" within the
meaning of section 4001(a)(3) or section 3(37) of ERISA. No Plan is a
"multiple employer plan" within the meaning of section 4064 of ERISA.
(iv) With respect to each Title IV Plan, the present
value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan did
not exceed, as of its latest valuation date, then current value of the
assets of such plan allocable to such accrued benefits.
(v) No Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of
each Title IV Plan ended prior to the Closing Date. All contributions
required to be made with respect to any Plan on or prior to the Closing
Date have been timely made.
(d) Except as set forth on Schedule 4.15(d), no payment
required to be made to any employee associated with the Company or its
Subsidiaries as a result of the Merger under any contract or otherwise will, if
made, constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
(e) Neither the Company nor any of its Subsidiaries is a party
to any Contract, agreement or other arrangement which could result in the
payment of amounts that could be nondeductible by reason of Section 162(m) of
the Code.
Section 4.16 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Schedule 4.16(a):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of
its assets;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may constitute or
result in a violation by the Company or any Company Subsidiary of, or a
failure on the part of the
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Company or any Company Subsidiary to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of the
Company or any Company Subsidiary or Parent to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature;
and
(iii) neither the Company nor any Subsidiary has
received, at any time since December 31, 1998, any written notice or to
the Knowledge of the Company any oral communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement, or (B) any actual, alleged, possible or
potential obligation on the part of the Company or any Company
Subsidiary to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
(b) Schedule 4.16(b) contains a complete and accurate list of
each Governmental Authorization that is held by the Company and its Subsidiaries
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company and its Subsidiaries. Each Governmental Authorization
listed or required to be listed in Schedule 4.16(b) is valid and in full force
and effect. Except as set forth in Schedule 4.16(b):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Schedule 4.16(b);
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to comply
with any term or requirement of any Governmental Authorization listed
or required to be listed in Schedule 4.16(b), or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Schedule 4.16(b);
(iii) neither the Company nor any Subsidiary has
received, at any time since December 31, 1998, any written notice or to
the Knowledge of the Company any other communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental
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Authorization, or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of or
modification to any Governmental Authorization; and
(iv) since December 31, 1998, all applications
required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed in Schedule 4.16(b) have
been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect
to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 4.16(b) collectively
constitute all of the Governmental Authorizations necessary to permit the
Company and its Subsidiaries to lawfully conduct and operate their respective
businesses in the manner they currently conduct and operate such businesses and
to permit the Company and its Subsidiaries to own and use their respective
assets in the manner in which they currently own and use such assets.
Section 4.17 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 4.17(a) there is no
pending Proceeding:
(i) that has been commenced by or against the Company
or any Company Subsidiary or that otherwise relates to or may affect
the business of, or any of the assets owned or used by, the Company or
any Company Subsidiary; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any
of the Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Company has delivered to Parent copies of all pleadings, correspondence and
other documents relating to each Proceeding listed in Schedule 4.17(a). The
Proceedings listed in Schedule 4.17(a) will not have a Material Adverse Effect
on the Company.
(b) Except as set forth in Schedule 4.17(b):
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(i) there is no Order to which the Company or any
Company Subsidiary, or any of the assets owned or used by the Company
or any Company Subsidiary, is subject;
(ii) none of the shareholders of the Company is
subject to any Order that relates to the business of, or any of the
assets owned or used by, the Company or any Company Subsidiary; and
(iii) no officer, director, or to the Knowledge of
the Company, no agent or employee of the Company or any Company
Subsidiary is subject to any Order that prohibits such officer,
director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to its business.
(c) Except as set forth in Schedule 4.17(c):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
all of the terms and requirements of each Order to which it, or any of
the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement
of any Order to which the Company or any Company Subsidiary, or any of
the assets owned or used by the Company or any Company Subsidiary, is
subject; and
(iii) neither the Company nor any Company Subsidiary
has received, at any time since December 31, 1998, any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any term or requirement of any
Order to which the Company or any Company Subsidiary, or any of the
assets owned or used by the Company or any Company Subsidiary, is or
has been subject.
Section 4.18 Absence of Certain Changes and Events. Except as
set forth in Schedule 4.18, and except as otherwise consented to by Parent and
Purchaser and confirmed to the Company in writing, since December 31, 1998, the
Company has conducted its businesses only in the ordinary course of business and
there has not been any:
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(a) change in the authorized or issued capital stock of the
Company or any Company Subsidiary; grant of any stock option or right to
purchase shares of capital stock of the Company or any Company Subsidiary;
issuance of any security convertible into such capital stock; grant of any
registration rights with respect to such capital stock; purchase, redemption,
retirement or other acquisition by the Company or any Company Subsidiary of any
shares of any such capital stock; or declaration or payment of any dividend or
other distribution or payment in respect of shares of any such capital stock;
(b) amendment to the Organizational Documents of the Company
or any Company Subsidiary;
(c) increase by the Company or any Company Subsidiary of any
bonuses, salaries or other compensation to any shareholder, director, officer or
employee or entry into any employment, severance or similar Contract with any
director, officer, or employee;
(d) except in the ordinary course of business, adoption of, or
increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other employee
benefit plan for or with any employees of the Company or any Company Subsidiary;
(e) damage to or destruction or loss of any asset or property
of the Company or any Company Subsidiary materially and adversely affecting the
properties, assets, business, or financial condition of the Company or any
Company Subsidiary, taken as a whole;
(f) entry into, termination of or receipt of notice of
termination of (i) any license, joint venture, credit or similar agreement, (ii)
any distributorship, dealer or sales representative or similar agreement that
was responsible for more than $1,000,000 of sales in the fiscal year ended
December 31, 1998, or (iii) any Contract or transaction involving a total
remaining commitment by or to the Company or any Company Subsidiary in excess of
$100,000;
(g) except in the ordinary course of business, sale, lease or
other disposition of any asset or property of the Company or any Company
Subsidiary or Encumbrance on any material asset or property of the Company or
any Company
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Subsidiary, including the sale, lease or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company or any Company Subsidiary in excess of $50,000;
(i) change in the accounting methods used by the Company or
any Company Subsidiary;
(j) incurrence, assumption or guarantee of the indebtedness of
the Company or any Company Subsidiary;
(k) issuance or sale of any shares of capital stock of the
Company or any Company Subsidiary, or making of any other changes in the capital
structure of the Company or any Company Subsidiary;
(l) writing-off as uncollectible of any notes or accounts
receivable, except writeoffs in the ordinary course of business charged to
applicable reserves, none of which individually or in the aggregate is material;
writing-off, writing-up or writing-down of any other material asset of the
Company or any Company Subsidiary; or altering of its customary time periods for
collection of accounts receivable or payments of accounts payable;
(m) making of any loan, advance or capital contributions to or
investment in any Person;
(n) terminating or closing of any material facility, business
or operation of the Company or any Company Subsidiary; or
(o) agreement, whether oral or written, by the Company or any
Company Subsidiary to do any of the foregoing.
Section 4.19 Applicable Contracts; No Defaults.
(a) Schedule 4.19(a) contains a complete and accurate list,
and the Company has delivered to Parent complete copies, of:
(i) each Applicable Contract;
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(ii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement and other
Applicable Contract affecting the ownership of, leasing of, title to,
use of or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments per item of less than $100,000 for any twelve (12) month
period following the date of this Agreement);
(iii) each licensing agreement or other Applicable
Contract with respect to patents, trademark, copyrights or other
intellectual property, including agreements with current or former
employees, consultants or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Assets;
(iv) each joint venture or partnership agreement and
each other Applicable Contract (however named) involving a sharing of
profits, losses, costs or liabilities by the Company or any Company
Subsidiary with any other Person;
(v) each power of attorney that is currently
effective and outstanding; and
(vi) each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
Schedule 4.19(a) sets forth the date and parties to the Applicable
Contracts, copies of which have been previously delivered to Parent or
Purchaser.
(b) Except as set forth in Schedule 4.19(b):
(i) none of the shareholders of the Company (and no
Related Person of any of the shareholders of the Company) has or may
acquire any rights under, or may become subject to any obligation or
liability under, any Applicable Contract that relates to the business
of, or any of the assets owned or used by, the Company or any Company
Subsidiary; and
(ii) neither the Company nor any Company Subsidiary
nor any officer, director, agent, employee, consultant or contractor of
the Company or any Company Subsidiary is bound by any Applicable
Contract that purports
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to limit the ability of the Company or any Company Subsidiary or any
such officer, director, agent, employee, consultant or contractor to
engage in or continue any conduct, activity or practice relating to the
business of the Company or any Company Subsidiary.
(c) Except as set forth in Schedule 4.19(c), each Applicable
Contract identified or required to be identified in Schedule 4.19(a) is in full
force and effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 4.19(d):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in substantial
compliance with all applicable terms and requirements of each
Applicable Contract under which the Company and any Company Subsidiary
has or had any obligation or liability or by which the Company and any
Company Subsidiary or any of the assets owned or used by the Company
and any Company Subsidiary is or was bound;
(ii) to the Knowledge of the Company, each other
Person that has or had any obligation or liability under any Applicable
Contract under which the Company or any Company Subsidiary has or had
any rights is, and at all times since December 31, 1998 has been, in
full compliance with all applicable terms and requirements of such
Applicable Contract;
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict
with or result in a violation or breach of, or give the Company or any
Company Subsidiary or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate or modify, any Applicable Contract; and
(iv) neither the Company nor any Company Subsidiary
has given to or received from any other Person, at any time since
December 31, 1998, any written notice or other communication regarding
any actual, alleged, possible or potential violation or breach of or
default under, any Applicable Contract.
(e) Except as set forth in Schedule 4.19(e), there are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate,
or rights to reclaim or
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have repaid, any material amounts paid or payable to the Company or any Company
Subsidiary under current or completed Applicable Contracts with any Person and
no such Person has made written demand for such renegotiation.
(f) The Applicable Contracts relating to the provision of
products or services by the Company and its Subsidiaries have been entered into
in the ordinary course of business.
Section 4.20 Insurance.
(a) The Company has delivered to Parent:
(i) true and complete copies of all policies of
insurance to which the Company or any Company Subsidiary is a party or
under which the Company or any Company Subsidiary, or any director of
the Company or any Company Subsidiary, is or has been covered at any
time since December 31, 1998;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) since December 31, 1998, any statement by the
auditor of the financial statements of the Company and its Subsidiaries
with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Schedule 4.20(b) describes:
(i) any self-insurance arrangement by or affecting
the Company or any Company Subsidiary, including any reserves
established thereunder;
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by the Company or
any Company Subsidiary; and
(iii) all obligations of the Company or any Company
Subsidiary to third parties with respect to insurance (including such
obligations under leases and service agreements) and identifies the
policy under which such coverage is provided.
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(c) Schedule 4.20(c) sets forth, by year, for the current
policy year and each of the two preceding policy years:
(i) a summary of the loss experience under each
policy of insurance, to the extent available from the insurance
company;
(ii) a statement describing each claim under any
general liability or workers' compensation insurance policy for an
amount in excess of $50,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer,
type of insurance and period of coverage; and
(C) the amount and a brief description of
the claim; and
(iii) a statement describing the loss experience for
all claims that were self-insured, including the number and aggregate
cost of such claims (or similar statement prepared on behalf of the
Company or any Subsidiary by its third party administrator).
(d) Except as set forth in Schedule 4.20(d):
(i) all policies to which the Company or any Company
Subsidiary is a party or that provide coverage to the Company or any
Company Subsidiary or any director or officer of the Company or any
Company Subsidiary:
(A) are valid, outstanding and enforceable;
(B) are to the Knowledge of the Company
issued by an insurer that is financially sound and reputable;
(C) will continue in full force and effect
following the consummation of the Transactions; and
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(D) do not provide for any retrospective
premium adjustment or other experience-based liability on the
part of the Company; and
(ii) with respect to current insurance policies,
neither the Company nor any Company Subsidiary has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder;
(iii) each of the Company and its Subsidiaries has
paid all premiums due and has otherwise performed all of its
obligations under each policy to which the Company or any Company
Subsidiary is a party or that provides coverage to the Company or any
Company Subsidiary or any director thereof, and
(iv) each of the Company and its Subsidiaries has
given notice to the applicable insurer of all claims that may be
insured thereby.
Section 4.21 Environmental Matters.
(a) Except as set forth in Schedule 4.21(a), (i) each of the
Company and its Subsidiaries is, and at all times has been, in full compliance
with all applicable federal, state and local laws and regulations, orders, and
ordinances relating to the protection of human health or the environment
("Environmental Laws"); (ii) none of the Company or any Company Subsidiary, or
any shareholder of the Company, has received any notice or communication
(written or oral), whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that the Company or any Company Subsidiary is not or may
not be in such full compliance; and (iii) to the Knowledge of the Company, there
are no circumstances, incidents, conditions or events that may prevent or
interfere with such full compliance in the future. Each of the Company and its
Subsidiaries has all necessary Governmental Authorizations or other
authorizations to comply with such Environmental Laws, and all such Governmental
Authorizations and other authorizations are identified in Schedule 4.21(a).
Except as identified in Schedule 4.21(a), the Company has provided to Parent all
assessments, reports, data, results of investigations or audits, and other
information that is in the possession of or reasonably available to the Company
regarding environmental matters pertaining to or the environmental condition of
the business of the Company and its Subsidiaries, or the
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compliance (or noncompliance) by the Company or any Company Subsidiary with any
Environmental Laws.
(b) Except as set forth in Schedule 4.21(b), there are no past
or present actions, activities, circumstances, conditions, events or incidents
that could form the basis of any Proceeding, Order or third party claim against
the Company or any Company Subsidiary based on any Environmental Law or common
law.
(c) Except as set forth in Schedule 4.21(c), there has been no
release or threatened release of any Hazardous Materials (except in compliance
with all Environmental Laws) at or from any properties or assets now or
previously owned or operated by the Company or any Company Subsidiary or at any
other locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used or processed from or by the
Company or any Company Subsidiary.
Section 4.22 Employees.
(a) Schedule 4.22(a) contains a complete and accurate list of
the following information for each Key Employee or director of the Company and
its Subsidiaries, including each Key Employee on leave of absence or layoff
status: (i) employer, name and job title; (ii) current compensation (including
commissions and bonuses, if any) paid or payable and any change in compensation
since the Interim Financial Statements; (iii) vacation and sick leave accrued,
(iv) service credited for purposes of vesting and eligibility to participate
under the following plans of the Company or any Company Subsidiary: pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare or
vacation plan, other Pension Plan or Welfare Plan or any other employee benefit
plan or any Plan for the benefit of directors; and (v) contracts or other
agreements to which such Key Employee or director is a party, including but not
limited to any employment, confidentiality, noncompetition, consulting or
proprietary rights agreement.
(b) No Key Employee or director of the Company or any Company
Subsidiary is a party to, or is otherwise bound by, any contract, agreement or
arrangement, including any employment, confidentiality, noncompetition or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way materially adversely
affects or will affect (i) the performance of such person's duties as an
employee or director of the Company or any
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Company Subsidiary, or (ii) the ability of the Company or any Company Subsidiary
to conduct its business, including any Proprietary Rights Agreement with the
Company, its Subsidiaries, or the shareholders of the Company by any such
employee or director. Except as set forth in Schedule 4.22(b) to the Knowledge
of the Company, no director, officer or other Key Employee of the Company or any
Company Subsidiary has communicated his intention to, or the Knowledge of the
Company or any Company Subsidiary intends to terminate his employment with the
Company or any Company Subsidiary.
(c) Schedule 4.22(c) contains a complete and accurate list of
the following information for each retired employee of the Company and its
Subsidiaries or their dependents receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.
Section 4.23 Labor Relations; Compliance. Schedule 4.23
contains a complete and accurate list of all collective bargaining or other
labor contracts to which the Company or any Subsidiary is, or at any time since
December 31, 1998 has been, a party. Since December 31, 1998, there has not
been, and there is not currently, pending or existing, and there is not and has
not been threatened, (a) any strike, slowdown, picketing, work stoppage or
employee grievance pending; (b) any Proceeding against or affecting the Company
or any Company Subsidiary relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge, claim, action or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, the
United States Department of Labor or any comparable Governmental Body, any
organizational activity or any other labor or employment dispute against or
affecting the Company or any Company Subsidiary or their premises; (c) any
application for certification of a collective bargaining agent; or (d) any
organizational activity by its employees. To the Knowledge of the Company, no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company or any Company Subsidiary, and no such action is contemplated by the
Company or any Company Subsidiary. The Company and its Subsidiaries have
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
employee leave, hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health and plant closings.
Neither the Company nor any Company Subsidiary is liable for the payment of any
compensation, damages,
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taxes, fines, penalties or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.
Section 4.24 Intellectual Property Assets.
(a) Schedule 4.24(a) identifies all patents, trademarks,
copyrights, service marks and trade names of the Company and its Subsidiaries,
and all pending applications for any of the foregoing, and all permits, grants
and licenses (the "Intellectual Property Assets") owned by or running to or from
the Company or any Company Subsidiary or used in the conduct of their
operations. Except as set forth on Schedule 4.24(a), there are no Intellectual
Property Assets necessary in order to operate the business of the Company and
its Subsidiaries as currently conducted or being developed. The Company and its
Subsidiaries own all right, title and interest to their Intellectual Property
Assets, and each Intellectual Property Asset owned or used by the Company and
its Subsidiaries immediately prior to the Effective Time will be owned or
available for use by the Company and its Subsidiaries on identical terms and
conditions immediately subsequent to the Effective Time.
(b) Each of the Company and its Subsidiaries owns or has the
right to use without charge all necessary or desirable Intellectual Property
Assets, trade secrets, know-how, processes, designs and other technology or
information utilized in its business as currently conducted or being developed,
and to the Knowledge of the Company, such use by the Company and its
Subsidiaries does not infringe upon, misappropriate, isolate or otherwise come
into conflict with any patent, trademark, copyright, service xxxx, trade name or
any other intellectual property rights of any other Person. Except as set forth
on Schedule 4.24(a), none of the Company or the shareholders of the Company has
ever received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation.
Section 4.25 Certain Payments. Since December 31, 1998, none
of the Company, any Company Subsidiary, or any director, officer, agent or
employee of the Company or any Subsidiary, or the shareholders of the Company or
any other Person associated with or acting for or on behalf of the Company or
any Company Subsidiary, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Company Subsidiary, or (iv) in violation of any Legal Requirement; or (b)
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established or maintained any fund or asset that has not been recorded in the
books and records of the Company or any Company Subsidiary.
Section 4.26 Relationship with Related Persons. Except as set
forth in Schedule 4.26, none of the shareholders or any Related Person of the
shareholders of the Company or the Company or any Company Subsidiary has, or has
had, any interest in any property (whether real, personal or mixed and whether
tangible or intangible), used in or pertaining to the business of the Company or
any Company Subsidiary. None of the shareholders of the Company or any Related
Person of the shareholders of the Company or the Company or any Company
Subsidiary owns, or has owned (of record or as a beneficial owner), an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Company or any Company Subsidiary, or (ii) engaged in competition with the
Company or any Company Subsidiary with respect to any line of the products or
services of the Company or any Company Subsidiary in any market currently served
by the Company or any Company Subsidiary. Except as set forth in Schedule 4.26,
none of the shareholders of the Company or any Related Person of any of the
shareholders of the Company or the Company is a party to any Contract with, or
has any claim or right against, the Company or any Company Subsidiary.
Section 4.27 Brokers or Finders. Except as set forth in
Schedule 4.27, none of the Company or any Company Subsidiary, or any of the
shareholders of the Company, or any of their respective agents has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement. The Company has delivered to Parent true and correct copies of any
written Contracts, and summarized the terms of any oral agreements, with all of
such parties set forth on Schedule 4.27.
Section 4.28 Opinion of Financial Advisor. The Company has
received the opinion of Xxxxxx Xxxxxxxx & Co., to the effect that, as of the
date of this Agreement, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
The Company has been authorized by Xxxxxx Xxxxxxxx & Co. to permit the inclusion
of such opinion in its entirety in the Offer Documents and the Schedule 14D-9
and the Proxy Statement.
Section 4.29 Year 2000.
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Except as set forth on Schedule 4.29:
(a) all of the Computer Programs, computer firmware, computer
hardware (whether general or special purpose) and other similar or related items
of automated, computerized and/or software system(s) that are material to the
Company or by any of its Subsidiaries in the conduct of their respective
businesses will not malfunction, will not cease to function, will not generate
incorrect data, and will not provide incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the twentieth
and twenty-first centuries and (ii) date-related data in connection with any
valid date in the twentieth and twenty-first centuries, except in each case for
failures that individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Company or
its Subsidiaries;
(b) all of the products and services sold, licensed, rendered
or otherwise provided by the Company or by any of its Subsidiaries in the
conduct of their respective businesses will not malfunction, will not cease to
function, will not generate incorrect data and will not produce incorrect
results when processing, providing and/or receiving (i) date-related data into
and between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first centuries,
except in each case for failures that individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company or its Subsidiaries; and neither the Company nor any of
its Subsidiaries is or shall be subject to claims or liabilities arising from
their failure to do so;
(c) neither the Company nor any of its Subsidiaries has made
other representations or warranties regarding the ability of any product or
service sold, licensed, rendered or otherwise provided by the Company or by any
of its Subsidiaries in the conduct of their respective businesses to operate
without malfunction, to operate without ceasing to function, to generate correct
data and to produce correct results when processing, providing and/or receiving
(i) date-related data into and between the twentieth and twenty-first centuries
and (ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries; and
(d) to the Knowledge of the Company and its Subsidiaries,
there is no supplier or any third party with whom the Company or its
Subsidiaries has a material business relationship, that has Computer Programs,
computer firmware, computer hardware (whether general or special purpose) and
other similar or related items of
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automated, computerized and/or software system(s), the operation of which
relates in a material way to the products or services provided by the Company or
its Subsidiaries or which are received from the third party, that will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing and/or receiving (i)
date-related data into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in the twentieth and
twenty-first centuries, except in each case for failures that individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Company or its Subsidiaries.
Section 4.30 Products Liability; Recalls. (a) Except as set
forth in Schedule 4.30, (i) there is no notice, demand, claim, action, suit,
inquiry, hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature (collectively, "Notices") pending or
threatened before any Governmental Body in which a Product is alleged to have a
Defect or relating to or resulting from any alleged failure to warn or from any
alleged breach of express or implied warranties or representations; (ii) to the
Knowledge of the Company, no valid basis exists for any such demand, claim,
action, suit, inquiry, hearing, proceeding, notice of violation or
investigation; (iii) no demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation referred to in clause (i) or
(ii) of this Section 4.30 would, if adversely determined, have, individually or
in the aggregate, a Material Adverse Effect on the Company; (iv) to the
Knowledge of the Company, there has not been any Occurrence; (v) there has not
been any recall, rework, retrofit or post-sale warning (collectively, "Recalls")
of any Product, or any investigation or consideration of or decision made by any
person or entity concerning whether to undertake or not to undertake any Recalls
and the Company has received no Notices from any Governmental Body or any other
person with respect to the foregoing; and (vi) to the Knowledge of the Company,
there are no material Defects in design, manufacturing, materials, or
workmanship, including, without limitation, any failure to warn, or any breach
of express or implied warranties or representations, which involve any Product.
(b) Schedule 4.30 sets forth all Notices received by the
Company or its Subsidiaries since November 1, 1995 and the amount of the
reserves provided therefor.
Section 4.31 Information in Schedule 14D-9. The information
supplied by the Company expressly for inclusion in the Offer Documents and the
Schedule 14D-9 will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. The
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Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information furnished by Parent or
Purchaser for inclusion in the Schedule 14D-9.
Section 4.32 Information in Proxy Statement. Each of the Proxy
Statement and the Articles Amendment Proxy Statement, if any, will not, at the
respective dates each is mailed to Company shareholders and at the respective
times of the meetings of Company shareholders to be held in connection with the
Merger or the Articles Amendment, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information furnished by Parent or Purchaser for inclusion in
the Proxy Statement or the Articles Amendment Proxy Statement, as the case may
be. Each of the Proxy Statement and the Articles Amendment Proxy Statement will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company as
follows:
Section 5.1 Organization and Valid Existence. Each of Parent
and Purchaser is a corporation duly organized and validly existing under the
laws of its state of incorporation with full corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
to which Parent and Purchaser is a party and to perform all of its obligations
hereunder and thereunder. At the Effective Time, Purchaser will be a corporation
duly organized and validly existing under the laws of Delaware.
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Section 5.2 Authority; No Conflict.
(a) The execution and delivery of this Agreement, the Stock
Option Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of Parent and Purchaser, including approval of the
Merger by the respective Board of Directors of each of Parent and Purchaser.
This Agreement and the Stock Option Agreement have been duly executed and
delivered by Parent and Purchaser and constitute the legal, valid and binding
obligations of Parent and Purchaser, enforceable against them in accordance with
their terms. Upon execution and delivery by Parent and Purchaser of the other
agreements contemplated hereby to which it is or they are a party, such other
agreements will constitute the legal, valid and binding obligations of Parent
and Purchaser, as the case may be, enforceable against them in accordance with
their respective terms.
(b) Neither the execution and delivery of this Agreement, the
Stock Option Agreement or the other agreements contemplated hereby nor the
consummation or performance of any of the Transactions or other transactions
contemplated by such agreements will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents of
Parent or Purchaser, or (B) any resolution adopted by the board of
directors or the shareholders of Parent or Purchaser;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right
to challenge any of the Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
Parent or Purchaser, or any of the assets owned or used by any of them,
may be subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by
Parent or Purchaser or that otherwise relates to the business of, or
any of the assets owned or used by, Parent or Purchaser.
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(c) Except as set forth in Schedule 5.2(c), or as may be
required under the applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, any applicable state securities or "blue sky" laws and the
PBCL, Parent and Purchaser are not and will not be required to obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement, the Stock Option Agreement or the consummation or performance of any
of the Transactions.
(d) Except as set forth in Schedule 5.2(d), no Proceeding has
been commenced by or against Parent or Purchaser that relates to or may affect
the business of, or any of the assets owned or used by Parent or Purchaser.
Section 5.3 Certain Proceedings. There is no pending
Proceeding that has been commenced against Parent or Purchaser and that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Transactions. To the Knowledge of Parent
and Purchaser, no such Proceeding has been threatened.
Section 5.4 Brokers or Finders. Except as set forth on
Schedule 5.4, Parent, Purchaser and their officers and agents, have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
Section 5.5 Information in Offer Document. The Offer Documents
will comply as to form in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or
Purchaser with respect to information furnished by the Company expressly for
inclusion in the Offer Documents.
Section 5.6 Information in Proxy Statement. None of the
information furnished by Parent or Purchaser expressly for inclusion in the
Proxy Statement will, at the date mailed to shareholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading.
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ARTICLE VI
COVENANTS
Section 6.1 Access and Investigation. Between the date of this
Agreement and the Effective Time, the Company will, and will cause its
Representatives to, (a) afford Parent, Purchaser and their respective
Representatives reasonable access to the personnel, properties, operations,
contracts, books and records and other documents and data of the Company and its
Subsidiaries; (b) furnish Parent, Purchaser and their respective Representatives
with copies of all such contracts, books and records and other existing
documents and data as they may reasonably request; (c) furnish Parent, Purchaser
and their respective Representatives with a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of the federal securities laws and (d)
furnish Parent, Purchaser and their respective Representatives with such
additional financial, operating and other data and information as they may
reasonably request. Access shall include the right to conduct such environmental
studies as Parent, in its reasonable discretion, shall deem appropriate.
Section 6.2 Operation of the Businesses of the Company. Except
as set forth in Schedule 6.2 or as agreed to in writing by Parent, between the
date of this Agreement and the Effective Time, the Company will:
(a) conduct the business of the Company and its Subsidiaries
only in the ordinary course of business (including managing the working capital
of the Company and its Subsidiaries in accordance with past practice and
custom);
(b) use its Best Efforts to preserve intact the current
business organization of the Company and its Subsidiaries, keep available the
services of the current officers, employees and agents of the Company and its
Subsidiaries and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with the Company and its Subsidiaries;
(c) inform Parent concerning operational matters of the
Company or any Subsidiary of a material nature; and
(d) otherwise report periodically to Parent concerning the
status of the business, operations and finances of the Company and its
Subsidiaries.
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Section 6.3 Negative Covenant. Between the date of this
Agreement and the Effective Time, and except (i) as expressly contemplated by
this Agreement, (ii) as set forth on Schedule 6.3, or (iii) as agreed in writing
by Parent:
(a) the Company will not take any action or fail to take any
action as a result of which any of the changes or events listed in Section 4.18
hereof (as modified by Schedule 4.18) occurs or is reasonably likely to occur;
(b) neither the Company nor any Company Subsidiary shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except policies
providing coverage for losses not in excess of $ 50,000;
(c) neither the Company nor any of its Subsidiaries shall
enter into any contract or transaction relating to the purchase of assets other
than in the ordinary course of business consistent with prior practices;
(d) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries;
(e) neither the Company nor any of its Subsidiaries will adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(f) neither the Company nor any Company Subsidiary will (i)
change any of the accounting methods used by it unless required by GAAP or (ii)
make any election relating to Taxes, change any election relating to Taxes
already made, adopt any accounting method relating to Taxes, change any
accounting method relating to Taxes unless required by GAAP, enter into any
closing agreement relating to Taxes, settle any claim or assessment relating to
Taxes or consent to any claim or assessment relating to Taxes or any waiver of
the statute of limitations for any such claim or assessment;
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(g) neither the Company nor any of its Subsidiaries will take,
or agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Offer set forth in Annex A or any of the
conditions to the Merger set forth in Article VII not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company, Parent, Purchaser or the holders
of Shares to consummate the Offer or the Merger in accordance with the terms
hereof or materially delay such consummation; and
(h) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 6.4 Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including without limitation Section 6.5 hereto, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer and
the Merger, and the other Transactions, including (i) the preparation and filing
with the SEC of the Offer Documents, the Schedule 14D-9, the information
required to be distributed to the shareholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as is
necessary to enable Parent's designees to be elected to the Company Board or
Directors pursuant to Section 2.3 hereof, the preliminary Proxy Statement and
the Proxy Statement and all necessary amendments or supplements thereto; (ii)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Body and the making of all necessary
registrations and filings (including filings with any Governmental Body, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Body, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Body
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement. Notwithstanding the foregoing, or any other covenant
herein contained, in connection with the receipt of any necessary
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approvals under the HSR Act, neither the Company nor any of its Subsidiaries
shall be entitled to divest or hold separate or otherwise take or commit to take
any action that limits Parent's or Purchaser's freedom of action with respect
to, or their ability to retain, the Company or any of its Subsidiaries or any
material portions thereof or any of the businesses, product lines, properties or
assets of the Company or any of its Subsidiaries, without Parent's prior written
consent.
(b) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to, provide any necessary information
with respect to, and provide the other parties (or their respective counsel)
with copies of, all filings made by such party with any Governmental Body or any
other information supplied by such party to a Governmental Body in connection
with this Agreement, the Merger and the other Transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental Body
regarding any of the Transactions. If any party hereto or Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Body with respect to any of the Transactions, then such party
shall endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other parties, an appropriate
response in compliance with such request. To the extent that transfers,
amendments or modifications of permits (including environmental permits) are
required as a result of the execution of this Agreement or consummation of any
of the Transactions, the Company shall use its best efforts to effect such
transfers, amendments or modifications.
(c) The Company and Parent shall file as soon as practicable
notifications under the HSR Act and respond as promptly as practicable to any
inquiries received from the Federal Trade Commission and the Antitrust Division
of the Department of Justice for additional information or documentation and
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Body in connection with
antitrust matters. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, the Company and Parent shall each
request early termination of the HSR Act waiting period. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to require Parent or
Purchaser to commence any litigation against any entity in order to facilitate
the consummation of any of the Transactions or to defend against any litigation
brought by any Governmental Body seeking to prevent the consummation of any of
the Transactions.
Section 6.5 Notification; Updating of Schedules.
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(a) Between the date of this Agreement and the Effective Time,
the Company will promptly notify Parent and Purchaser in writing if any of the
Company's representations or warranties contained in this Agreement becoming
untrue or inaccurate in any material respect (including receiving knowledge of
any fact, event or circumstance which may cause any representation qualified as
to Knowledge to be or become untrue or inaccurate in any material respect);
provided, however, that no such notification shall affect the representations
and warranties of the parties or the conditions to the obligations of the
parties under this Agreement.
(b) Between the date of this Agreement and the Effective Time,
the Company will promptly notify Parent and Purchaser of the failure by the
Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by them under this
Agreement; provided, however, that no such notification shall affect the
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) Between the date of this Agreement and the Effective Time,
the Company shall keep up to date all of the Schedules, and shall notify Parent
and Purchaser of any changes or additions or events which may, after the lapse
of time, cause any material change or addition in any of such Schedules, whether
or not such material changes or additions relate to matters that are permitted
under this Agreement; provided, however, that no such updates shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 6.6 No Solicitation of Competing Transaction.
(a) Neither the Company nor any Company Subsidiary or
Affiliate of the Company shall (and the Company shall cause the Representatives
of the Company, each Company Subsidiary and each Affiliate of the Company, not
to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any Person or
group (other than Parent, any of its Affiliates or representatives) concerning
any Acquisition Proposal, except that nothing contained in this Section 6.6 or
any other provision hereof shall prohibit the Company or the Company Board of
Directors from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Company Board of Directors, after receiving advice from outside counsel, is
required
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under applicable law, provided that the Company may not, except as permitted by
Section 6.6(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. Upon execution of this
Agreement, the Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if:
(x) such entity or group has submitted a Superior
Proposal; and
(y) in the opinion of the Company Board of Directors
such action is required to discharge the Company Board of Director's
fiduciary duties to the Company's shareholders under applicable law,
determined only after receipt of a written opinion from independent
legal counsel to the Company that the failure to provide such
information or access or to engage in such discussions or negotiations
would cause the Company Board of Directors to violate its fiduciary
duties to the Company's shareholders under applicable law.
The Company will immediately notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by the Company, and the Company will
immediately communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent. The Company will keep Parent informed of the
status and details of any such Acquisition Proposal and of any amendments or
proposed amendments to any Acquisition Proposal and will promptly (but in no
case later than 24 hours) notify Parent of any determination by the Company
Board of Directors that a Superior Proposal has been made.
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(b) Except as set forth below in this subsection (b), neither
the Company Board of Directors nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, this Agreement or the Merger, (ii) approve or recommend
or propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the time of acceptance for payment of Shares pursuant to the
Offer, the Company Board of Directors may withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger, approve or recommend
a Superior Proposal, or enter into an agreement with respect to a Superior
Proposal, in each case at any time after the fifth business day following
Parent's receipt of written notice from the Company advising Parent that the
Company Board of Directors has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal, but only if the Company
shall have caused its financial and legal advisors to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms.
Section 6.7 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective Affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without prior
consultation with the other party, except as may be required by law or by any
listing agreement with a national securities exchange or trading market.
Section 6.8 Employee Arrangements
(a) Parent and Purchaser hereby acknowledge and agree that the
employment agreements and severance agreements set forth on Schedule 6.9(a)
constitute binding obligations of the Company and Parent and Purchaser will
honor such agreements after the Effective Time in accordance with their terms as
in effect on the date hereof.
(b) For a period of one (1) year following the Effective Time,
Parent and Purchaser shall continue to maintain employee benefit plans, programs
and policies for the employees of the Company which, in the aggregate, provide
benefits that are
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substantially comparable to those provided to such employees under the plans,
programs and policies maintained for such employees by the Company as of the
date hereof; provided, however, that the aggregate cost per employee of
maintaining such benefits does not increase by more than five percent (5%)
during such period.
Section 6.9 Officers' and Directors' Insurance;
Indemnification.
(a) For three (3) years after the Effective Time, Parent and
Purchaser shall maintain officers' and directors' liability insurance covering
the persons who are presently covered by the Company's officers' and directors'
liability insurance policies (copies of which have been delivered to Parent)
with respect to actions and omissions occurring prior to the Effective Time, on
terms which are not materially less favorable than the terms of such current
insurance in effect for the Company on the date hereof provided, however, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 120% of the annual premium currently paid by the Company for such
coverage; and provided further, that, if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 120% of the aggregate annual premiums
paid by the Company in 1999 (which the Company represents will be approximately
$47,000 on an annualized basis for 1999).
(b) For three (3) years after the Effective Time, Parent and
Purchaser shall maintain the rights to indemnification of officers and directors
provided for in the Company's bylaws as in effect on the date hereof, with
respect to indemnification for acts and omissions occurring prior to the
Effective Time, including without limitation, the transactions contemplated by
this Agreement.
Section 6.10 Takeover Statutes.
If any "business combination," "fair price," "control share
acquisition" or "moratorium" statute or other similar statute or regulation or
any state "blue sky" or securities law statute shall become applicable to the
transactions contemplated hereby, the Company and the Company Board of Directors
shall, to the extent consistent with applicable law, grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of such statute or
regulations on the transactions contemplated hereby; provided, that this Section
6.10 shall not require the Company to seek to amend its Articles of
Incorporation to opt out of Subchapter E of Chapter 25 of the PBCL.
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Section 6.11 Form S-8. As soon as practicable following the
Effective Time, Parent shall file with the SEC a registration statement on an
appropriate form or a post-effective amendment to a previously filed
registration statement under the Securities Act, with respect to the shares of
Parent Common Stock issuable in respect of Company Options.
Section 6.12 Assistance. The Company agrees to provide, and
will cause its Subsidiaries and its and their respective officers, employees,
counsel and accountants to provide, to Parent and any of its Subsidiaries all
reasonable necessary cooperation in connection with the arrangement of any
financing to be consummated including without limitation any of the following,
the execution and delivery of any requested certificates, documents (including
without limitation any "comfort" letters from auditors and opinions of counsel)
or financial information as may be reasonably requested by Parent or any of its
Subsidiaries in connection with the financing. Parent agrees to reimburse the
Company for its reasonable out-of-pocket costs incurred in connection with such
cooperation.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, if
required by applicable law, in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation
shall have been enacted or promulgated by any Governmental Body which prohibits
the consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the Merger;
(c) Purchase of Shares in Offer. Parent, Purchaser or their
Affiliates shall have purchased Shares pursuant to the Offer; and
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(d) HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section 7.2 Conditions to Parent's and Purchaser's Obligations
to Effect the Merger. The obligations of Parent and Purchaser to consummate the
Merger shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole or
in part by the Parent and Purchaser, to the extent permitted by applicable law.
(a) Compliance with Obligations. All actions contemplated by
Section 3.4 shall have been taken;
(b) Representations and Warranties. The representations and
warranties of the Company set forth in Article IV shall be true in all material
respects on the date of this Agreement and as of the Effective Time;
(c) Covenants. The Company shall have complied in all material
respects with its obligations under the terms of this Agreement; and
(d) Articles Amendment. The Articles Amendment shall have been
approved by the holders of the requisite number of shares required by the PBCL
and the Articles.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. The Transactions may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) Subject to Section 2.3(c), by the mutual written consent
of Parent and the Company;
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any
Shares being purchased pursuant thereto or (y) Purchaser shall not have
accepted for payment any Shares pursuant to the Offer by December 31,
1999; provided,
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however, that the right to terminate this Agreement under this Section
8.1(b)(i) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of Purchaser to purchase the Shares pursuant to the
Offer on or prior to such date; or
(ii) if any Governmental Body shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) By the Company:
(i) if Parent, Purchaser or any of their Affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 8.1(c)(i) if the Company is at such time in
material breach of its obligations under this Agreement;
(ii) in connection with entering into a definitive
agreement as permitted by Section 6.6(b), provided the Company has
complied with all provisions thereof, including the notice provisions
therein, and that the Company makes simultaneous payment to Parent of
funds as required by Section 9.1(b);
(iii) if Parent or Purchaser shall have terminated
the Offer or the Offer expires without Parent or Purchaser, as the case
may be, purchasing any Shares pursuant thereto; provided that the
Company may not terminate this Agreement pursuant to this Section
8.1(c)(ii) if the Company is in material breach of this Agreement or
the Stock Option Agreement.
(d) By Parent:
(i) if, due to an occurrence, not involving a breach
by Parent or Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, Purchaser, or any of their Affiliates shall have failed
to commence the Offer on or prior to the fifth business day following
the date of the initial public announcement of the Offer;
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(ii) (A) if, prior to the purchase of Shares by
Purchaser pursuant to the Offer, the Company Board of Directors shall
have withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger or shall have recommended an Acquisition Proposal or (B)
there shall have been a material breach of Section 6.6, including but
not limited to the Company having executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent,
Purchaser or their Affiliates;
(iii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement which
would give rise to the failure of a condition set forth in Annex A
hereto;
(iv) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 15% or more of the Shares or any
such Person or group shall have announced its intention to acquire 15%
or more of the Shares and the Company Board of Directors has failed to
recommend against acceptance of such announcement (including by taking
no position with respect to such announcement);
(v) if the Company receives an Acquisition Proposal
from any Person (other than Parent or Purchaser), and the Company Board
of Directors takes a neutral position or makes no recommendation with
respect to such Acquisition Proposal after a reasonable amount of time
(and in no event more than five business days following such receipt)
has elapsed for the Company's Board of Directors to review and make a
recommendation with respect to such Acquisition Proposal; or
(vi) if Parent or Purchaser shall have terminated the
Offer in accordance with the terms of this Agreement without Parent or
Purchaser purchasing any Shares thereunder; provided that Parent or
Purchaser is not in material breach of this Agreement.
Section 8.2 Effect of Termination. In the event of the
termination or abandonment of the Transactions by any party hereto pursuant to
the terms of this
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Agreement, written notice thereof shall forthwith be given to the other party or
parties specifying the clause of Section 8.1 hereof pursuant to which such
termination or abandonment of the Transactions is made, and there shall be no
liability hereunder on the part of the Parent or the Company except (A) for
fraud or for breach of this Agreement prior to such termination or abandonment
of the Transactions and (B) as set forth in Section 9.1.
Section 8.3 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall include
all genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no
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presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses.
(a) Except as specifically provided to the contrary in this
Agreement, including Section 9.1(b), (c) or (d), whether or not the Transactions
are consummated, all costs and expenses incurred in connection with this
Agreement and the consummation of the Transactions shall be paid by the party
incurring such expenses.
(b) If
(i) the Company shall enter into an agreement which
accepts or implements a Superior Proposal;
(ii) the Company shall terminate or abandon the
Transactions pursuant to Section 8.1(c)(ii); or
(iii) Parent shall terminate or abandon the
Transactions pursuant to Section 8.1(d)(ii), (iv) or (v);
then the Company shall pay to Parent an amount equal to the Termination Fee.
(c) If this Agreement is terminated by Parent pursuant to
Section 8.1(d)(iii) and at the time of such termination, (i) the Company has not
paid the Termination Fee to Parent pursuant to any other provision of this
Agreement and (ii) Parent is not in material breach of this Agreement, then the
Company shall pay to Parent, at the time of termination, an amount equal to
Parent's actual and reasonably documented out-of-pocket fees and expenses
incurred by Parent and Purchaser in connection with the Offer, the Merger, this
Agreement and the consummation of the Transactions including, without
limitation, the fees and expenses payable to all banks, investment banking
firms, and other financial institutions and Persons and their respective agents
and counsel incurred in connection with acting as Parent's or Purchaser's
financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the Transactions (the "Expenses").
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(d) In addition, if
(i) this Agreement is terminated by Parent pursuant
to Section 8.1(d)(i), (iii) or (vi) and prior thereto there shall been
publicly announced another Acquisition Proposal;
(ii) this Agreement is terminated by the Company
pursuant to Section 8.1(c)(iii) and prior thereto there shall have been
publicly announced another Acquisition Proposal; or
(iii) either the Company or Parent terminates or
abandons the Transactions pursuant to 8.1(b)(i) and prior thereto there
shall have been publicly announced another Acquisition Proposal
and, in each such case, at the time of such termination, (i) the Company has not
paid the Termination Fee to Parent pursuant to any other provision of this
Agreement and (ii) Parent is not in material breach of this Agreement and within
12 months after such termination the Company shall enter into an agreement with
respect to an Acquisition Proposal, then concurrently with the consummation of
the transactions contemplated by such agreement, the Company shall pay an amount
equal to the difference between the Termination Fee and the Expenses, previously
paid (if any). The Termination Fee shall be paid in same day funds concurrently
with the execution of an agreement referred to in subsection (b)(i) above or any
termination or abandonment referred to in subsections (b)(ii) or (b)(iii) above,
whichever shall first occur.
Section 9.2 Amendment and Modification. Subject to applicable
law and Section 2.3, this Agreement may be amended, modified and supplemented in
any and all respects, whether before or after any vote of the shareholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 2.3(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the shareholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 9.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
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The foregoing sentence shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Fedders Corporation
Westgate Corporate Center
000 Xxxxxxxxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000-0000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
if to the Company, to:
Trion, Inc.
000 XxXxxx Xxxx
Xxxxxxx, XX 00000-0000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Section 9.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 9.6 Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Stock Option Agreement, the Shareholder Agreements, and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
provided in Sections 3.4 and 6.9 are not intended to confer upon any person
other than the parties hereto and thereto any rights or remedies hereunder.
Section 9.7 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 9.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
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Section 9.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 9.10 Time of Essence. Each of the parties hereto
hereby agrees that, with regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
Section 9.11 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a 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. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 9.12 Assignment. Neither this Agreement not any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that Purchaser may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to any direct or indirect wholly owned Subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be binding upon, inure
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to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
FEDDERS CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
__________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
TI ACQUISITION CORP.
By /s/ Xxxxxx X. Xxxxxxx
__________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
TRION, INC.
By /s/ Xxxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President and
Chief Executive Officer
82
Annex A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of)
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act has
not expired or terminated, (ii) the Minimum Condition has not been satisfied, or
(iii) at any time on or after the date of the Agreement and prior to the
expiration of the Offer, any of the following events shall occur or shall be
determined by Purchaser to have occurred:
(a) (i) there shall be threatened, instituted or
pending any suit, action or proceeding by any Governmental Body or (ii) there
shall be instituted or pending any suit, action or proceeding before any court
which in the good faith judgement of Parent and Purchaser is likely to result in
a Material Adverse Effect, in each cases of (i) or (ii), (A) seeking to prohibit
or impose any limitations on Parent's or Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or Affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
Purchaser or their respective Subsidiaries and Affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (B)
challenging the acquisition by Parent or Purchaser of any Shares under the Offer
or pursuant to the Stock Option Agreement or the Shareholders Agreement, seeking
to restrain, prohibit or delay the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, the Stock Option Agreement or the Shareholders Agreement, or seeking
to obtain from the Company, Parent or Purchaser any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (C) seeking to
impose material limitations on the ability of Parent or Purchaser, or rendering
Parent or Purchaser unable, to accept for payment, pay for or purchase some or
all of the Shares pursuant to the Offer and the Merger, (D) seeking to impose
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's shareholders, (E) seeking to restrict any future business activity by
Parent or Purchaser, including,
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without limitation, requiring the prior consent of any person or entity
(including any Governmental Body) to future transactions by Parent or Purchaser,
or (F) which otherwise is reasonably likely to have a Material Adverse Affect on
the Company or, as a result of the Transactions, Parent and its Subsidiaries; or
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by any
Governmental Body, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (A) through (F) of paragraph (a) above; or
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the NYSE or
on the Nasdaq (excluding (A) suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions and (B) limitations on price fluctuations in effect on the date of
this Agreement), or (ii) a declaration of a banking moratorium by federal or
state authorities or any suspension of payments in respect of banks in the
United States (whether or not mandatory) imposed by federal or state authorities
on the extension of credit by lending institutions in the United States; or
(d) there shall have occurred any Material Adverse
Change (or any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in any Material Adverse Change); or
(e) the Company Board of Directors or any committee
thereof (i) shall have withdrawn, modified or changed in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Purchaser or their Affiliates, (iii) shall have
executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Purchaser or their Affiliates or (iv) upon request of
Purchaser, shall fail to reaffirm its approval or recommendation of the Offer,
the Merger Agreement, or the Merger; or
(f) the Company shall have breached or failed to
perform any of its agreements under the Stock Option Agreement or breached any
of its representa-
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tions and warranties in such agreement or such agreement shall not be valid,
binding and enforceable, except for such breaches or failures or failures to be
valid, binding and enforceable that do not materially and adversely affect the
benefits expected to be received by Parent and Purchaser under the Merger
Agreement or the Stock Option Agreement; or
(g) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates
or any group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 15% or more of the Shares or any such Person or group shall have
announced its intention to acquire 15% or more of the Shares and the Company
Board of Directors has failed to recommend against acceptance of such
announcement (including by taking no position with respect to such
announcement); or
(h) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each case
as of the date of this Agreement and as of the scheduled expiration of the
Offer; or
(i) the Company shall have breached or failed to
perform or to comply with any obligation, agreement or covenant of the Company
to be performed or complied with by it under this Agreement; except, in each
case where the failure to perform or comply with such obligations, agreements or
covenants, do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or a Material Adverse Effect on the ability to consummate
the Offer or the Merger; or
(j) all consents necessary to the consummation of the
Tender Offer or the Merger including, without limitation, consents from parties
to loans, contracts, leases or other agreements and consents from governmental
agencies, whether federal, state or local shall not have been obtained, other
than consents the failure to obtain which would not have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole; or
(k) the Employment Agreements shall not be in full
force and effect and either Employee shall have denied or disaffirmed his
obligation under his respective Employment Agreement; and
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(l) this Agreement shall have been terminated in
accordance with its terms;
which in the reasonable good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent
and Purchaser, may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or 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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86
ANNEX B
Microfilm Number _________ Filed with the Department of State on ___________
Entry Number _____________ _________________________________________________
Secretary of the Commonwealth
ARTICLES OF INCORPORATION-FOR PROFIT
DSCB:15-1306/2102/2303/2702/2903/7102a (Rev 90)
Indicate type of domestic corporation (check one):
X Business-stock (15 Pa. C.S.Section 1306) Management (15 Pa. C.S.Section 2702)
--- ---
Business-nonstock (15 Pa. C.S.Section 2102) Professional (15 Pa. C.S.Section 2903)
--- ---
Business-statutory close (15 Pa. C.S.Section 2303) Cooperative (15 Pa. C.S. Section 7102A)
--- ---
In compliance with the requirements of the applicable provisions of 15
Pa. C.S. (relating to corporations and unincorporated associations) the
undersigned, desiring to incorporate a corporation for profit hereby state(s)
that:
1. The name of the corporation is Trion, Inc.
2. The (a) address of the corporation's initial registered office in this
Commonwealth or (b) name of its commercial registered office provider
and the county of venue is:
(a) One Commerce Sq., 000 Xxxxxx Xx., Xxxxxxxxxx, XX 00000 Dauphin
-----------------------------------------------------------------
Number and Street City State Zip County
(b) c/o: CT Corporation System
-----------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
3. The corporation is incorporated under the provision of the Business
Corporation Law of 1988.
4. The aggregate number of shares authorized is: 1,000 (other provisions,
if any, attach 8 1/2 x 11 sheet)
5. The name and address, including street and number, if any, of each
incorporator is:
Name Address
Xxxx Xxxxxxx Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000
-------------- ----------------------------------------
-------------- ----------------------------------------
6. The specific effective date, if any, is
------------------------------
month day year hour, if any
7. Any additional provisions of the articles, if any, attach an 8 1/2 x 11
sheet.
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87
8. Statutory close corporations only: Neither the corporation nor any
shareholder shall make an offering of any of its shares of any class
that would constitute a "public offering" within the meaning of the
Securities Act of 1933 (15 U.S.C. Section 77a et seq.).
9. Cooperative corporations only: (Complete and strike out inapplicable
term) The common bond of membership among its members/shareholders is
---------------------------------------------------------------------
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed these Articles of
Incorporation this day of July, 1999.
----
---------------------------------- ----------------------------------------
(Signature) (Signature)
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