EXHIBIT 10.v
AGREEMENT AND PLAN OF MERGER
between
SUNBEAM CORPORATION
JAVA ACQUISITION CORP.
and
SIGNATURE BRANDS USA, INC.
Dated as of February 28, 1998
TABLE OF CONTENTS
ARTICLE I - THE OFFER
1.1 THE OFFER...................................................3
1.1.1 GENERAL............................................3
1.1.2 SECURITIES LAW COMPLIANCE..........................3
1.1.3 TERMINATION OF THE OFFER...........................3
1.2 ACTION BY THE COMPANY.......................................4
1.2.1 APPROVAL AND RECOMMENDATION OF THE BOARD...........4
1.2.2 SECURITIES LAW COMPLIANCE..........................4
1.2.3 STOCKHOLDER LISTS..................................4
1.2.4 DIRECTORS..........................................5
ARTICLE II - THE MERGER.......................................................5
2.1. THE MERGER..................................................7
2.2. CLOSING.....................................................7
2.3. EFFECTIVE TIME OF THE MERGER................................7
2.4. EFFECTS OF THE MERGER.......................................7
2.5. CERTIFICATE OF INCORPORATION; BY-LAWS.......................7
2.6. DIRECTORS...................................................7
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2.7. OFFICERS....................................................8
ARTICLE III - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS......................................................8
3.1. EFFECT ON CAPITAL STOCK.....................................8
3.2. STOCK PLANS.................................................8
3.3. EXCHANGE OF CERTIFICATES....................................9
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................11
4.1 ORGANIZATION, STANDING AND CORPORATE POWER.................12
4.2 SUBSIDIARIES...............................................13
4.3 CAPITAL STRUCTURE..........................................13
4.4 AUTHORITY; NONCONTRAVENTION................................13
4.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.....................15
4.6 INFORMATION SUPPLIED.......................................16
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.......................17
4.8 LITIGATION; LABOR MATTERS; COMPLIANCE WITH LAWS............17
4.9 EMPLOYEE BENEFIT PLANS.....................................17
4.10 TAXES......................................................19
4.11 ENVIRONMENTAL MATTERS......................................21
4.12 MATERIAL CONTRACTS.........................................22
4.13 BROKERS....................................................24
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4.14 OPINION OF FINANCIAL ADVISOR...............................25
4.15 BOARD RECOMMENDATION.......................................25
4.16 REQUIRED COMPANY VOTE......................................25
4.17 STATE TAKEOVER STATUTES....................................25
4.18. INTELLECTUAL PROPERTY......................................25
4.19. TITLE TO PROPERTIES........................................26
4.20. PRODUCTS LIABILITY.........................................26
4.21 SOLE REPRESENTATIONS.......................................27
ARTICLE V -REPRESENTATIONS AND WARRANTIES OF BUYER
AND MERGER CO................................................................27
5.1 ORGANIZATION, STANDING AND CORPORATE POWER.................27
5.2 AUTHORITY; NONCONTRAVENTION................................28
5.3 BROKERS....................................................28
5.4 OFFER DOCUMENTS AND SCHEDULE 14D-9.........................29
5.5 INFORMATION SUPPLIED.......................................29
5.6 SOLE REPRESENTATIONS.......................................29
ARTICLE VI - COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER.......................................................................29
6.1 CONDUCT OF BUSINESS OF THE COMPANY.........................29
6.2 CHANGES IN EMPLOYMENT ARRANGEMENTS.........................29
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6.3 SEVERANCE..................................................32
6.4 WARN.......................................................33
ARTICLE VII - ADDITIONAL AGREEMENTS..........................................33
7.1. PREPARATION OF PROXY STATEMENT: STOCKHOLDER MEETING .......33
7.2. ACCESS TO INFORMATION, CONFIDENTIALITY.....................33
7.3. ADDITIONAL UNDERTAKINGS....................................34
7.4 INDEMNIFICATION............................................35
7.5 PUBLIC ANNOUNCEMENTS.......................................36
7.6 NO SOLICITATION............................................36
7.7 RESIGNATION OF DIRECTORS...................................37
7.8 EMPLOYEE BENEFITS..........................................39
7.9 NOTIFICATION OF CERTAIN MATTERS...........................39
7.10 STATE TAKEOVER LAWS........................................40
ARTICLE VIII - CONDITIONS PRECEDENT..........................................40
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION......................40
8.2 CONDITION TO BUYER'S AND MERGER CO.'S OBLIGATION...........41
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER...............................41
9.1 TERMINATION................................................41
9.2 EFFECT OF TERMINATION......................................42
9.3 AMENDMENT..................................................42
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9.4 EXTENSION; WAIVER..........................................42
9.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER..43
ARTICLE X - PROVISIONS.......................................................43
10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES..............43
10.3 NOTICES....................................................45
10.4 DEFINITIONS................................................46
10.5 INTERPRETATION.............................................47
10.6 COUNTERPARTS...............................................47
10.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.............47
10.8 GOVERNING LAW..............................................48
10.9 ASSIGNMENT.................................................48
10.10 ENFORCEMENT................................................48
Annex I............................................................I-1
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 28th day
of February, 1998 by and between Sunbeam Corporation, a Delaware corporation
(the "Buyer"), Java Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Buyer or other wholly owned subsidiary of Buyer as contemplated
hereby ("MergerCo"), and Signature Brands USA, Inc., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of the Company, the Buyer
and MergerCo have determined that the merger of MergerCo with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement, would be advisable and in the best interests of their
respective companies and stockholders, and such Boards of Directors have
approved such Merger, pursuant to which each share of common stock, par value
$.01 per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in Section
1.3) will be converted into the right to receive cash, other than (a) shares of
Company Common Stock owned, directly or indirectly, by the Company or any
subsidiary (as defined in Section 10.4) of the Company, the Buyer or MergerCo
and (b) Dissenting Shares (as defined in Section 3. l(d));
WHEREAS, subject to the terms and conditions of this Agreement and in
furtherance of the Merger, the Buyer will make, or will cause MergerCo to make,
a tender offer (the "Offer") to acquire any and all shares of Company Common
Stock;
WHEREAS, concurrently with the execution and delivery of this
Agreement, certain stockholders of the Company have entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Buyer pursuant to
which, subject to the terms and conditions specified therein, Buyer is willing
to purchase and such stockholders are willing to sell certain Shares owned by
such stockholders;
WHEREAS, approval of this Agreement requires the vote of a majority in
number of the issued and outstanding shares of Company Common Stock for the
approval thereof (the "Company Stockholder Approval"); and
WHEREAS, Buyer, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various terms of and conditions to
the Offer and the Merger;
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
1.1.1 GENERAL. Provided that this Agreement shall not have
been terminated in accordance with Article IX, the Buyer shall commence, or
shall cause MergerCo to commence, the Offer to acquire any and all shares of
Company Common Stock for a cash price per share equal to the Merger
Consideration (as defined in Section 3.1(c), (the "Offer Price")), as promptly
as reasonably practicable after the date hereof, but in no event later than five
(5) business days after the initial public announcement of Offeror's intention
to commence the Offer. For purposes of this Article I, the party which makes the
Offer, whether the Buyer or MergerCo, shall be referred to as the "Offeror."
Offeror may not accept any shares of Company Common Stock tendered for purchase
in response to the Offer unless it accepts all such shares that are properly
tendered in accordance with the terms thereof. Acceptance by Offeror of shares
of Company Common Stock for payment pursuant to the Offer shall be irrevocable.
The Offer shall be subject: (i) to the condition that there shall be validly
tendered in accordance with the terms of the Offer prior to the expiration date
of the Offer and not withdrawn a number of shares of Company Common Stock which,
together with the shares of Company Common Stock then owned by the Buyer and
MergerCo, represents at least 51% of the total number of outstanding shares of
the Company Common Stock, assuming the exercise of all outstanding options,
rights and convertible securities (if any) and the issuance of all shares of
Company Common Stock that the Company is then obligated to issue (such total
number of outstanding or issuable shares of Company Common Stock being
hereinafter referred to as the "Fully Diluted Shares") (the "Minimum Condition")
and (ii) to the other conditions set forth in Annex I attached hereto
(collectively, the "Offer Conditions"). The Buyer and MergerCo expressly reserve
the right to waive any of the conditions to the Offer, including but not limited
to, the satisfaction of the Minimum Condition. The initial expiration date of
the Offer shall be twenty (20) business days after commencement. Buyer and
MergerCo agree that if all of the Offer Conditions are not satisfied on such
initial expiration date of the Offer then, provided that the Offeror determines,
in its reasonable discretion that all such Conditions are reasonably capable of
being satisfied and subject to SEC rules with respect to extension of time
periods, Offeror shall extend the Offer, without consent of the Company, from
time to time until such Conditions are satisfied or waived; provided, that
Offeror shall not be required to extend the Offer beyond April 30, 1998, unless
any necessary approvals under the HSR Act (as defined herein) shall not have
been received by such date, in which case Offeror shall not be required to
extend the Offer beyond the earlier of (i) ten (10) days following receipt of
such approvals and (ii) June 30, 1998. Buyer and MergerCo
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agree that upon the expiration date of the Offer, as the same may be extended in
accordance with the immediately preceding sentence, if the Offer Conditions have
been satisfied, Offeror shall accept the shares of Company Common Stock properly
tendered for purchase. Without the prior written consent of the Company, no
change may be made by Offeror which reduces the maximum number of shares of
Company Common Stock to be purchased in the Offer or which reduces the Offer
Price or changes the form of consideration or changes the Offer Conditions. The
Offer Price shall, subject to reduction for applicable withholding of taxes, be
net to the seller in cash, payable upon the terms and subject to the conditions
of the Offer. Subject to the terms and conditions of the Offer, Offeror shall
pay, as promptly as practicable after expiration of the Offer, for all shares of
Company Common Stock validly tendered and not withdrawn. At or prior to the
expiration of the Offer, Offeror will take all steps necessary to provide its
paying agent any funds necessary to make the payments contemplated by the Offer.
Upon the execution of this Agreement, the Merger Consideration shall be the
amount set forth in Section 3.1(c) payable without interest thereon, and such
initial Merger Consideration shall be adjusted only in accordance with the
following provisions. The Merger Consideration payable in connection with the
Offer shall automatically be adjusted appropriately for any stock dividend,
split or any conversion or reclassification in respect of the Company Common
Stock occurring after the date hereof and prior to the date of consummation of
the Offer, which shall occur only in accordance with the terms of this
Agreement. Buyer and MergerCo shall have the right to increase the Merger
Consideration in effect hereunder at any time, in which case the consideration
payable with respect to the Offer shall also be so increased.
1.1.2 SECURITIES LAW COMPLIANCE. On the date of commencement
of the Offer, Offeror shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). Offeror and the Company agree
to promptly correct any information provided by either of them for use in the
Offer Documents which shall have become false or misleading, and Offeror further
agrees to take all steps necessary to cause the Schedule 14D-1 as so corrected
to be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of the Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Offeror agrees
to provide the Company with a written copy of any comments it or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-1 promptly after receipt of such comments.
1.1.3 TERMINATION OF THE OFFER. Offeror shall not, without the
prior written consent of the Company, (i) terminate the Offer, except in
accordance with the terms of Annex I attached hereto, or (ii) extend the
Expiration Date, except as specifically provided herein, and in
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no event to a date later than April 30, 1998 or, if any necessary approvals
under the HSR Act shall not have been received by such date, in no event to a
date later than the earlier of (i) ten (10) days following receipt of such
approvals and (ii) June 30, 1998.
1.2 ACTION BY THE COMPANY.
1.2.1 APPROVAL AND RECOMMENDATION OF THE BOARD. The Company
hereby approves of and consents to the making of the Offer and represents that
(a) the Board of Directors of the Company, at a meeting duly called and held on
February 28, 1998 has (i) determined that the Merger and the Offer, taken
together, are fair to, and in the best interests of, the Company and the holders
of the Company Common Stock, (ii) advised, authorized and approved this
Agreement and approved the Merger and the other transactions contemplated hereby
(including but not limited to the Offer), (iii) recommended that the
stockholders of the Company accept the Offer and authorize and approve this
Agreement and the transactions contemplated hereby, and (iv) agreed to recommend
that holders of Company Common Stock tender their shares of Company Common Stock
pursuant to the Offer, and (b) Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation has delivered to the Board an oral opinion on February 28, 1998
which will be confirmed promptly in writing, to the effect that, as of such
date, the consideration to be received by the holders of shares of Company
Common Stock pursuant to the Offer and the Merger, taken together, is fair to
the holders of shares of Company Common Stock from a financial point of view.
Subject to the provisions of Section 7.6 hereof and the other provisions of this
Agreement, the Company hereby consents to the inclusion in the Offer Documents
prepared in connection with the Offer of the recommendation of the Board of
Directors of the Company described in the immediately preceding sentence.
1.2.2 SECURITIES LAW COMPLIANCE. On the date of commencement
of the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject to the provisions of Section
6.6 hereof and the other provisions of this Agreement, the recommendation of the
Board of Directors of the Company described in Section 1.2.1 and shall mail the
Schedule 14D-9 to the stockholders of the Company. 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
therein, in light of the circumstances under which they were made, not
misleading. The Company and Offeror agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading, and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of shares of the Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Buyer and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the
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Company. The Company agrees to provide Offeror with a written copy of any
comments it or its counsel may receive from time to time from the SEC or its
staff with respect to the Schedule 14D-9, promptly after receipt of such
comments.
1.2.3 STOCKHOLDER LISTS. In connection with the Offer and the
Merger, the Company shall furnish Offeror with mailing labels containing the
names and addresses of all record holders of shares of Company Common Stock and
with security position listings of shares of Company Common Stock held in stock
depositories, each as of a recent date, and of those persons becoming record
holders subsequent to such date. The Company shall furnish Offeror with all such
additional information (including, but not limited to, updated lists of holders
of shares of Company Common Stock and their addresses, mailing labels and lists
of security positions) and such other assistance as Offeror or its agents may
reasonably request in communicating the Offer to the record and beneficial
owners of shares of the Company Common Stock. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Offeror shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Section 9.1, shall deliver to the Company all copies of such
information then in its or any of its affiliate's possession.
1.2.4 DIRECTORS.
(a) Effective upon the acceptance for payment by Offeror of
shares pursuant to the Offer such that Buyer or MergerCo shall own at least a
majority of the Fully Diluted Shares, the Offeror shall be entitled to designate
the number of Directors, rounded up to the next whole number, on the Company's
Board of Directors that equals the product of (i) the total number of directors
on the Company's Board of Directors (giving effect to the election of any
additional directors pursuant to this Section) and (ii) the percentage that the
number of shares of Company Common Stock owned by Offeror (including shares of
Company Common Stock accepted for payment) bears to the total number of Shares
of Company Common Stock outstanding, and the Company shall take all action
necessary to cause Offeror's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such times, the Company will use its best efforts to cause
individuals designated by Offeror to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each committee
of the Board (other than any committee of the Board established to take action
under this Agreement), (y) each board of directors of each Subsidiary of the
Company and (z) each committee of each such board. provided; however, that in
the event that Offeror's designees are elected to the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
two directors who are directors of the Company on the date of this Agreement and
who are not officers of the Company or any of its subsidiaries
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(the "Independent Directors") and; provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall designate a person to fill
such vacancy who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the other directors
of the Company on the date hereof shall designate two persons to fill such
vacancies who shall not be officers or affiliates of the Company or any of its
Subsidiaries, or officers or affiliates of Buyer or any of its subsidiaries, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
affirmative vote of the majority of the Independent Directors shall be required
to (i) amend or otherwise modify the Certificate of Incorporation of the
Company, (ii) approve any amendment, modification or waiver by the Company of
any provisions of this Agreement or (iii) approve any other action by the
Company that materially adversely affects the interests of the stockholders of
the Company (other than Buyer or MergerCo) with respect to the transactions
contemplated hereby, including without limitation, any actions which would
constitute a breach by the Company of its representations, warranties or
covenants contained herein. The provisions of this Section 1.2.4(a) are in
addition to and shall not limit any rights which the Buyer, MergerCo 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.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. Subject to applicable law, the Company shall
promptly take all action requested by Offeror necessary to effect any such
election, including mailing to its stockholders the information statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Offeror shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Offeror's designees). In
connection with the foregoing, the Company will promptly, at the option of
Offeror, either increase the size of the Company's Board of Directors and/or
obtain the resignation of such number of its current directors as is necessary
to enable Offeror's designees to be elected or appointed to, and to constitute a
majority of the Company's Board of Directors as provided above. Offeror will
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the relevant state statute, MergerCo
or such wholly owned
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subsidiary of MergerCo shall be merged with and into the Company at the
Effective Time of the Merger (as hereafter defined). Upon the Effective Time of
the Merger, the separate existence of MergerCo or such wholly owned subsidiary
of MergerCo shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue under the name
Signature Brands USA, Inc. In the event that a wholly owned Subsidiary of
MergerCo rather than MergerCo is merged with and into the Company, references
herein to MergerCo with respect to the Merger shall be deemed to be references
to such wholly owned Subsidiary of MergerCo.
2.2. CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
9.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the closing of the Merger (the "Closing") will take place at 10:00
a.m. on the second business day after satisfaction or waiver of the conditions
set forth in Article VIII (the "Closing Date"), at the offices of Xxxxxxxx,
Xxxxxxx & Xxxxxxx, A Professional Corporation, unless another date, time or
place is agreed to in writing by the parties hereto.
2.3. EFFECTIVE TIME OF THE MERGER. On the Closing Date, the Surviving
Corporation shall file a certificate of merger or, if applicable, MergerCo shall
file a certificate of ownership and merger (the "Certificate of Merger")
executed in accordance with the Delaware General Corporation Law ("DGCL") with
the Delaware Secretary of State and the Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or at such other time as is specified in the Certificate
of Merger as MergerCo and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger").
2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in the DGCL
2.5. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) The Certificate of
Incorporation of MergerCo, as in effect immediately prior to the Effective Time
of the Merger, shall become the Certificate of Incorporation of the Surviving
Corporation except that it shall be amended to change the name of the Surviving
Corporation to Signature Brands USA, Inc. and, as so amended, until thereafter
further amended as provided therein and under the DGCL, it shall be the
Certificate of Incorporation of the Surviving Corporation following the Merger.
(b) The By-laws of MergerCo as in effect at the Effective Time of the
Merger shall be the By-laws of the Company following the Merger until thereafter
changed or amended as provided therein or by applicable law.
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2.6. DIRECTORS. The directors of MergerCo at the Effective Time of the
Merger shall be the directors of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.7. OFFICERS. The officers of the Company at the Effective Time of the
Merger shall be the officers of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
3.1. EFFECT ON CAPITAL STOCK. As of the Effective Time of the Merger,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of MergerCo:
(a) COMMON STOCK OF MERGERCO. Each share of common stock of MergerCo
issued and outstanding immediately prior to the Effective Time of the Merger
shall be converted into one share of the common stock, par value $.01 per share,
of the Company.
(b) CANCELLATION OF TREASURY STOCK. Each share of Company Common Stock
that is owned by the Company or by any wholly owned subsidiary of the Company
shall automatically be canceled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Except as otherwise provided
herein and subject to Section 3.3, each issued and outstanding share of Company
Common Stock, other than shares owned by Buyer, MergerCo or any other direct or
indirect subsidiary of Buyer, the Company or any wholly owned Subsidiary of the
Company (collectively, the "Excluded Shares"), and other than Dissenting Shares
and treasury stock, shall be converted into the right to receive in cash from
the Company following the Merger an amount equal to $8.25 (the "Merger
Consideration"), without interest, upon surrender of the certificates formerly
representing such shares pursuant to Section 3.3. The term "Merger
Consideration" shall mean the per share amount in reference to the consideration
designated on a per share basis, and otherwise shall refer to the aggregate
consideration represented by the per share amount multiplied by the total number
of shares of Company Common Stock then outstanding.
(d) DISSENTING SHARES. Shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger held by a
holder who has the right to demand payment for and an appraisal of such shares
in accordance with the DGCL (or any
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successor provision) ("Dissenting Shares") shall not be converted into the right
to receive Merger Consideration unless such holder fails to perfect or otherwise
withdraws, forfeits or loses such holder's right to such payment or appraisal,
if any. If, after the Effective Time of the Merger, such holder fails to perfect
or withdraws, forfeits or loses any such right to appraisal, each share of such
holder shall be treated as a share that had been converted as of the Effective
Time of the Merger into the right to receive Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to MergerCo of any
demands received by the Company for appraisal of shares of Company Common Stock,
and MergerCo shall have the right to participate in and, at MergerCo's
reasonable discretion, to direct all communications, negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of MergerCo, make any payment with respect to, or settle
or offer to settle, any such demands.
(e) CANCELLATION AND RETIREMENT OF EXCLUDED SHARES. Each Excluded Share
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(f) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As of the
Effective Time of the Merger, all shares of Company Common Stock (other than
shares referred to in Section 3.1(b)) issued and outstanding immediately prior
to the Effective Time of the Merger, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall, to
the extent such certificate represents such shares, cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
applicable thereto, without interest, upon surrender of such certificate in
accordance with Section 3.3 or the right, if any, to receive payment from the
Surviving Corporation for the "fair value" of such shares as determined in
accordance with the provisions of Section 262 of the DGCL.
3.2. STOCK PLANS AND WARRANTS.
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee
administering the Stock Plans (as defined below)) shall adopt such resolutions
or take such other actions as may be required to effect the following:
(i) cause written notification of the Merger to be given to each holder
of a Company Stock Option (as defined below) by the Board of Directors as
provided in the Stock Plans to the effect that each such holder of a Company
Stock Option may exercise such Company Stock Option (whether or not such Company
Stock Option was
9
exercisable immediately before such notification was given) no later than thirty
days from the date of such notification (the "Exercise Period"); and
(ii) adjust the terms of all outstanding employee stock options to
purchase shares of Company Common Stock ("Company Stock Options") granted under
the Company's Chief Executive Officer Stock Option Plan, 1997 Stock Option and
Incentive Plans, 1995 Stock Option and Incentive Plan and Second Amended and
Restated 1992 Stock Option Plan (the "Stock Option Plans") to provide that, at
the Effective Time of the Merger each Company Stock Option outstanding
immediately prior to the Effective Time of the Merger shall vest as a
consequence of the Merger and shall be canceled in exchange for a payment from
the Company after the Merger (subject to any applicable withholding taxes) equal
to the product of (1) the total number of shares of Company Common Stock subject
to such Company Stock Option and (2) the excess of the Merger Consideration over
the exercise price per share of Company Common Stock subject to such Company
Stock Option and applicable withholding taxes, payable in cash immediately
following the Effective Time of the Merger, except as otherwise set forth on
Exhibit 3.2(b)(ii); and
(iii) except as provided herein or as otherwise agreed to by the
parties, the Stock Option Plan and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any subsidiary shall terminate as of the
Effective Time of the Merger, and the Company shall ensure that, following the
Effective Time of the Merger, no holder of a Company Stock Option nor any
participant in any Stock Option Plan shall have any right thereunder to acquire
equity securities of the Company following the Merger.
(b) Each outstanding Warrant (each a "Warrant") governed by that
certain Warrant Agreement, dated as of August 17, 1994, by and between the
Company and American Bank National Association, as Warrant Agent (the "Warrant
Agreement"), shall at the Effective Time automatically without any further
action of the Company or the holders thereof be converted into the right to
receive an amount equal to the difference between the Merger Consideration and
the Exercise Price (as defined in the Warrant Agreement) in accordance with the
terms of the Warrant Agreement.
(c) The Company hereby represents and warrants that upon taking of the
actions specified above, immediately following the Effective Time of the Merger,
and after giving effect to the payments described in this Section 3.2, no holder
of a Company Stock Option nor any participant in any Stock Option Plan nor the
holder of any warrant to purchase Company Common Stock shall have the right
thereunder to acquire equity securities of the Company, or any other benefit,
after the Merger.
10
3.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time of the Merger, Buyer
shall designate a bank or trust company to act as agent for the holders of
Company Common Stock in connection with the Merger (the "Exchange Agent") (who
shall be reasonably acceptable to the Company) to receive the funds to which
holders of the shares of Company Common Stock are entitled to pursuant to this
Article III. Buyer shall, from time to time, make available to the Exchange
Agent funds in amounts and at times necessary for the payment of the Merger
Consideration as provided herein. Promptly after the Effective Time, the
Exchange Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented shares of Company Common Stock (the "Certificates"), a letter
of transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor (or such other documents as may reasonably be
required in connection with such surrender) in customary form to be agreed by
MergerCo and the Company prior thereto.
(b) EXCHANGE PROCEDURES. (i) After the Effective Time of the Merger,
each holder of an outstanding Certificate or Certificates shall, upon surrender
to the Exchange Agent of such Certificate or Certificates and acceptance thereof
by the Exchange Agent, be entitled to receive the amount of cash into which such
Certificate or Certificates surrendered shall have been converted pursuant to
this Agreement.
(i) After the Effective Time of the Merger, there shall be no further
transfer on the records of the Company or its transfer agent of Certificates,
and if Certificates are presented to the Company for transfer, they shall be
canceled against delivery of cash. If Merger Consideration is to be remitted to
a name other than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person requesting such exchange shall
pay to the Company or its transfer agent any transfer or other taxes required or
establish to the satisfaction of the Company or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 3.3(b), each Certificate shall be deemed at any time after the Effective
Time of the Merger to represent only the right to receive upon such surrender
the Merger Consideration applicable thereto as contemplated by Section 3.1. From
and after the Effective Time, the holders of Certificates evidencing ownership
of the shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares, except as otherwise provided for
herein or by applicable law. No interest will be paid or will accrue on any cash
payable as Merger Consideration or in lieu of any fractional shares of Company
Common Stock. The right of any stockholder to
11
receive the Merger Consideration shall be subject to reduction to reflect any
applicable withholding obligation for Taxes.
(ii) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such person of a bond in such amount as Buyer may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
or the provision of other reasonable assurances requested by Buyer, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof pursuant to this Agreement.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK EXCHANGED FOR
CASH. The Merger Consideration paid upon the surrender for exchange of
Certificates in accordance with the terms of this Article II shall be deemed to
have been issued and paid in full satisfaction of all rights pertaining to such
shares.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 3.3
(the "Exchange Fund") which remains undistributed to the holders of the
Certificates for six months after the Effective Time of the Merger shall be
delivered to the Company, upon demand, and any holders of shares of Company
Common Stock prior to the Merger who have not theretofore complied with this
Article II shall thereafter look only to the Company and only as general
creditors thereof for payment of their claim for cash, if any, to which such
holders may be entitled.
(e) NO LIABILITY. None of Buyer, MergerCo, the Company or the Exchange
Agent shall be liable to any person in respect of any Merger Consideration from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by the Buyer, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
the Buyer.
12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer and MergerCo as
follows:
4.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company and
each of its Subsidiaries (as defined in Section 4.2) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect (as defined in Section 10.4) with respect to the Company. Attached as
Section 4.1 of the schedule (the "Disclosure Schedule") delivered to MergerCo by
the Company at the time of execution of this Agreement are complete and correct
copies of the Amended and Restated Certificate of Incorporation, as amended, and
bylaws, as amended, of the Company. The Company has delivered to MergerCo
complete and correct copies of the articles or certificates of incorporation and
by-laws (or other comparable organizational documents) of each of its
Subsidiaries, in each case as amended to the date of this Agreement.
4.2 SUBSIDIARIES. The only direct or indirect subsidiaries of the
Company are those listed in Section 4.2 of the Disclosure Schedule (the
"Subsidiaries"). All the outstanding shares of capital stock of each such
Subsidiary have been validly issued and are fully paid and nonassessable and are
owned (of record and beneficially) by the Company, by another wholly owned
Subsidiary of the Company or by the Company and another such wholly owned
Subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens").
Except for the ownership interests set forth in Section 4.2 of the Disclosure
Schedule, the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, business association,
joint venture or other entity.
4.3 CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock, par value $.01 per share.
Subject to any Permitted Changes (as defined in Section 6.1(d)) there were, as
of the close of business on January 16, 1998: (i) 9,174,261 shares of Company
Common Stock issued and outstanding; (ii) no shares of Company Common Stock are
held in the treasury of the Company; (iii) 1,634,853 shares of Company Common
Stock are reserved for issuance
13
upon exercise of outstanding Company Stock Options (of which options 190,500
shares will be cancelled prior to the consummation of the Offer); and (iv)
767,200 shares of Company Common Stock issuable upon exercise of outstanding
Warrants (the "Warrants"). Section 4.3 of the Disclosure Schedule sets forth the
exercise price for the outstanding Company Stock Options and the Warrants.
Except as set forth above or in Section 3.3 of the Disclosure Schedule, no
shares of capital stock or other equity securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company are, and all shares which may be issued pursuant to the Stock Option
Plan including any increases pursuant to existing contractual obligations will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. Except as set forth on Section 4.3 of the
Disclosure Schedule, there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its Subsidiaries
or obligating the Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Other than as disclosed in the most
recent balance sheet of the Company included in the SEC Documents (as defined
below) or as set forth in Section 4.3 of the Disclosure Schedule, no
indebtedness for borrowed money of the Company or its Subsidiaries contains any
restriction upon the incurrence of indebtedness for borrowed money by the
Company or any of its Subsidiaries or restricts the ability of the Company or
any of its Subsidiaries to grant any Liens on its properties or assets. Other
than the Company Stock Options and other than as disclosed in Section 4.3 of the
Disclosure Schedule, (i) there are no outstanding contractual obligations,
commitments, understandings or arrangements of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of the Company or any of its Subsidiaries
and (ii) to the knowledge of the Company, there are no irrevocable proxies with
respect to shares of capital stock of the Company or any subsidiary of the
Company. Section 4.3 of the Disclosure Schedule sets forth the record and, to
the knowledge of the Company, beneficial ownership of, and voting power in
respect of, the capital stock of the Company held by the Company's directors,
officers and stockholders owning five percent (5%) or more of the Company's
outstanding common stock. Except as set forth on Section 4.3 of the Disclosure
Schedule, there are no agreements or arrangements pursuant to which the Company
is or could be required to register shares of Company Common Stock or other
securities under
14
the Securities Act of 1933, as amended (the "Securities Act") or other
agreements or arrangements with or among any security holders of the Company
with respect to securities of the Company.
4.4 AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate and other power and authority to enter into this Agreement and,
subject to the Company Stockholder Approval with respect to the consummation of
the Merger, to consummate the transactions contemplated hereby. The Offer, the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by the Company's Board of Directors, which constitutes all necessary
corporate action on the part of the Company, subject, in the case of the Merger,
to the Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. Except
for the Company's credit facility and except as disclosed in Section 4.4 of the
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by the Offer and this
Agreement and compliance with the provisions hereof will not, conflict with, or
result in (a) any breach or violation of, or default (with or without notice or
lapse of time, or both) under, or right of termination, cancellation,
acceleration or "put", with respect to any obligation or (b) the loss of a
benefit or other right or (c) the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under, (i) the
Certificate of Incorporation, as amended, or By-laws, as amended, of the Company
or the comparable organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, note purchase agreement, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not have a Material Adverse Effect with
respect to the Company or would not prevent, hinder or materially delay the
ability of the Company and/or MergerCo to consummate the transactions
contemplated by this Agreement if not cured or waived by the Closing Date. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), or any other person under any
material agreement, indenture or other instrument to which the Company or any
Subsidiary is a party or to which any of its properties is subject, is required
by or with respect to the Company or any of its
15
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) the filing of a pre-merger notification and report form
by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (ii) the filing with the SEC of (x) a proxy
statement relating to the Company Stockholder Approval (such proxy statement as
amended or supplemented from time to time, the "Proxy Statement"), and (y) such
reports under the Exchange Act as may be required in connection with the Offer
and this Agreement and the transactions contemplated by this Agreement, (iii)
the filing of the Certificate of Merger with the Secretary of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations, filings or
notices as are set forth in Section 4.4 of the Disclosure Schedule.
4.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Except as disclosed on
Schedule 4.5 of the Disclosure Schedule, the Company has timely filed all
required reports, schedules, forms, statements and other documents with the
Securities and Exchange Commission ("SEC") since January 1, 1996 (collectively,
and in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, as amended, the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Documents, and none of the SEC Documents (including any and all financial
statements included therein) as of such dates contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in all SEC Documents (the "SEC
Financial Statements") comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited consolidated
quarterly statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations, stockholders' equity, and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments, none of which, individually or
in the aggregate is material). Except as set forth in Schedule 4.5 of the
Disclosure Schedule and except as set forth in the SEC Documents filed and
publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent
16
with past practice since the date of the most recent consolidated balance sheet
included in the SEC Documents filed and publicly available prior to the date of
this Agreement (the "Balance Sheet"), neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto.
4.6 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to the
information supplied by MergerCo or any affiliate of MergerCo in writing
specifically for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder. Neither the Schedule
14D-9 nor any information supplied by the Company for inclusion in the Offer
Documents will, at the respective times the Schedule 14D-9, the Offer Documents
or any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading (except to
the extent information contained therein is based upon information supplied
solely by the Buyer or MergerCo). The Schedule 14D-9 shall comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents or on Section 4.7 of the Disclosure Schedule, since the date of
the Balance Sheet, the Company has conducted its business only in the ordinary
course consistent with past practice, and there is not and has not been: (i) any
Material Adverse Change with respect to the Company; (ii) any event which, if it
had taken place following the execution of this Agreement, would not have been
permitted by Section 6.1 without the prior consent of MergerCo; or (iii) any
condition, event or occurrence which would reasonably be expected to prevent,
hinder or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement.
4.8 LITIGATION; LABOR MATTERS; COMPLIANCE WITH LAWS. (a) Except as
disclosed in the SEC Documents filed and publicly available prior to the date of
this Agreement, there is (i) no suit, action or proceeding or investigation
pending and, (ii) to the
17
knowledge of the Company, no suit, action or proceeding or investigation
threatened against or affecting the Company or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect with respect to the Company or (iii) prevent, hinder or
materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against the
Company or any of its Subsidiaries having, or which in the future could have,
any such effect.
(b) Except as disclosed in Section 4.8 of the Disclosure Schedule, (i)
neither the Company nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization; (ii) neither the Company nor any of
its Subsidiaries is the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment;
(iii) there is no strike, work stoppage or other labor dispute involving it or
any of its Subsidiaries pending or, to its knowledge, threatened, nor has there
been in the three year period prior to the date of this Agreement and, to the
knowledge of the Company, there are no current union organizing activities among
the Employees of the Company or any of its Subsidiaries which are reasonably
likely to result in a Material Adverse Effect; (iv) there is no grievance
arising out of any collective bargaining agreement or other grievance procedure
against the Company or any of its subsidiaries, except such grievances that have
not and will not prevent the Company from carrying on its business substantially
as now conducted or might reasonably be expected to result in a Material Adverse
Effect; (v) no charges with respect to or relating to the Company or any of its
subsidiaries are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices, except such charges that have not and will not prevent the Company
from carrying on its business substantially as now conducted or might reasonably
be expected to result in a Material Adverse Effect; (vi) neither of the Company
or any of its subsidiaries has received notice of the intent of any Federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation which is reasonably likely to result
in a Material Adverse Effect; and (vii) the Company is not liable for any
severance pay or other payments to any employee or former employee, or any other
person, arising from the termination of employment, or other change in the legal
relationship with such person, under any benefit or severance policy, practice,
agreement, plan, or program of the Company, nor will the Company have any
liability which exists or arises, or may be deemed to exist or arise, under any
applicable law or otherwise, as a result of or in connection with the
transactions contemplated hereunder or as a result of the termination by the
Company of any persons employed by the Company or any of its Subsidiaries on or
prior to the Effective Time of the Merger.
18
(c) The ownership of the assets of and the conduct of the business of
the Company and each of its Subsidiaries have not been in violation of, and
comply with all statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto, except for violations
or failures so to comply, if any, that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect with respect to the
Company.
(d) Each of the Company and its Subsidiaries has in effect all material
Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchise, licenses, notices, permits and rights,
including all authorizations under Environmental Laws ("Permits"), necessary for
it to own, lease or operate its properties and assets and to carry on its
business substantially as now conducted, and there is no actions pending to
revoke any such Permit and there has occurred no default or violation under any
such Permit which is reasonably likely to have a Material Adverse Effect.
4.9 EMPLOYEE BENEFIT PLANS. With respect to the employee benefit plans
(as that phrase is defined in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and any other benefit or
compensation plan, program, or arrangement (including, but not limited to, each
deferred compensation and each bonus or other incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, and each employment, termination
or severance agreement) maintained for the benefit of any current or former
employee, officer, or director of the Company or any ERISA Affiliate (as defined
below) ("Benefit Plans"), except as set forth in Section 4.9 of the Disclosure
Schedule:
(i) none of the Benefit Plans is a "multiemployer plan" within the
meaning of ERISA nor has the Company ever maintained or contributed to such a
Plan;
(ii) No Benefit Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of the Company or any other Subsidiary for periods extending beyond
their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
(iii) none of the Benefit Plans or any other agreement with any
employee of the Company or its Subsidiaries provides for payment of a benefit,
the increase of a benefit amount, the payment of a contingent benefit, or the
acceleration of the payment or vesting of a benefit by reason of the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement;
19
(iv) each Benefit Plan intended to be qualified under section 401 (a)
of the Internal Revenue Code of 1986, as amended ("Code" has received a
favorable determination letter from the Internal Revenue Service that it is so
qualified and nothing has occurred since the date of such letter that could
reasonably be expected to result in the revocation of such determination letter;
(v) each Benefit Plan has been operated in all material respects in
accordance with its terms and the requirements of all applicable law.
(vi) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which premiums
have been paid when due). Insofar as the representation made in this section
4.9(v) applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made
with respect to any employee benefit plan, program, agreement or arrangement
subject to Title IV of ERISA to which the Company or any ERISA Affiliate made,
or was required to make, contributions during the five (5)-year period ending on
the last day of the most recent plan year ended prior to the Effective Plan.
(vii) the Company has provided to Buyer or MergerCo (x) true and
complete copies of all Benefit Plans, (y) the most recent annual actuarial
valuation, if any, prepared for each Benefit Plan, and (z) the most recent
annual report (Form 5500), if any, required under ERISA with respect to each
Benefit Plan;
(viii) no payment that is owed or may become due to any director,
officer, employee, or agent of the Company will be non-deductible to the Company
or subject to tax under I.R.C. ss.280G or ss.4999, respectively, nor will the
Company be required to "gross up"or otherwise compensate any such person because
of the imposition of any excise tax on a payment to such person;
(ix) as of the date hereof, subject to the requirements of Section 412
of the Code or Section 302 of ERISA, no Pension Plan has incurred an accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code) nor has any sponsor of such a Pension Plan obtained a funding waiver (as
such terms are defined in such applicable sections and any regulations
thereunder) with respect thereto;
(x) neither the Company nor any ERISA Affiliates has engaged in, and
neither the Company nor any Affiliate knows of any other person who or which has
engaged in, any "prohibited transaction" (within the meaning of Section 406 of
ERISA or
20
Section 4975 of the Code, excluding any transactions which are exempt
under Section 408 of ERISA or Section 4975 of the Code) with respect to any
Benefit Plan, which could reasonably be expected to subject the Company or any
Subsidiary or Buyer or MergerCo to any material liability;
(xi) no reportable event (as defined in ERISA and the regulations
thereunder, but excluding any such event for which the thirty (30) day notice
requirement has been waived) has occurred or is continuing with respect to any
Benefit Plan;
(xii) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Company, any actions,
suits or claims (other than routine claims for benefits) which can reasonably be
expected to be asserted, against the Company with respect to any Benefit Plan or
other plan or arrangement, or against any such Benefit Plan or other plan or the
assets thereof;
(xiii) the Company and each ERISA Affiliate is, and at all relevant
times, has been in material compliance with the provisions of COBRA (as defined
below); and
(xiv) except as specifically set forth herein, the Company has not
taken any action or made any statement, promise or representation to, or
agreement with, any of its employees, officers or directors that after the
Closing, Buyer will continue or establish any Benefit Plan or other plan or
arrangement or provide any particular benefits or compensation to employees. To
the knowledge of the Company, the PBGC has not instituted proceedings to
terminate any Benefit Plan subject to Section 302 or Title IV of ERISA or
Section 412 of the Code (each, a "Title IV Plan") and no condition exists that
presents a material risk that such proceedings will be instituted.
For purposes of this Agreement, "ERISA Affiliate" shall mean any
corporation, trade or business which controls, is controlled by, or is under
common control with, the Company within the meaning of Sections 414(b), 414(c),
414(m) or 414(o) of the Code or Section 4001(a)(14) of ERISA and "COBRA" shall
mean Part 6 of Subtitle B of Title I of ERISA and Section 4980B(f) of the Code.
Schedule 4.9 of the Disclosure Schedule sets forth a complete and
accurate list of all Benefit Plans currently in effect.
4.10 TAXES. Except as disclosed in Section 4.10 of the Disclosure
Schedule, the Company and each of its Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its Subsidiaries is or has been a member (a "Consolidated Group") has
timely filed (or has had timely filed on
21
its behalf) all Tax Returns required to be filed by it (except for certain Tax
Returns, each of which is immaterial in amount and scope, involving aggregate
liability for Taxes of no more than $100,000, which may not have been timely
filed) and all such Tax Returns are true, correct and complete in all material
respects, has paid (or has had paid on its behalf) all Taxes shown thereon to be
due and has provided adequate reserves in its financial statements, in
accordance with generally accepted accounting principles, for any Taxes that
have not been paid, whether or not shown as being due on any Tax Returns. Except
as disclosed in Section 4.10 of the Disclosure Schedule, (i) no claim for unpaid
Taxes has become a lien against the assets of the Company or any of its
Subsidiaries or is being asserted against the Company or any of its
Subsidiaries; (ii) no audit of any Tax Return that includes the Company or any
of its Subsidiaries is being conducted by a Tax authority; (iii) no extension or
waiver of the statute of limitations on the assessment of any Taxes or with
respect to any Tax Return has been granted by the Company or any of its
Subsidiaries and is currently in effect and (iv) there is no arrangement with
respect to sharing or allocating Taxes that will require any payment by the
Company or any of its Subsidiaries after the date of this Agreement. As used in
this Agreement, "Taxes" shall mean (a) all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding, back-up
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
Governmental Entity, domestic or foreign (b) any liability for the payment of
any amount of the type described in (a) as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (c) any liability for
the payment of any amounts as a result of being a party to any tax sharing
agreement or as a result of an express or implied obligation to indemnify
another person with respect to the payment of any amounts of the type described
in clause (a) or (b). As used in this Agreement, "Tax Return" shall mean any
return, report or statement required to be filed with any Governmental Entity
with respect to Taxes. Except as set forth on Schedule 4.10, there are no
written or, to its knowledge, oral proposed assessments of Taxes against the
Company or any of its Subsidiaries or written or, to its knowledge, oral
proposed adjustments to any Tax Return filed, pending against the Company or any
of its Subsidiaries, or written or, to its knowledge, oral proposed adjustments
to the manner in which any Tax of the Company or any of its Subsidiaries is
determined.
4.11 ENVIRONMENTAL MATTERS. Except as disclosed in Section 4.11 of the
Disclosure Schedule, and except for items of non-compliance which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Company:
22
(a) The Company and its Subsidiaries hold and formerly held, and are,
and have been, in material compliance with, all Environmental Permits, and the
Company and its Subsidiaries are, and have been, in material compliance with all
applicable Environmental Laws;
(b) None of the Company or its Subsidiaries has received any
Environmental Claim, and none of the Company or its Subsidiaries is aware, after
diligent inquiry, of any threatened Environmental Claim or of any circumstances,
conditions or events that could reasonably be expected to give rise to a
material Environmental Claim, against the Company or any of its Subsidiaries
and, to the knowledge of the Company, as of the date of this Agreement, there
are no circumstances or conditions that may prevent or interfere with compliance
by the Company or its subsidiaries in the future with Environmental Laws
(or Environmental Permits issued thereunder) in effect as of the date of this
Agreement, except such circumstances or conditions that have not and are not
reasonably likely to result in a Material Adverse Effect;
(c) There are no Hazardous Materials present at any facility currently
owned, leased or operated by the Company or any of its Subsidiaries that could
reasonably be expected to give rise to liability of the Company or any of its
Subsidiaries under any Environmental Laws which liability could reasonably be
expected to have a Material Adverse Effect on the Company;
(d) No modification, revocation, reissuance, alteration, transfer, or
amendment of the Environmental Permits, or any review by, or approval of, any
third party of the Environmental Permits is required in connection with the
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby or the continuation of the business of the Company or its
Subsidiaries following such consummation;
(e) Hazardous Materials have not been generated, transported, treated,
stored, disposed of, released or threatened to be released at, on, from or under
any of the properties or facilities currently or previously owned or leased by
the Company or any of its Subsidiaries, in violation of or in a manner or to a
location that could give rise to liability under any Environmental Laws which
liability could reasonably be expected to have Material Adverse Effect on the
Company;
(f) The Company and its Subsidiaries have not assumed, contractually or
by operation of law, any liabilities or obligations under any Environmental Laws
except, in the case of those assumed by operation of law, those assumed which in
and of themselves (and irrespective of any contribution or indemnification
rights) could not reasonably be expected to have a Material Adverse Effect on
the Company.
23
(g) For purposes of this Agreement, the following terms shall have the
following meanings:
"ENVIRONMENTAL CLAIM" means any written or oral notice, claim, demand,
action, complaint, proceeding, request for information or other communication by
any person alleging liability or potential liability (including without
limitation liability or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resource damages, property damage,
personal injury, fines or penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, whether or not owned, leased
or operated by the Company or any of its Subsidiaries or (ii) circumstances
forming the basis of any violation or alleged violation of any Environmental Law
or Environmental Permit or (iii) otherwise relating to obligations or
liabilities under any Environmental Laws
"ENVIRONMENTAL PERMITS" means all permits, licenses, registrations and
other governmental authorizations required for the Company and its Subsidiaries
and the operations of the Company's and its Subsidiaries', facilities and
otherwise to conduct its business under Environmental Laws.
"ENVIRONMENTAL LAWS" means all applicable domestic and foreign federal,
state and local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to contamination, pollution or protection of
human health or the environment, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste Disposal
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state and local laws.
"HAZARDOUS MATERIALS" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, asbestos and asbestos-containing materials, pollutants,
contaminants and all other materials, substances and forces, including but not
limited to electromagnetic fields, regulated pursuant to, or that could form the
basis of liability under, any Environmental Law.
4.12 MATERIAL CONTRACTS. The Company has provided or made available to
MergerCo true and complete copies of all written contracts, agreements
(including, but not limited to, distribution agreements and licensing
agreements), commitments, arrangements, leases (including with respect to
personal property), policies and other instruments to which it or any of its
Subsidiaries is a party or by which it or any such
24
Subsidiary is bound which is or was required to be filed as an exhibit to the
SEC Documents ("Material Contracts"). Except as set forth in Section 4.12 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in breach or
default in any material respect under any such Material Contract; and there has
not occurred any event that with the lapse of time or the giving of notice or
both would constitute a material breach or default. Except as set forth on
Section 4.12 of the Disclosure Schedule, all Material Contracts are valid and
subsisting and in full force and effect in accordance with their terms, and the
Company has duly performed its obligations thereunder in all material respects
to the extent such obligations have occurred.
4.13 BROKERS. No broker, investment banker, financial advisor or other
person, other than Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, the fees
and expenses of which will be paid by the Company (pursuant to a fee agreement,
a copy of which has been provided to MergerCo), is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
4.14 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation dated the date hereof, to
the effect that the consideration to be received in the Offer and the Merger by
the Company's stockholders (other than any consideration paid with respect to
Dissenting Shares is fair to the holders of Company Common Stock from a
financial point of view, a signed copy of which opinion has been delivered to
MergerCo.
4.15 BOARD RECOMMENDATION. The Board of Directors of the Company, at a
meeting duly called and held, has (a) determined that the Offer, this Agreement
and the transactions contemplated hereby, taken together, are advisable and in
the best interests of the Company and the stockholders of the Company, and (b)
resolved to recommend that the holders of the shares of Company Common Stock
tender their shares of Company Common Stock in the Offer, approve the Offer,
this Agreement and the transactions contemplated herein, including the Merger.
4.16 REQUIRED COMPANY VOTE. The Company Stockholder Approval, being the
affirmative vote of a majority in number of the shares of the Company Common
Stock, is the only vote of the holders of any class or series of the Company's
securities necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
4.17 STATE TAKEOVER STATUTES. No state takeover statute or similar
statute or regulation of the State of Delaware (and, to the knowledge of the
Company after due inquiry, of any other state or jurisdiction) applies or
purports to apply to the Company or
25
any of its Subsidiaries, or to this Agreement, the Offer, the Merger, or any of
the other transactions contemplated hereby, except any such statutes or
regulations which are no longer applicable in any respect upon the execution of
this Agreement. Neither the Company nor any of its Subsidiaries has any rights
plan, preferred stock or similar arrangement which have any of the
aforementioned consequences in respect of the transactions contemplated hereby.
4.18. INTELLECTUAL PROPERTY. Section 4.18 of the Disclosure Schedule
sets forth a true and complete list of all patents, trademarks (registered or
unregistered), trade names, service marks and copyrights and applications
therefor owned, used or filed by or licensed to the Company and its Subsidiaries
and which are material to the Company and its Subsidiaries taken as a whole
(collectively, "Intellectual Property Rights"). The Intellectual Property Rights
are sufficient to allow each of the Company and each of its Subsidiaries to
conduct, and continue to conduct, its business as currently conducted in all
material respects. To the knowledge of the Company, each of the Company and each
of its Subsidiaries owns or has sufficient unrestricted right to use the
Intellectual Property Rights in order to allow it to conduct its business as
currently conducted in all material respects, and the consummation of the
transactions contemplated hereby will not alter or impair such ability in any
respect. Each copyright registration, patent and registered trademark and
application therefor listed on Section 4.18 of the Disclosure Schedule is in
proper form, not disclaimed in whole and has been duly maintained including the
submission of all necessary filings in accordance with the legal and
administrative requirements of the appropriate jurisdictions except with respect
to use requirements as to trademarks and except for any such failure to be in
proper form, any such disclaimer or such failure to be duly maintained which is
not reasonably likely to result in a Material Adverse Effect. To the knowledge
of the Company, there are no pending oppositions, cancellations, invalidity
proceedings, interferences or re-examination proceedings with respect to the
Intellectual Property Rights which are reasonably likely to result in a Material
Adverse Effect. To the knowledge of the Company, neither the Company nor any of
its Subsidiaries has received any written notice from any other Person
pertaining to or challenging the right of the company or any of its Subsidiaries
to use any of the Intellectual Property Rights which is reasonably likely to
result in a Material Adverse Effect. Except as identified in Section 4.18 of the
Disclosure Schedules, no claims are pending by any Person with respect to the
ownership, validity, enforceability or use of any such Intellectual Property
Rights challenging or questioning the validity or effectiveness of any of the
foregoing which are reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has made any claim of a
violation or infringement by others of its rights to or in connection with the
Intellectual Property Rights.
26
4.19. TITLE TO PROPERTIES. Each of the Company and each of its
Subsidiaries has sufficiently good and valid title to, or an adequate leasehold
interest in, its material tangible properties and assets (including real
property) in order to allow it to conduct, and continue to conduct, its business
as currently conducted in all material respects. Except as set forth in Section
4.19 of the Disclosure Schedule, such material tangible properties and assets
(including real property) are free of Liens which would impair such ability in
any material respect and, to the knowledge of the Company, the consummation of
the transactions contemplated by this Agreement will not alter or impair such
ability in any material respect.
4.20. PRODUCTS LIABILITY. Except as set forth in Section 4.20 of the
Disclosure Schedule, there is no pending or, to the knowledge of the Company,
threatened claim, action, suit, inquiry, proceeding or investigation by any
individual or Governmental Entity in which a Product is alleged to have a Defect
and which is reasonably likely to result in a Material Adverse Effect; nor, to
the knowledge of the Company, is there any valid basis for any such claim,
cation, suit, inquiry, proceeding, or investigation. As used in this
Section 4.20, the term "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 Subsidiaries,
including, without limitation, any product sold in the United States by the
Company or any of its Subsidiaries as the distributor, agent, or pursuant to any
other contractual relationship with a non-U.S. manufacturer; and the term
"Defect" shall mean a defect or impurity of any kind, 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, impurity, or
dangerous propensity.
4.21 SOLE REPRESENTATIONS. The representations and warranties contained
in this Agreement are the sole representations and warranties which the Company
is making in connection with the transactions contemplated herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
AND MERGERCO
Each of Buyer and MergerCo hereby, jointly and severally, represents
and warrants to the Company as follows:
27
5.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of Buyer and
MergerCo are corporations duly organized, validly incorporated and in good
standing in the State of Delaware, and each has the requisite corporate power
and authority to carry on its business as now being conducted. Each of Buyer and
MergerCo has delivered to the Company complete and correct copies of its
certificate of incorporation (or other organizational documents) and by-laws.
5.2 AUTHORITY; NONCONTRAVENTION. Each of Buyer and MergerCo has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by each of Buyer and MergerCo and the consummation by
each of Buyer and MergerCo of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of each
of Buyer and MergerCo. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Buyer and MergerCo.
Except as disclosed on Section 5.2 of the Disclosure Schedule, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in (a) any breach or violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration or "put" with
respect to any obligation or (b) the loss of a benefit, or other right or the
creation of any Lien upon any of the properties or assets of either Buyer or
MergerCo under, (i) the certificate of incorporation or by-laws of either Buyer
or MergerCo, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to either Buyer or MergerCo or its properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to either Buyer or MergerCo or its
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not have a Material Adverse Effect with
respect to either Buyer or either Buyer or MergerCo or could not prevent, hinder
or materially delay the ability of MergerCo to consummate the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, or notice to, any Governmental
Entity or any other person under any agreement, indenture or other instrument to
which Buyer or MergerCo is a party or to which any of its properties is subject,
is required by or with respect to either Buyer or MergerCo in connection with
the execution and delivery of this Agreement by either Buyer or MergerCo or the
consummation by Buyer and MergerCo of any of the transactions contemplated by
this Agreement, except for (i) the filing of a pre-merger notification and
report form under the HSR Act, and (ii) the filing with the SEC of (y) the Offer
Documents and (z) such reports under the Exchange Act as
28
may be required in connection with this Agreement and the transactions
contemplated hereby.
5.3 BROKERS. No broker, investment banker, financial advisor or other
person, other than Xxxxxx Xxxxxxx & Co. Incorporated, the fees and expenses of
which will be paid by Buyer or MergerCo, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
an behalf of MergerCo to its affiliates.
5.4 OFFER DOCUMENTS AND SCHEDULE 14D-9. The Offer Documents will not,
at the time the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading (except to the extent information contained therein is based upon
information supplied solely by the Company). The Offer Documents shall comply in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
5.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Buyer or MergerCo or its affiliates in writing specifically for
inclusion or incorporation by reference in the Proxy Statement will, at the time
the Proxy Statement is first mailed to the Company's stockholders or at the time
of the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
5.6 SOLE REPRESENTATIONS. The representations and warranties contained
in this Agreement are the sole representations and warranties which Buyer or
MergerCo are making in connection with the transactions contemplated herein.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date
of this Agreement to the Effective Time of the Merger (except as otherwise
specifically required by the terms of this Agreement), the Company shall, and
shall cause its Subsidiaries to, act and carry on their respective businesses in
the usual, regular and ordinary course of business consistent with past practice
and use its and their respective reasonable best efforts to preserve intact
their current business organizations, keep
29
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
advertisers, distributors and others having business dealings with them and to
preserve goodwill. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time of the Merger, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of MergerCo:
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned subsidiary of the Company to
its parent in accordance with applicable law;
(b) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(c) purchase, redeem or otherwise acquire any shares of capital stock
of the Company or any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
except for the cash-out of Company Stock Options (as provided in Section 3.2.3);
in full or partial payment of the exercise price payable by such holder upon
exercise of Company Stock Options outstanding on the date of this Agreement;
(d) authorize for issuance, issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock or the capital stock of any of its
Subsidiaries, any other voting securities or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, voting securities
or convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights) (other than the
issuance of Company Common Stock upon the exercise of Company Stock Options
outstanding on the date of this Agreement and in accordance with their present
terms (such issuances, together with the acquisitions of shares of Company
Common Stock permitted under clause (c) above, being referred to herein as
"Permitted Changes"));
(e) in the case of the Company or any subsidiary, amend its
certificates or articles of incorporation, by-laws or other comparable charter
or organizational documents;
(f) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization;
30
(g) other than as specifically permitted by Section 6.1 of the
Disclosure Schedule, sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
other than any such properties or assets the value of which do not exceed two
million individually and ten million in the aggregate, except sales of inventory
in the ordinary course of business consistent with past practice;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings and for lease obligations, in
each case incurred in the ordinary course of business consistent with past
practice;
(i) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any direct or
indirect wholly owned subsidiary of the Company and other than loans to
employees in the ordinary course of business not to exceed $25,000 in any one
case or $500,000 in the aggregate;
(j) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction, (a) of liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as in
effect on the date hereof or (b) claims settled or compromised to the extent
permitted by Section 6. 1 (n), or waive, release, grant, or transfer any rights
of material value or modify or change in any material respect any existing
license, lease, Permit, contract or other document, other than in the ordinary
course of business consistent with past practice;
(k) adopt a plan of merger, consolidation, restructuring,
recapitalization or reorganization or complete a partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
(1) enter into any new collective bargaining agreement;
(m) change any material accounting principle used by it;
(n) settle or compromise any litigation (whether or not commenced prior
to the date of this Agreement) other than settlements or compromises of
litigation where the
31
amount paid (after giving effect to insurance proceeds actually received) in
settlement or compromise is not material to the Company;
(o) neither the Company nor any of its subsidiaries shall make any new
capital expenditure or expenditures, other than capital expenditures not to
exceed, in the aggregate, the amounts provided for capital expenditures in the
capital budget of the company provided to Buyer;
(p) neither the Company nor any of its subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by this
Agreement, modify, amend or terminate any contract or agreement set forth in the
SEC Documents filed and publicly available prior to the date of this Agreement
to which the company or any Subsidiary is a party or waive, release or assign
any material rights or claims;
(q) neither the Company nor any of its subsidiaries shall: (i) enter
into any employment agreement with any officer, director or key employee of the
Company or any of its subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers.
(r) neither the Company nor any of its subsidiaries shall make any Tax
election or settle or compromise any material Tax liability;
(s) neither the Company nor any of its subsidiaries will voluntarily
take, or voluntarily agree to commit to take, any action that 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
(t) authorize any of, or commit or agree to take any of, the foregoing
actions.
6.2 CHANGES IN EMPLOYMENT ARRANGEMENTS. Except as set forth in Section
6.2 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
shall adopt or amend (except as may be required by law) any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or other
arrangement (including any Company Plan) for the benefit or welfare of any
employee, director or former director or employee, or increase the compensation
or fringe benefits of any director, employee or former director or employee or
pay any benefit not required by any existing plan, arrangement or agreement
(other than increases for employees other than officers and directors) in the
ordinary course of business consistent with past practice.
32
6.3 SEVERANCE. Neither the Company nor any of its Subsidiaries shall
grant any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
6.4 WARN. Neither the Company nor any of its Subsidiaries shall
effectuate a "plant closing" or "mass layoff", as those terms are defined in the
Worker Adjustment and Retraining Notification Act of 1988 or similar state law
("WARN") affecting in whole or in part any site of employment, facility,
operating unit or employee of the Company or any subsidiary, without the prior
written consent of MergerCo or its affiliates in advance and without complying
with the notice requirements and other provisions of WARN.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. PREPARATION OF PROXY STATEMENT: STOCKHOLDER MEETING.
(a) As promptly as practicable after Buyer or MergerCo first purchases
Shares pursuant to the Offer, and if required by applicable law, the Company
shall prepare and file with the SEC a preliminary proxy or information statement
in accordance with the Exchange Act relating to the Merger and this Agreement
and use its best efforts (x) to obtain and furnish the information required to
be included by the Exchange Act and the SEC in the Proxy Statement and, after
consultation with Buyer, 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 stockholders, provided that no amendment or
supplement to the Proxy Statement or information statement will be made by the
Company without consultation with Buyer and its counsel. If, at any time prior
to the Stockholders Meeting, any event, with respect to the Company, its
Subsidiaries, directors, officers, and/or the Merger or the other transactions
contemplated hereby, shall occur, which is required to be described in the Proxy
Statement, the Company shall so describe such event and, to the extent required
by applicable law, shall cause it to be disseminated to the Company's
stockholders.
(b) The Company will immediately notify MergerCo and its affiliates of
(i) the receipt of any comments from the SEC regarding the Proxy Statement and
(ii) the approval of the Proxy Statement by the SEC. MergerCo shall be given a
reasonable opportunity to review and comment on all filings with the SEC and all
mailings to the Company's stockholders in connection with the Merger prior to
the filing or mailing
33
thereof, and the Company shall use its best efforts to reflect all such
reasonable comments.
(c) The Company will, as promptly as practicable following the
expiration of the Offer and in consultation with MergerCo, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of approving this Agreement and the transactions
contemplated by this Agreement. The Company will, through its Board of
Directors, recommend to its stockholders approval of the foregoing matters and
seek to obtain all votes and approvals thereof by the stockholders, as set forth
in Section 4.15; PROVIDED, HOWEVER; that the obligations contained herein shall
be subject to the provisions of Section 7.6 of this Agreement. Subject to the
foregoing, such recommendation, together with a copy of the opinion referred to
in Section 4.14 shall be included in the Proxy Statement. The Company will use
its best efforts to hold such meetings as soon as practicable after the date
hereof. Notwithstanding the foregoing, if MergerCo shall acquire at least 90% of
the outstanding Company Common Stock pursuant to the Offer, MergerCo may, in its
sole discretion, and in lieu of completing the Merger in accordance with this
Agreement, cause the Company to be merged into Merger Co, or MergerCo into the
Company, in either case without a Stockholders Meeting and in accordance with
the Delaware law; provided, however, that in such event, the rights of
stockholders of the Company under this Agreement (including, without limitation,
the right to receive the Merger Consideration) shall not be adversely affected
thereby (other than the right to receive the Proxy Statement, attend the
Stockholders Meeting and vote on the Merger, which shall no longer be
applicable).
(d) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement.
7.2. ACCESS TO INFORMATION, CONFIDENTIALITY.
(a) The Company shall, and shall cause its Subsidiaries, officers,
employees, counsel, financial advisors and other representatives to, afford to
MergerCo and its representatives reasonable access during normal business hours,
in a manner initially coordinated with the chief executive officer or chief
financial officer of the Company, and thereafter coordinated with those persons
designated by the chief executive officer, during the period prior to the
Effective Time of the Merger to its properties, books, contracts, commitments,
personnel and records (including, without limitation, to the extent available,
the work papers of the Company's independent public accountants) and, during
such period, the Company shall, and shall cause its Subsidiaries, officers,
employees and representatives to, furnish promptly to MergerCo (i) a copy of
each report, schedule, registration statement and other document filed by it
during such period
34
pursuant to the requirements of Federal or state securities laws and (ii) all
other information concerning its business, properties, financial condition,
operations and personnel as MergerCo may from time to time reasonably request.
Except as required by law, each of the Company and MergerCo will hold, and will
cause its respective directors, officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in confidence to the extent required by and in accordance
with that certain Confidentiality Agreement, dated February 17, 1998 by or on
behalf of the Company and Buyer, the other terms of which Confidentiality
Agreement are hereby terminated.
7.3. ADDITIONAL UNDERTAKINGS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best 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, the Merger and the other transactions
contemplated by this Agreement. The Buyer, MergerCo and the Company will use
their reasonable best efforts and cooperate with one another (i) in promptly
determining whether any filings are required to be made or consents, approvals,
waivers, licenses, Permits or authorizations are required to be obtained (or,
which if not obtained, would result in a breach or violation, or an event of
default, termination or acceleration of any agreement or any put right under any
agreement) under any applicable law or regulation or from any governmental
authorities or third parties, including parties to loan agreements or other debt
instruments, in connection with the transactions contemplated by this Agreement,
including the Offer, the Merger and (ii) in promptly making any such filings, in
furnishing information required in connection therewith and in timely seeking to
obtain any such consents, approvals, permits or authorizations. Notwithstanding
the foregoing, or any other covenant herein contained, in connection with the
receipt of any necessary 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 its freedom of action
with respect to, or its 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
Buyer's prior written consent.
(b) The Company and Buyer shall make, subject to the condition that the
transactions contemplated herein actually occur, any undertakings (including
undertakings to make divestitures, provided, in any case, that such divestitures
need not themselves be effective or made until after the transactions
contemplated hereby actually occur) required in order to comply with the
antitrust requirements or laws of any
35
governmental entity, including the HSR Act, in connection with the transactions
contemplated by this Agreement.
7.4 INDEMNIFICATION. For six years after the Effective Time of the
Merger, the Company and the Buyer shall indemnify all present and former
directors or officers of the Company and its Subsidiaries ("Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time of the Merger, whether asserted or claimed prior to, at or after
the Effective Time of the Merger, to the fullest extent as would have been
permitted in their respective articles of organization or by-laws consistent
with applicable law, to the extent such Costs have not been paid for by
insurance and shall, in connection with defending against any action for which
indemnification is available hereunder, reimburse such Indemnified Parties from
time to time upon receipt of sufficient supporting documentation, for any
reasonable costs and expenses reasonably incurred by such Indemnified Parties;
provided that such reimbursement shall be conditioned upon such Indemnified
Parties' agreement promptly to return such amounts to the Company if a court of
competent jurisdiction shall ultimately determine that indemnification of such
Indemnified Parties is prohibited by applicable law. The Company will maintain
for a period of not less than six years from the Effective Time of the Merger,
the Company's current directors' and officers, insurance and indemnification
policy (or a policy providing substantially similar coverage) to the extent that
it provides coverage for events occurring prior to the Effective Time of the
Merger (the "D&O Insurance") for all persons who are directors and officers of
the Company on the date of this Agreement; provided that the Company shall not
be required to spend as an annual premium for such D&O Insurance an amount in
excess of 200% of the annual premium paid for directors' and officers' insurance
in effect prior to the date of this Agreement; and provided further that the
Company shall nevertheless be obligated to provide such coverage as may be
obtained for such amount. The provisions of this Section are intended for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
7.5 PUBLIC ANNOUNCEMENTS. Neither MergerCo or the Buyer, on the one
hand, nor the Company, on the other hand, will issue any press release or public
statement with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, without the other party's prior consent,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with NASDAQ, and in any event MergerCo and the
Company will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any such press release or other public
statements with respect to such transactions. The parties agree that
36
the initial press release or releases to be issued with respect to the
transactions contemplated by this Agreement shall be mutually agreed upon prior
to the issuance thereof.
7.6 NO SOLICITATION.
(a) From and after the date hereof until the termination of this
Agreement, neither the Company or any of its Subsidiaries, nor any of their
respective officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) will directly or indirectly
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or take any other action to facilitate
knowingly, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to any Transaction Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain a Transaction Proposal
or agree to or endorse any Transaction Proposal or authorize or permit any of
its officers, directors or employees or any of its Subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to take any such
action, PROVIDED, HOWEVER, that nothing contained in this Agreement shall
prohibit the Board of Directors of the Company which, for purposes of this
Section 7.6, shall include any Special Committee thereof from, prior to the
acceptance for payment of Company Common Stock pursuant to the Offer (i)
furnishing information to or entering into discussions or negotiations with, any
person or entity that makes an unsolicited written, bona fide Transaction
Proposal and in respect of which such person or entity has all of the necessary
funds or commitments therefor if, and only to the extent that: (A) the Board of
Directors of the Company, after consultation with their financial advisors and
after receipt of advice from independent outside legal counsel (who may be the
Company's regularly engaged independent outside legal counsel) determines in
good faith that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to stockholders under applicable
law, (B) prior to taking such action the Company receives from such person or
entity an executed confidentiality agreement containing terms and
provisions substantially similar to those contained in the Confidentiality
Agreement described in Section 7.2, (ii) failing to make or withdrawing or
modifying its recommendation referred to in Section 4.15 if there exists a
Transaction Proposal and the Board of Directors of the Company, after
consultation with its financial advisors and after receipt of advice from
independent outside legal counsel (who may be the Company's regularly engaged
outside independent counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law in connection with such Transaction
Proposal or (iii) making to the Company's stockholders any recommendation
37
and related filing with the SEC as required by Rule 14e-2 and 14d-9 under the
Exchange Act, with respect to any tender offer, or taking any other legally
required action with respect to such tender offer (including, without
limitation, the making of public disclosures as may be necessary or reasonably
advisable under applicable securities laws) if the Board of Directors of the
Company, after consultation with their financial advisors and receipt of advice
from independent outside legal counsel (who may be the Company's regularly
engaged independent counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law; and Section 7.6(b) and 7.6(c) are
fully complied with by the Board of Directors of the Company. In the event of an
exercise of the Company's or it's Board of Director's rights under clauses (i),
(ii) or (iii) above and subject to compliance with this Section 7.6,
notwithstanding anything contained in this Agreement to the contrary, such
exercise of rights shall not constitute a breach of this Agreement by the
Company. For purposes of this Agreement, "Transaction Proposal" shall mean any
of the following (other than the transactions between the Company and MergerCo
contemplated by the Offer and this Agreement) involving the Company or any of
its Subsidiaries: (i) any merger, consolidation, share exchange,
recapitalization, business combination, or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of the Company and its Subsidiaries, taken as a whole, in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for, or the acquisition (or right to acquire) of "beneficial ownership" by
any person, "group" or entity (as such terms are defined under Section 13 (d) of
the Exchange Act), of 20% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act
in connection therewith; (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing or recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries or (vi) any other transaction
the consummation of which would reasonably be expected to impede, interfere
with, prevent or materially delay the Offer or the Merger or which would
reasonably be expected to dilute materially the benefits to Buyer of the
transactions contemplated hereby.
(b) Prior to the Board of Directors withdrawing or modifying its
approval or recommendation of the Offer, this Agreement or the Merger, approving
or recommending a Transaction Proposal, or entering into an agreement with
respect to a Transaction Proposal, the Board of Directors shall provide Buyer
with a written notice (a "Notice of Takeover Proposal") advising Buyer that the
Board of Directors has received a Takeover Proposal, specifying the material
terms and conditions of such Transaction Proposal (unless prohibited from doing
so by the terms thereof) and identifying the person making such transaction
Proposal (unless prohibited from doing so by the terms thereof), and neither the
Company nor any subsidiary shall enter into an agreement with respect to a
38
Transaction Proposal until midnight three business days after the day on which
the Notice of Takeover Proposal was given to Buyer. In addition, if the Company
proposes to enter into an agreement with respect to any Transaction Proposal, it
shall concurrently with entering into such agreement pay, or cause to be paid,
to Buyer the expenses and fees and the Termination Fee (as provided in and
defined in Section 10.2)
7.7 RESIGNATION OF DIRECTORS. Prior to the Effective Time of the
Merger, the Company shall deliver to MergerCo evidence satisfactory to MergerCo
of the resignation of all directors of the Company, effective at the Effective
Time of the Merger.
7.8 EMPLOYEE BENEFITS. Buyer agrees that, for a period of twelve (12)
months following the Effective Time, the Surviving Corporation shall maintain
employee benefits plans and arrangements (directly or in conjunction with Buyer)
which, in the aggregate, will provide a level of benefits to continuing
employees of the Company and its Subsidiaries substantially comparable in the
aggregate to those provided under the Buyer's benefit plans as in effect
immediately prior to the Effective Time (other than discretionary benefits);
provided, however, that Buyer may cause modifications to be made to such benefit
plans and arrangements to the extent necessary to comply with applicable Law or
to reflect widespread adjustments in benefits (or costs thereof) provided to
employees under compensation and benefit plans of Buyer and its subsidiaries,
and no specific compensation and benefit plans need be provided. For purposes of
determining eligibility and vesting with respect to all Benefit Plans set forth
on Schedule 4.9 of the Disclosure Schedule (except with respect to any defined
benefit plans), Buyer shall use the employee's hire date with the Company or
such other date as has been previously determined by the Company for credit for
prior employment with any ERISA Affiliate of the Company. Benefit plans which
provide medical, dental, or life insurance benefits after the Effective Time to
any individual who is an active or former employee of the Company or any of its
Subsidiaries as of the Effective Time or a dependent of such an employee shall,
with respect to such individuals, waive any waiting periods, any pre-existing
conditions, and any actively-at-work exclusions to the extent so waived under
present policy and shall provide that any expenses incurred on or before the
Effective Time by such individuals shall be taken into account under such plans
for purposes of satisfying applicable deductible, coinsurance, and maximum
out-of-pocket provisions to the extent taken into account under present policy.
Nothing in this Section 7.8 shall prohibit the Company or the Surviving
Corporation from terminating the employment of any employee at any time with or
without cause (subject to, and in accordance with the terms of any existing
employment agreements), or shall be construed or applied to restrict the ability
of the Buyer or Surviving Corporation and its Subsidiaries to establish such
types and levels of compensation and benefits as they determine to be
appropriate. Buyer agrees to cause the Surviving Corporation (or the applicable
39
Subsidiary employer) to honor the existing employment agreements that are set
forth on Schedule 7.8 of the Disclosure Schedule.
7.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Buyer and MergerCo and Buyer and MergerCo shall give prompt notice to
the Company of: (i) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which does or would be likely to cause (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, or (B) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied; and (ii) any
failure of the Company on the one hand, or Buyer or MergerCo on the other hand,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
7.10 STATE TAKEOVER LAWS. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated by the Stock Purchase Agreement or
this Agreement, including the Offer or the Merger, the Company and Buyer, and
their respective Boards of Directors shall use their reasonable best efforts to
grant such approvals and to take such other actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and shall otherwise use their reasonable best
efforts to eliminate the effects of any such statute or regulation on the
transactions contemplated hereby.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligation of
each party to effect the Merger is subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. The Company Stockholder Approval
shall have been obtained if required by applicable law.
(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any Governmental
Entity or other legal
40
restraint or prohibition shall be in effect preventing or prohibiting the
acceptance for payment of, or payment for, shares of Common Stock pursuant to
the Offer, or the consummation of the Merger; provided, however, that the
parties hereto shall, subject to the last sentence of Section 7.3 (a) hereof,
use their best efforts to have any such injunction, order, restraint or
prohibition vacated.
(d) STATUTES; CONSENTS. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any Governmental Entity of competent
jurisdiction which prohibits the consummation of the Merger.
8.2 CONDITION TO BUYER'S AND MERGER CO.'S OBLIGATION. The obligation of
Buyer and Merger Co. to effect the Merger is subject to Buyer or Merger Co.
having purchased shares of Company Common Stock in the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after approval
of matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Buyer and the Company; or
(b) by either Buyer or the Company, if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting or if there shall be in effect
any other legal restraint or prohibition preventing or prohibiting the
acceptance for payment of, or payment for, shares of Company Common Stock
pursuant to the Offer or the consummation of the Merger and such order, decree,
ruling or other action shall have become final and nonappealable (other than due
to the failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time of the Merger); or
(c) by the Company, if Offeror shall not have (i) commenced the Offer
within five (5) business days after the initial public announcement of Buyer's
intention to commence the Offer, or (ii) accepted for payment any shares of
Company Common Stock pursuant to the Offer (other than due to the failure of the
Company to perform its obligations under this Agreement) on or prior to April
30, 1998, or, if any necessary
41
approvals required under the HSR Act shall not have been obtained by April 30,
1998, on or prior to the earlier of (A) ten (10) days after receipt of all
necessary approvals under the HSR Act or (B) July 15, 1998; or
(d) by the Company, upon its execution, prior to Buyer's or MergerCo's
purchase of shares of Company Common Stock pursuant to the Offer, of a binding
agreement with a third party with respect to a Transaction Proposal, provided
that it has complied with all provisions of this Agreement, including the notice
provisions herein, and that it pays the Termination Fee as provided by and
defined in Section 10.2;
(e) by Buyer in the event of a material breach or failure to perform in
any material respect by the Company of any representation, warranty, covenant or
other agreement contained in this Agreement which cannot be or has not been
cured within 10 days after the giving of written notice to the Company; or
(f) by the Company, in the event of a material breach or failure to
perform in any material respect by MergerCo or Buyer of any representation,
warranty, covenant or other agreement contained in this Agreement which cannot
be or has not been cured within 10 days after the giving of written notice to
MergerCo or Buyer.
(g) by Buyer, if Offeror terminates the Offer in accordance with the
terms of Annex I.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or MergerCo as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of MergerCo or the Company, other than the provisions
of Section 4.13, Section 5.5, the last sentence of Section 7.2, this Section
9.2, Section 10.2 and Section 10.7. Nothing contained in this Section shall
relieve any party for any breach of the representations, warranties, covenants
or agreements set forth in this Agreement.
9.3 AMENDMENT. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the stockholders of the Company; provided, however, that after any
such approval, there shall be made no amendment that by law requires further
approval by such stockholders without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time of the
Merger, 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
42
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.3, waive compliance 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 such rights.
9.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 9.1, an amendment of this
Agreement pursuant to Section 9.3 or an extension or waiver pursuant to Section
9.4 shall, in order to be effective, require in the case of MergerCo or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE X
GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger and
all such representations and warranties will be extinguished on consummation of
the Merger and none of the Company, Buyer and MergerCo, nor any officer,
director or employee or shareholder thereof shall be under any liability
whatsoever with respect to any such representation or warranty after such time.
This Section 10.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time of the Merger.
10.2 FEES AND EXPENSES.
(a) In addition to any other amounts which may be payable or become
payable pursuant to any other paragraph of this Section 10.2, the Company shall,
simultaneously with the termination of this Agreement in any of the
circumstances described in Section 10.2(b), reimburse MergerCo for all
out-of-pocket expenses and fees, in an aggregate amount not to exceed $1,500,000
(including, without limitation, fees payable to all banks, investment banking
firms and other financial institutions, and their respective agents and counsel,
and all fees of counsel, accountants, financial printers, experts and
consultants to MergerCo and its affiliates), whether incurred prior to, on or
after the date hereof, in connection with the Merger and the consummation of all
transactions contemplated by this Agreement, and the financing thereof.
(b) If any person (other than MergerCo or any of its affiliates) shall
have made, proposed, communicated or disclosed a Transaction Proposal in a
manner which is or
43
otherwise becomes public and this Agreement is terminated pursuant to any of the
following provisions:
(i) by the Company pursuant to Section 9.1 (d);
(ii) by Buyer pursuant to Section 9.1 (e), other than as a result
of a breach of the representation in clause (i) of Section 4.7 and other
than as a result of facts or circumstances occurring after the date of this
Agreement and not as a result of any action or inaction by the Company or
any of its Subsidiaries in violation of this Agreement;
(iii) by Buyer pursuant to Section 9.1(g), if Offeror has
terminated the Offer as a result of the occurrence of any of the events set
forth in subparagraph (c) of Annex I, other than a breach of the
representation in clause (i) of Section 4.7 and other than as a result of
facts or circumstances occurring after the date of this Agreement and not as
a result of any action or inaction by the Company or any of its Subsidiaries
in violation of this Agreement or subparagraphs (d) or (e) of Annex I;
then the Company shall, simultaneously with such termination of this
Agreement, pay MergerCo a fee of $5,000,000 in cash, which amount shall be
payable in same day funds (the "Termination Fee") .
In addition, (i) if any Person (other than Merger Co. or any of its
affiliates) shall have made, proposed, communicated or disclosed a Transaction
Proposal and the Minimum Condition is not met in the Offer; or (ii) if prior to
any termination of this Agreement, any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) (other than Buyer or any of its affiliates)
purchases or otherwise acquires, directly or indirectly, beneficial ownership of
10% or more of the outstanding voting securities of the Company, and, if at any
time prior to 12 months following the termination of this Agreement any such
person or "group" consummates a transaction that would otherwise constitute a
Transaction Proposal, there shall be paid to Buyer immediately prior to the
consummation of such transaction the Termination Fee. In no event shall the
Company be required to pay more than one Termination Fee pursuant to this
Section 10.2(b).
(c) Except as provided otherwise in paragraph (a) above, all costs and
expenses incurred in connection with this Agreement, and the transactions
contemplated hereby shall be paid by the party incurring such expenses,, except
that the Company shall pay all costs and expenses (i) in connection with
printing and mailing the Proxy Statement, as well as all SEC filing fees
relating to the transactions contemplated herein and (ii) of obtaining any
consents of any third party.
44
10.3 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to MergerCo or Buyer, to
Sunbeam Corporation
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Xxxx, Esq.
(b) if to the Company, to
Signature Brands, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attn: Chief Executive Officer
with copies to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
10.4 DEFINITIONS. For purposes of this Agreement:
45
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) a "business day" means any day, other than Saturday,
Sunday or a federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time. In computing any time period under
Section 14(d)(5) or Section 14(d)(6) of the Exchange Act or under Regulation 14D
or Regulation 14E, the date of the event which begins the running of such time
period shall be included except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter;
(c) "knowledge", with respect to the Company means the actual
knowledge of any one or more of the following officers and employees of the
Company and its Subsidiaries: Xxxxx Xxxx and Xxxxxx X. Xxxxxxx.
(d) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with the Company, any change or effect that
either individually or in the aggregate with all other such changes or effects
is materially adverse to the business, financial condition, or results of
operations of the Company and its Subsidiaries taken as a whole and the terms
"material" and "materially" shall have correlative meanings; provided, however,
that no Material Adverse Change or Material Adverse Effect shall be deemed to
have occurred as a result solely of general economic conditions affecting
generally the industry in which the Company competes and general market
conditions in the United States.
(e) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
and
(f) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors (or other governing body) or, if there are no such voting interests,
50% or more of the equity interests of which is owned directly or indirectly by
such first person or any entity, in which the Company or any of its Subsidiaries
is a general partner.
10.5 INTERPRETATION. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words -without
limitation".
46
10.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
10.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement and
the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This
Agreement, other than Section 7.4, is not intended to confer upon any Person
other than the parties any rights or remedies.
10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
10.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties; provided, however, that Buyer or MergerCo
may, without the Company's prior written consent, assign its rights under this
Agreement to any financial institution that requires such assignment in
connection with such financial institution's agreement to provide financing to
either Buyer or MergerCo Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
10.10 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.
[Remainder of Page Intentionally Left Blank]
47
IN WITNESS WHEREOF, Buyer, MergerCo and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
SUNBEAM CORPORATION
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President & General Counsel
SIGNATURE BRANDS USA, INC.
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Vice Chairman and Chief Executive Officer
JAVA ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President & General Counsel
48
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) relating to MergerCo's obligation to pay for or return tendered shares
after termination of the Offer, Buyer and MergerCo shall not be required to
accept for payment or pay for any shares of Company Common Stock tendered
pursuant to the Offer and may delay acceptance for payment or payment or may
terminate the Offer, if (i) less than 51% of the Fully Diluted Shares of Company
Common Stock has been tendered pursuant to the Offer by the expiration of the
Offer and not withdrawn (the "Minimum Condition"); (ii) any applicable waiting
period under the HSR Act has not expired or terminated; or (iii) at any time
after the date of this Agreement, and before acceptance for payment of any
shares of Company Common Stock, any of the following events shall occur and be
continuing:
(a) there shall be instituted or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Buyer or
MergerCo of any shares of Company Common Stock under the Offer, or
seeking to restrain or prohibit the making or consummation of the Offer
or the Merger, (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Buyer or any of Buyer's
subsidiaries of a material portion of the business or assets of the
Company or Buyer and its subsidiaries, taken as a whole, or to compel
the Company or Buyer to dispose of or hold separate any material portion
of the business or assets of the Company or Buyer and its subsidiaries,
taken as a whole, in each case as a result of the Offer or the Merger or
(iii) seeking to impose material limitations on the ability of Buyer or
MergerCo to acquire or hold, or exercise full rights of ownership of,
any shares of Company Common Stock to be accepted for payment pursuant
to the Offer including, without limitation, the right to vote such
shares of Company Common Stock on all matters properly presented to the
stockholders of the Company or (iv) seeking to prohibit Buyer or any of
its subsidiaries from effectively controlling in any material respect
any material portion of the business or operations of the Company;
(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, by any Governmental Entity or court, other
than the application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that would result in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
49
(c) any of the representations and warranties of the Company contained
in the Agreement shall not be true and correct at and as of the date of
consummation of the Offer (except to the extent such representations and
warranties speak to an earlier date), as if made at and as of the date
of consummation of the Offer, in each case except as contemplated or
permitted by this Agreement and except, in the case of any such breach
when such breach would not have, individually or in the aggregate, a
Material Adverse Effect with respect to the Company or materially affect
the ability of the Company to consummate the Merger or the Offeror to
accept for payment or pay for shares of Company Common Stock pursuant to
the Offer;
(d) the Company shall have failed to perform the obligations required to
be performed by it under the Agreement at or prior to the date of
expiration of the Offer, including but not limited to its obligations
pursuant to Section 7.6 hereof, except for such failures to perform as
have not had or would not individually or in the aggregate, have a
Material Adverse Effect with respect to the Company or materially
adversely affect the ability of the Company to consummate the Merger or
the Offeror to accept for payment or pay for shares of Company Common
Stock pursuant to the Offer;
(e) the Board of Directors of the Company or any committee thereof shall
have (i) withdrawn, modified or amended in any respect adverse to Buyer
or MergerCo its approval or recommendation of the Offer or the Merger,
(ii) recommended or approved any Transaction Proposal from a person
other than Buyer, MergerCo or any of their respective affiliates, (iii)
failed to publicly announce, within ten (10) business days after the
occurrence of a Transaction Proposal, its opposition to such Transaction
Proposal, or amended, modified or withdrawn its opposition to any
Transaction Proposal in any manner adverse to Buyer or MergerCo or
failed to promptly reaffirm its recommendation of the Offer or the
Merger at the Buyer's request, or (iv) resolved to do any of the
foregoing;
(f) the Agreement shall have been terminated in accordance with its
terms; or
(g) (i) it shall have been publicly disclosed that any person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act), shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 15% of any class or series of capital stock
of the Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, other than Buyer or an affiliate or any
person or group existing which on the date of the Agreement beneficially owned
more than 15% of any class or series of capital stock of the Company or (ii) the
Company shall have entered into a definitive agreement or agreement in principle
with any person with respect to a Transaction Proposal or similar business
combination with the Company or any subsidiary,
I-2
which in the reasonable judgment of Buyer or MergerCo in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment.
The foregoing conditions are for the sole benefit of the Buyer
and MergerCo and may be waived by Buyer or MergerCo, in whole or in part at any
time and from time to time in the reasonable discretion of Buyer or MergerCo.
I-3
