EXECUTION COPY
Exhibit (D)(1)
AGREEMENT AND PLAN OF MERGER
Among
XXXX COMPANY
and
FORVALTNINGS AB RATOS (PUBL.)
and
RATOS ACQUISITION CORP.
Dated as of March 26, 2000
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I THE OFFER .........................................................1
1.1. The Offer .........................................................1
1.2. Company Actions ...................................................4
1.3. Board of Directors; Section 14(f) .................................5
ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME ...............................6
2.1. The Merger ........................................................6
2.2. Closing ...........................................................6
2.3. Effective Time ....................................................7
2.4. Options ...........................................................7
ARTICLE III CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION; OFFICERS AND DIRECTORS OF
THE SURVIVING CORPORATION .........................................7
3.1. Certificate of Incorporation ......................................7
3.2. Bylaws ............................................................7
3.3. Directors .........................................................7
3.4. Officers ..........................................................8
ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION .............................8
4.1. Effect on Capital Stock ...........................................8
(a) Merger Consideration .........................................8
(b) Cancellation of Excluded Shares ..............................8
(c) Merger Sub ...................................................8
4.2. Exchange of Certificates for Payment ..............................8
(a) Exchange Agent ...............................................8
(b) Exchange Procedures ..........................................8
(c) Transfers ....................................................9
(d) Termination of Merger Fund ...................................9
(e) Return of Consideration ......................................9
(f) Lost, Stolen or Destroyed Certificates .......................9
4.3. Dissenters' Shares ...............................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES ...................................10
5.1. Representations and Warranties of the Company ....................10
(a) Organization, Good Standing, Corporate Power and
Qualification; Subsidiaries and Other Interests .............10
(b) Capital Structure ...........................................10
i
(c) Corporate Authority; Approval and Fairness ..................11
(d) Governmental Filings; No Violations .........................11
(e) Company Reports; Financial Statements .......................12
(f) Absence of Certain Changes ..................................13
(g) Litigation and Liabilities ..................................13
(h) Employee Benefits ...........................................14
(i) Compliance with Laws ........................................15
(j) Takeover Statutes ...........................................16
(k) Environmental Matters .......................................16
(l) Taxes .......................................................17
(m) Labor Matters ...............................................18
(n) Brokers and Finders .........................................18
(o) Certain Business Practices ..................................18
(p) Insurance ...................................................18
(q) Intellectual Property .......................................18
(r) Rights Plan .................................................19
(s) Contracts ...................................................19
(t) Real Property and Other Assets ..............................20
5.2. Representations and Warranties of Parent and Merger Sub ..........20
(a) Organization, Good Standing and Qualification ...............20
(b) Ownership of Merger Sub .....................................20
(c) Corporate Authority .........................................20
(d) Governmental Filings; No Violations .........................21
(e) Brokers and Finders .........................................21
(f) Financing ...................................................21
(g) Share Exchange Option Agreement .............................22
(h) Environmental Reports .......................................22
ARTICLE VI COVENANTS ........................................................22
6.1. Interim Operations ...............................................22
6.2. Third Party Acquisitions .........................................24
6.3. Filings; Other Actions; Notification .............................25
6.4. Information Supplied .............................................27
6.5. Stockholders Meeting .............................................27
6.6. Access ...........................................................28
6.7. Publicity ........................................................28
6.8. Status of Company Employees; Employee Benefits ...................28
6.9. Expenses .........................................................28
6.10. Indemnification ..................................................29
6.11. Other Actions by the Company and Parent ..........................31
ARTICLE VII CONDITIONS .......................................................31
7.1. Conditions to Each Party's Obligation to Effect Merger ...........31
(a) Stockholder Approval ........................................31
(b) Regulatory Consents .........................................31
(c) Litigation ..................................................31
ii
7.2. Conditions to Obligations of Parent and Merger Sub ..............32
(a) Representations and Warranties .............................32
(b) Performance of Obligations of the Company ..................32
7.3. Conditions to Obligations of the Company ........................32
(a) Representations and Warranties .............................32
(b) Performance of Obligations of Parent and Merger Sub ........32
ARTICLE VIII TERMINATION .....................................................32
8.1. Termination by Mutual Consent ...................................32
8.2. Termination by Either Parent or the Company .....................32
8.3. Termination by the Company ......................................33
8.4. Termination by Parent and Merger Sub ............................33
8.5. Effect of Termination and Abandonment; Termination Fee ..........34
8.6. Procedure for Termination .......................................34
ARTICLE IX MISCELLANEOUS ...................................................35
9.1. Survival ........................................................35
9.2. Certain Definitions .............................................35
(a) Affiliate ..................................................35
(b) Business Day ...............................................35
(c) Capital Stock ..............................................35
(d) Company Material Adverse Effect ............................35
(e) Depositary .................................................35
(f) knowledge, to the knowledge of, has received no notice .....35
(g) Lien .......................................................35
(h) Parent Material Adverse Effect .............................36
(i) Permitted Liens ............................................36
(j) Person .....................................................36
(k) Subsidiary or Subsidiaries .................................36
9.3. No Personal Liability ...........................................36
9.4. Modification or Amendment .......................................36
9.5. Waiver of Conditions ............................................36
9.6. Counterparts ....................................................37
9.7. Governing Law and Venue; Waiver of Jury Trial ...................37
9.8. Notices .........................................................38
9.9. Entire Agreement ................................................39
9.10. No Third Party Beneficiaries ....................................39
9.11. Obligations of the Company and Surviving Corporation ............39
9.12. Severability ....................................................39
9.13. Interpretation ..................................................39
9.14. Assignment ......................................................40
ANNEX A .....................................................................A-1
iii
INDEX OF DEFINED TERMS
----------------------
Page
----
Affiliate .....................................................................5
Agreement .....................................................................1
Annex A .......................................................................2
Audit Date ...................................................................12
Balance Sheet ................................................................13
Beneficial Owner .............................................................19
beneficially own .............................................................19
Business Day .................................................................35
Bylaws ........................................................................7
Camfil .......................................................................22
Capital Stock ................................................................35
Certificate ...................................................................8
Charter .......................................................................7
Claim ........................................................................29
Closing .......................................................................6
Closing Date ..................................................................7
Code .........................................................................14
Common Stock ..................................................................1
Commonly Controlled Entity ...................................................14
Company .......................................................................1
Company 10-K .................................................................12
Company Advisors .............................................................24
Company Disclosure Schedule ..................................................10
Company Employees ............................................................28
Company Labor Agreements .....................................................18
Company Material Adverse Effect ..............................................35
Company Option ...............................................................11
Company Reports ..............................................................12
Company Requisite Vote .......................................................11
Company's Board ...............................................................2
Compensation and Benefit Plans ...............................................14
Confidential Information .....................................................28
Confidentiality Agreement ....................................................28
Contract .....................................................................12
Costs ........................................................................29
Delaware Certificate of Merger ................................................7
Depositary ...................................................................35
DGCL ..........................................................................4
Dissenters' Shares ...........................................................10
Effective Time ................................................................7
Employment Agreements .........................................................2
iv
Employment and Severance Agreements ..........................................28
Environmental Laws ...........................................................16
ERISA ........................................................................14
Exchange Act ..................................................................1
Exchange Agent ................................................................8
Excluded Shares ...............................................................8
Expiration Date ...............................................................2
Fairness Opinion ..............................................................4
Financial Advisor .............................................................4
GAAP .........................................................................13
Government Consents ..........................................................12
Governmental Entity ..........................................................12
Hazardous Material ...........................................................16
HSR Act ......................................................................12
HSR Filing ...................................................................12
Indemnified Parties ..........................................................29
Indemnified Party ............................................................29
Independent Directors .........................................................5
knowledge, to the knowledge of, has received no notice .......................35
Laws .........................................................................15
Lien .........................................................................35
Merger ........................................................................1
Merger Consideration ......................................................... 8
Merger Fund ...................................................................8
Merger Sub. ...................................................................1
Minimum Condition .............................................................2
NASD .........................................................................12
Offer .........................................................................1
Offer Documents ...............................................................3
Offer Price ...................................................................1
Option Agreement .............................................................22
Order ........................................................................31
Parent ........................................................................1
Parent Directors ..............................................................5
Parent Material Adverse Effect ...............................................36
Pension Plans ................................................................14
Permitted Liens ..............................................................36
Person .......................................................................36
Proxy Statement ..............................................................27
Representatives ..............................................................28
Rights Agreement .............................................................19
Schedule 14D-9 ................................................................4
Schedule TO ...................................................................3
SEC ...........................................................................3
Shares ........................................................................1
Stock Option Plans ...........................................................11
v
Stockholders Meeting .........................................................27
Subsidiary or Subsidiaries ...................................................36
Superior Proposal ............................................................25
Surviving Corporation .........................................................6
Takeover Statute .............................................................16
Taxes ........................................................................17
Third Party ..................................................................25
Third Party Acquisition ......................................................25
Transaction Value .............................................................1
Transfer .....................................................................22
Voting Debt ..................................................................11
COMPANY DISCLOSURE SCHEDULE
Section Description
Section 5.1(a)(i) Company Subsidiaries and Other Interests
Section 5.1(f) Certain Changes
Section 5.1(g) Litigation and Liabilities
Section 5.1(h)(i) Compensation and Benefit Plans
Section 5.1(i) Compliance with Laws
Section 5.1(k) Environmental Matters
Section 5.1(l) Certain Tax Matters
Section 5.1(m) Labor Matters
Section 5.1(q) Intellectual Property
Section 5.1(s) Contracts
Section 5.1(t) Real Property and Other Assets
Section 6.10 Indemnity Contracts
vi
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
---------
as of March 26, 2000, among Xxxx Company, a Delaware corporation (the
"Company"), Forvaltnings AB Ratos (publ.), a Swedish corporation ("Parent"), and
------- ------
Ratos Acquisition Corp., a Delaware corporation and an indirect, wholly owned
subsidiary of Parent ("Merger Sub").
----------
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
------
conditions set forth in this Agreement; and
WHEREAS, in furtherance thereof, pursuant to this Agreement, Merger Sub has
agreed to commence a tender offer (the "Offer") to acquire all of the
-----
outstanding shares (the "Shares") of common stock, par value $.10 per share, of
------
the Company (the "Common Stock") and to cash out all of the Company Options (as
------------
defined in Section 5.1(b)) for a total cash consideration of U.S.$134,024,308.60
(the "Transaction Value"), which translates into a price, if the representations
-----------------
in Section 5.1(b) are correct, of $17.45 per Share (such price (contingent upon
the accuracy of the representations in Section 5.1(b)), or any different amount
per share paid pursuant to the Offer, being hereinafter referred to as the
"Offer Price"), all in accordance with the terms and subject to the conditions
-----------
provided herein;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1. The Offer.
---------
(a) Subject to compliance with the four conditions listed below, as
promptly as practicable, but in no event later than Tuesday, April 4, 2000, or,
if later, as soon as each of the four conditions listed below has been
satisfied, Merger Sub shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer for
------------
any and all of the Shares at the Offer Price, which Offer shall be subject to
the conditions set forth in Annex A (as defined below):
(i) This Agreement shall not have been terminated in accordance
with Article VIII;
(ii) Each member of the Board of Directors of the Company on and
as of the date hereof shall have entered into a binding agreement with Parent
and Merger Sub obligating him or her (x) to tender all shares held by him or her
into the Offer unless the Board determines not to recommend the Offer pursuant
to Section 1.2(b) or Section 6.2(b), and (y) to appoint new members to and to
resign from the Board of Directors to the extent required in order to allow the
Company to comply with Section 1.3(a);
(iii) The employment agreement between the Company and Xxxx X.
Xxxxxxxx and the amendment to the employment agreement between the Company and
H. Xxxx Xxxxx, substantially in the form previously conveyed by Parent to the
Company (together, the "Employment Agreements"), shall have been executed and
remain in effect; and
(iv) The Company shall be prepared to comply with Sections 1.2(b)
and 6.3(c).
The parties agree such public announcement shall occur promptly after the
execution and delivery of this Agreement. The obligation of Merger Sub to accept
for payment and to pay for any Shares tendered shall be subject only to (i) the
condition that more than a majority of the issued and outstanding Shares be
validly tendered and not withdrawn (the "Minimum Condition"), and (ii) the other
-----------------
conditions set forth in Annex A hereto ("Annex A"). Merger Sub expressly
-------
reserves the right to increase the Offer Price or to make any other changes in
the terms and conditions of the Offer; provided, however, that, unless
previously approved by the Board of Directors of the Company (the "Company's
---------
Board") in writing, no change may be made which (i) decreases the Offer Price,
-----
(ii) changes the form of consideration to be paid in the Offer, (iii) reduces
the maximum number of Shares to be purchased in the Offer, (iv) imposes
conditions to the Offer in addition to those set forth in Annex A, (v) amends
the conditions set forth in Annex A to broaden the scope of such conditions,
(vi) amends any other term of the Offer in a manner adverse to the holders of
the Shares, (vii) extends the Offer except as provided in Section 1.1(b), or
(viii) amends the Minimum Condition. It is agreed that the conditions set forth
in Annex A, other than the Minimum Condition, are for the sole benefit of Parent
and Merger Sub and may be waived by Parent or Merger Sub, in whole or in part at
any time and from time to time in its sole discretion; the Minimum Condition may
only be waived by Parent with the prior written approval of the Company's Board.
The failure by Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. The
Company agrees that no Shares held by the Company or any of its Subsidiaries (as
defined in Section 9.2) will be tendered in the Offer.
(b) Subject to the terms and conditions thereof, the Offer shall expire at
midnight, New York City time, on the date that is twenty (20) Business Days
after the date the Offer is commenced (the initial "Expiration Date", and any
---------------
expiration time and date established pursuant to an authorized extension of the
Offer as so extended, also an "Expiration Date"); provided, however, that
---------------
without the consent of the Company's Board, Merger Sub may (i) from time to time
extend the Offer (each such individual extension not to exceed five (5) Business
Days after the previously scheduled Expiration Date), if at the scheduled
Expiration Date of the Offer any of the conditions to the Offer shall not have
been satisfied or waived, until such time as such conditions are satisfied or
waived; (ii) extend the Offer for any period required by any
2
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer; or (iii)
---
extend the Offer for a subsequent offering period (as provided in Rule 14d-11
under the Exchange Act) of up to twenty (20) Business Days in order to acquire
over 90% of the outstanding Shares, provided that no such extension for a
subsequent offering period shall occur unless Merger Sub has purchased Shares in
number fulfilling the Minimum Condition and all additional shares tendered
through the period of the last Expiration Date. Merger Sub agrees that if any of
the conditions to the Offer set forth on Annex A other than the last two
conditions thereon (conditions (a) and (b) on page A-2 of this Agreement) are
not satisfied on any scheduled Expiration Date, then if all such conditions are
reasonably capable of being satisfied prior to May 31, 2000, Merger Sub shall
extend the Offer from time to time (each such individual extension not to exceed
ten (10) Business Days after the previously scheduled Expiration Date) until
such conditions are satisfied or waived; provided, that Merger Sub shall not be
required to extend the Offer beyond, and without the approval of the Company's
Board the Offer will not be extended beyond, May 31, 2000. Subject to the terms
and conditions of the Offer and this Agreement, Merger Sub shall accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Merger Sub becomes obligated to accept for payment and pay for
pursuant to the Offer, as promptly as practicable after the expiration of the
Offer.
(c) As soon as practicable on the date the Offer is commenced, Merger Sub
shall file with the SEC a Tender Offer Statement on Schedule TO (together with
all amendments and supplements thereto, and including all exhibits thereto, the
"Schedule TO") with respect to the Offer. The Schedule TO shall contain as an
-----------
exhibit or incorporate by reference the Offer to Purchase (or portions thereof)
and forms of the related letter of transmittal and summary advertisement. Parent
and Merger Sub agree that the Schedule TO, the Offer to Purchase and all
amendments or supplements thereto (which together constitute the "Offer
-----
Documents") shall comply in all material respects with the Exchange Act and the
---------
rules and regulations thereunder and other applicable Laws (as defined in
Section 5.1(i)). Parent and Merger Sub further agree that the Offer Documents,
on the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied by the Company or any of its
stockholders in writing specifically for inclusion or incorporation by reference
in the Offer Documents. The Company agrees that the written information provided
by the Company for inclusion or incorporation by reference in the Offer
Documents shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of Parent, Merger Sub and the Company agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in any
material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule TO as so corrected to be filed with the SEC and
the other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable laws. The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Offer Documents prior to the filing thereof with the SEC. Merger
Sub agrees to provide the Company with any comments (in writing if such comments
are
3
received orally or a copy of any written comments) Merger Sub or its counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments.
1.2. Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents that the Company's Board, at a meeting duly called and held, has by
unanimous vote of the directors present at such meeting, but subject to the
terms and conditions set forth herein, (i) determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, taken
together, are fair to and in the best interests of the Company and its
stockholders (other than Parent and its Affiliates), (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in all respects and such approval constitutes approval of the Offer,
this Agreement and the Merger for purposes of Section 203 of the Delaware
General Corporation Law (the "DGCL"), and (iii) resolved to recommend that the
----
stockholders of the Company accept the Offer, tender their Shares thereunder to
Merger Sub and approve and adopt this Agreement and the Merger; provided,
however, that such recommendation and approval may be withdrawn, modified or
amended to the extent that the Company's Board determines in good faith, after
taking into consideration the advice of its outside legal counsel, that failure
to take such action is reasonably likely to result in a breach of the fiduciary
obligations of the Company's Board under applicable law. The Company consents to
the inclusion of such recommendation and approval in the Offer Documents. The
Company also represents that the Company's Board has reviewed the opinion of
Xxxxxx Xxxxxxx Xxxxxx Gull, financial advisor to the Company's Board (the
"Financial Advisor"), that, as of the date of this Agreement, the consideration
-----------------
to be received pursuant to this Agreement is fair to the stockholders of the
Company (other than Parent and its Affiliates) from a financial point of view
(the "Fairness Opinion"). The Company has been authorized by the Financial
----------------
Advisor to permit, subject to the prior review and consent by the Financial
Advisor (such consent not to be unreasonably withheld), the inclusion of the
Fairness Opinion (or a reference thereto) in the Offer Documents, the Schedule
14D-9 (as defined below) and the Proxy Statement (as defined in Section 6.4).
(b) The Company shall file with the SEC, concurrently with or as soon
as practicable following the filing of the Schedule TO, but in no event later
than the next Business Day after the filing of the Schedule TO, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, and including all exhibits thereto, the
"Schedule 14D-9 ") containing the recommendation described in Section 1.2(a)
--------------
and shall mail the Schedule 14D-9 to the stockholders of the Company to the
extent required by Rule 14d-9 promulgated under the Exchange Act and any other
applicable federal securities laws; provided, however, that if the Company's
Board determines in good faith, after taking into consideration the advice of
its outside legal counsel, that the amendment or withdrawal of such
recommendation is reasonably likely to be required in order for its members to
comply with their fiduciary duties under applicable law, then any such amendment
or withdrawal, and any related amendment of the Schedule 14D-9, shall not
constitute a breach of this Agreement. The Company agrees that the Schedule 14D-
9 shall comply in all material respects with the Exchange Act and the rules and
regulations thereunder and other applicable laws. The Company further agrees
that Schedule 14D-9, on the date first published, sent or
4
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in Schedule 14D-9. Each of the Company, Parent and
Merger Sub agrees promptly to correct any written information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and be disseminated to the Company's stockholders, in
each case as and to the extent required by applicable federal securities laws.
Parent, Merger Sub and their counsel shall be given reasonable opportunity to
review and comment on the Schedule 14D-9 prior to the filing thereof with the
SEC.
(c) In connection with the Offer, the Company shall cause its transfer
agent to promptly furnish Parent and Merger Sub with such information, including
updated lists of the stockholders of the Company, mailing labels and updated
lists of security positions, and such assistance as Parent, Merger Sub or their
agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Merger Sub
and their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will
deliver, and will use their reasonable efforts to cause their agents to deliver,
to the Company all copies and any extracts or summaries from such information
then in their possession or control.
1.3. Company's Board; Section 14(f).
------------------------------
(a) Promptly upon the purchase of Shares pursuant to the Offer, and
from time to time thereafter, if the Minimum Condition has been met, and subject
to the next sentence of this Section 1.3(a), Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company's Board as is equal to the product of the total number of directors on
the Company's Board (determined after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Parent or its affiliates bears to the
total number of Shares then outstanding; provided, however, that if Merger Sub
shall have acquired at least 90% of the outstanding Shares in the Offer, Parent
shall be entitled to designate all of the members of the Company's Board (the
"Parent Directors"). The Company shall, upon request of Parent, promptly take
----------------
all actions necessary to cause the Parent Directors to be so appointed,
including, if necessary, increasing the size of the Company's Board (to the
extent permitted by the Company's certificate of incorporation and bylaws)
and/or seeking the resignations of one or more existing directors; provided,
however, that if Merger Sub shall not have acquired at least 90% of the
outstanding Shares prior to the Effective Time (as defined in Section 2.3), the
Company's Board shall at all times have at least two members who are members of
the Company's Board on the date of this Agreement and are neither officers of
the Company or any of its Subsidiaries, or officers or directors of Parent or
any of its Affiliates (as defined in Section 9.2) ("Independent
-----------
5
Directors"). If the number of Independent Directors is reduced to one prior to
---------
the Effective Time, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall not be an officer or affiliate
of the Company or any of its Subsidiaries, or an officer, director or affiliate
of Parent or any of its Subsidiaries, and such person shall be deemed an
Independent Director for all purposes of this Agreement. If no Independent
Directors then remain, a majority of 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,
directors or affiliates of Parent or any of its Subsidiaries, and such persons
shall be deemed to be Independent Directors for all purposes of this Agreement.
(b) The Company's obligation to appoint the Parent Directors to the
Company's Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all action
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
such Section and Rule in order to fulfill its obligations under this Section
1.3. Parent 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 such Section and Rule.
(c) Following the election or appointment of the Parent Directors pursuant
to this Section 1.3 and prior to the Effective Time, if there shall be any
Independent Directors, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Merger Sub or
any waiver of any of the Company's rights hereunder, will require the
concurrence of a majority of such Independent Directors.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Upon the terms and subject to the conditions set forth in
----------
this Agreement, at the Effective Time, Merger Sub shall be merged with and into
the Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
---------------------
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in
Article III. The Merger shall have the effects specified in the DGCL. Parent, as
the sole stockholder of Merger Sub, hereby approves the Merger and this
Agreement.
2.2. Closing. The closing of the Merger (the "Closing") shall take place
------- -------
(i) at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx at 9:00 a.m., Pacific time, on the first Business Day after
the day on which the last to be fulfilled or waived of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and
6
time and/or on such other date as the Company and Parent may agree in writing
(the "Closing Date").
------------
2.3. Effective Time. As soon as practicable following the Closing, the
--------------
Company and Parent will cause a Certificate of Merger (the "Delaware Certificate
--------------------
of Merger") to be executed, acknowledged and filed with the Secretary of State
---------
of Delaware as provided in Section 251 or 253, as the case may be, of the DGCL.
The Merger shall become effective at the time when the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware (the
"Effective Time").
--------------
2.4. Options. At the Effective Time, all Company Options (whether vested or
-------
unvested) shall be cancelled and only entitle each holder thereof, and each
holder thereof shall receive from the Surviving Corporation, an amount in cash
equal to, for each share with respect to such Company Option, the excess, if
any, of (A) the Offer Price over (B) the per share exercise price under such
Company Option. Parent, or Merger Sub, as applicable, shall be entitled to
deduct or withhold from the cash consideration otherwise payable to a holder of
a Company Option any amounts required to be withheld under applicable tax laws.
ARTICLE III
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION; OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION
3.1. Certificate of Incorporation. The certificate of incorporation of the
----------------------------
Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
-------
duly amended as provided therein or by applicable Law, except that:
(a) Article Fourth of the Charter shall be amended to read in its
entirety as follows: "The aggregate number of shares that the Corporation shall
have the authority to issue is 1,000 shares of Common Stock, par value $.01 per
share;" and
(b) The first sentence of Article Fifth of the Charter shall be
amended to read as follows: "The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors consisting of not
less than two directors, the exact number of directors to be determined from
time to time by resolution adopted by the Board of Directors."
3.2. Bylaws. The bylaws of the Company in effect at the Effective Time
------
shall be the bylaws of the Surviving Corporation (the "Bylaws"), until
------
thereafter amended as provided therein or by applicable Law, subject to the
restrictions contained in Section 6.10(d).
3.3. Directors. The directors of Merger Sub at the Effective Time shall,
---------
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and Bylaws.
7
3.4. Officers. The officers of the Company at the Effective Time, with the
--------
exception of the Chairman who shall be the Chairman of Merger Sub, shall, from
and after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Charter and
Bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
-----------------------
Merger and without any action on the part of the holder of any Capital Stock (as
defined in Section 9.2) of the Company:
(a) Merger Consideration. Each Share issued and outstanding
--------------------
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect Subsidiary of Parent or Shares that
are owned by the Company or any direct or indirect Subsidiary of the Company
(collectively, the "Excluded Shares")) shall be converted into, and become
---------------
exchangeable for the Offer Price, without interest (the "Merger Consideration").
--------------------
At the Effective Time, all Shares shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each certificate (a
"Certificate") formerly representing any of such Shares (other than Excluded
-----------
Shares) shall thereinafter represent only the right to receive the Merger
Consideration.
(b) Cancellation 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.
(c) Merger Sub. At the Effective Time, each share of common stock, par
----------
value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
4.2. Exchange of Certificates for Payment.
------------------------------------
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
--------------
shall cause to be deposited, with an exchange agent selected by Parent (the
"Exchange Agent"), for the benefit of the holders of Shares, cash in U.S.
--------------
dollars in an amount equal to the Merger Consideration multiplied by the
aggregate outstanding Shares (other than Excluded Shares) to be paid pursuant to
Section 4.1(a) in exchange for outstanding Shares upon due surrender of the
Certificates (or affidavits of loss in lieu thereof) pursuant to the provisions
of this Article IV (such aggregate cash amount when paid to the Exchange Agent
being hereinafter referred to as the "Merger Fund").
-----------
(b) Exchange Procedures. Promptly after the Effective Time, the
-------------------
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal (which shall, among other matters,
8
specify that delivery of the Certificates shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual receipt of
the Certificates (or affidavits of loss in lieu thereof) by the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration due and payable to
such holder. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange
therefor a check in the amount (after giving effect to any required tax
withholdings) of the Merger Consideration due and payable in respect of
such holder's Shares and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on any amount payable upon
due surrender of the Certificates. All Merger Consideration paid upon
surrender for exchange of Shares in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
check for the amount of cash to be paid upon due surrender of the
Certificate may be delivered to such a transferee if the Certificate
formerly representing such Shares is presented to the Exchange Agent,
accompanied by all documents required by the Exchange Agent to evidence and
effect such transfer and to evidence that any applicable stock transfer
taxes have been paid.
(c) Transfers. After the Effective Time, there shall be no transfers
---------
on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(d) Termination of Merger Fund. Any portion of the Merger Fund
--------------------------
(including the proceeds of any investments thereof) that remains unclaimed
by the stockholders of the Company for 180 days after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their Merger Consideration payable pursuant to
Section 4.1 upon due surrender of their Certificates (or affidavits of loss
in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation,
the Exchange Agent nor any other Person shall be liable to any former
holder of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) Return of Consideration. Any portion of the Merger Fund
-----------------------
representing Merger Consideration payable in respect of Dissenters' Shares
(as defined in Section 4.3) for which appraisal rights have been perfected
shall be returned to Parent, upon demand.
(f) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in an amount determined by Parent as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to Section 4.1 upon
due surrender of the Certificate representing such Shares pursuant to this
Agreement.
9
4.3. Dissenters' Shares. Notwithstanding Section 4.1, Shares outstanding
--------------
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the DGCL ("Dissenters' Shares'")
-------------------
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses such holder's right
to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses such holder's right to appraisal, such Dissenters' Shares
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Merger Consideration. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Dissenters'
Shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Good Standing, Corporate Power and Qualification;
---------------------------------------------------------------
Subsidiaries and Other Interests.
--------------------------------
(i) Each of the Company and its Subsidiaries (x) is a corporation
duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization, (y) has all requisite
corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently
conducted and (z) is qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, individually and in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect (as
defined in Section 9.2). The Company has made available to Parent a
complete and correct copy of the Company's and its Subsidiaries'
certificates of incorporation and bylaws (or comparable governing
documents), each as amended to the date hereof. The Company's and its
Subsidiaries' certificates of incorporation and bylaws (or comparable
governing documents) are in full force and effect.
(ii) Section 5.1(a) of the Company Disclosure Schedule delivered
by the Company to Parent at least one (1) day prior to the date of
this Agreement (the "Company Disclosure Schedule") contains a correct
and complete list of each of the Company's Subsidiaries, the
jurisdiction where each of such Subsidiaries is organized and
qualified to do business and the percentage of outstanding Capital
Stock of such Subsidiaries that is directly or indirectly owned by the
Company.
(b) Capital Structure. The authorized Capital Stock of the Company
-----------------
consists of twenty million (20,000,000) Shares, of which 7,294,519 were
outstanding as of the date of this
10
Agreement. All of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no authorized
preferred stock. As of the date of this Agreement, there were 697,200
outstanding purchase rights or options to purchase Shares having an average
exercise price of $7.79 (each, a "Company Option"), including all Company
--------------
Options issued under the Company's (i) 1983 Stock Option Plan for Key
Employees, (ii) 1991 Stock Option Plan for Non-Employee Directors, and
(iii) 1993 Stock Option Plan for Key Employees, in each case as amended to
the date hereof (collectively, the "Stock Option Plans"). The Stock Option
------------------
Plans are the only plans under which any Company Options are outstanding.
As of the date of this Agreement, other than the Shares reserved for
issuance upon exercise of outstanding Company Options, there are no Shares
reserved for issuance or any commitments for the Company to issue Shares.
Each of the outstanding shares of Capital Stock or other securities of each
of the Company's Subsidiaries directly or indirectly owned by the Company
is duly authorized, validly issued, fully paid and nonassessable and owned
by the Company or by a direct or indirect Subsidiary of the Company, free
and clear of all Liens except for Permitted Liens (as defined in Section
9.2). Except for Company Options, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements or
commitments to issue or sell any shares of Capital Stock or other
securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire from the Company, any shares
of Capital Stock or other securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have
the right to vote (or convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter
("Voting Debt"). The Shares constitute the only class of securities of the
-----------
Company or any of its Subsidiaries registered or required to be registered
under the Exchange Act.
(c) Corporate Authority; Approval and Fairness.
------------------------------------------
(i) The Company has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to
consummate the Merger, subject (if required by law) only to approval
of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Requisite Vote"). Assuming due execution and
----------------------
delivery by Parent and Merger Sub, this Agreement is a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally
or by general principles of equity.
(ii) The Company's Board has by unanimous vote of the directors
present at such meeting approved this Agreement and the Merger and the
other transactions contemplated hereby including, without limitation,
the Offer, has received and reviewed the Fairness Opinion and duly
taken all other actions described in Sections 1.2(a) and 5.1(j).
(d) Governmental Filings; No Violations.
-----------------------------------
(i) Other than the filings and/or notices (A) pursuant to Section
1.2, (B) with the Delaware Secretary of State, (C) under the
Xxxx-Xxxxx-Xxxxxx Antitrust
11
Improvements Act of 1976, as amended (the "HSR Act", and a filing
-------
under the XXX Xxx, x "XXX Xxxxxx") xxx xxx Xxxxxxxx Xxx, (X) to comply
----------
with state securities or "blue sky" laws and (E) with the National
Association of Securities Dealers (the "NASD"), no notices, reports or
----
other filings are required to be made nor are any consents,
registrations, approvals, permits or authorizations (collectively,
"Government Consents") required to be obtained by the Company from any
-------------------
court or other governmental or regulatory authority, agency,
commission, body or other governmental or regulatory authority,
agency, commission, body or other governmental entity (a "Governmental
------------
Entity"), in connection with the execution and delivery of this
------
Agreement by the Company and the consummation by the Company of
the Merger and the other transactions contemplated hereby, except
those that the failure to make or obtain are not, individually and in
the aggregate, reasonably likely to result in a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by
this Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company does not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of or a default
under, the certificate of incorporation or bylaws of the Company or
the comparable governing instruments of any of its Subsidiaries, (B) a
breach or violation of, or a default under, the acceleration of any
obligations or the creation of any Lien on the assets of the Company
or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, contract, note, mortgage,
indenture or other obligation (a "Contract") binding upon the Company
--------
or any of its Subsidiaries or any order, writ, injunction, decree of
any court or any Law or governmental or non-governmental permit or
license to which the Company or any of its Subsidiaries is subject or
(C) any change in the rights or obligations of any party under any
Contract; except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, or change that, when taken
together with all other breaches, violations, defaults, accelerations
or changes, is not reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by
this Agreement.
(e) Company Reports; Financial Statements. The Company has made
-------------------------------------
available to Parent each registration statement, report, proxy statement or
information statement filed with the SEC by it in respect of the fiscal
year ended January 1, 2000 (the "Audit Date"), including the Company's
Annual Report on Form 10-K for the fiscal year ended January 1, 2000 (the
"Company 10-K"), in the form (including exhibits, annexes and any
------------
amendments thereto) filed with the SEC (collectively, including any such
reports filed subsequent to the date hereof, the "Company Reports"). As of
---------------
their respective dates, the Company Reports complied, and any Company
Reports filed with the SEC after the date hereof will comply, as to form in
all material respects with the applicable requirements of the Exchange Act
and the Securities Act of 1933, as amended, and the Company Reports did
not, and any Company Reports filed with the SEC after the date hereof will
not, at the time of their filing, 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 made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents, or will fairly present, the consolidated financial position of
the Company and its Subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position
included in or
12
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results
of operations, retained earnings and changes in financial position, as the
case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments), in each case in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied
----
during the periods involved, except as may be noted therein. For purposes
of this Agreement, "Balance Sheet" means the consolidated balance sheet of
-------------
the Company as of January 1, 2000 set forth in the Company 10-K. Except as
set forth in Company Reports filed with the SEC prior to the date hereof or
as incurred in the ordinary course of business since the date of the most
recent financial statements included in the Company Reports, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) which would
be required under GAAP to be set forth on a consolidated balance sheet
(including the notes thereto) of the Company and its Subsidiaries taken as
a whole and which individually or in the aggregate would have a Company
Material Adverse Effect.
(f) Absence of Certain Changes. Except as disclosed in Section 5.1(f)
--------------------------
of the Company Disclosure Schedule or in the Company Reports filed prior to
the date hereof, since the Audit Date, the Company and its Subsidiaries
have conducted their respective businesses in all material respects only
in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses consistent with past
practices, and there has not been any (i) change in the financial
condition, properties or results of operations of the Company and its
Subsidiaries, except for those changes that, individually and in the
aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect; (ii) material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased
or otherwise used by the Company or any of its Subsidiaries, not covered by
insurance; (iii) declaration, setting aside or payment of any dividend or
other distribution in respect of the Capital Stock of the Company or any of
its Subsidiaries (other than wholly-owned Subsidiaries) or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries
of any outstanding shares of Capital Stock or other securities of, or other
ownership interests in, the Company or any of its Subsidiaries; or (iv)
material change by the Company or any of its Subsidiaries in accounting
principles, practices or methods, except in so far as may have been
required by GAAP.
(g) Litigation and Liabilities. Except as disclosed in Section 5.1(g)
--------------------------
of the Company Disclosure Schedule or in the Company Reports filed prior to
the date hereof, and except for matters which, individually and in the
aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect or prevent, delay or impair the ability of the
Company to consummate the transactions contemplated by this Agreement,
there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries; or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, including those relating to
matters involving any Environmental Law (as defined in Section 5.1(k)); or
(iii) other facts or circumstances of which the executive officers of the
Company have knowledge that could result in any claims against, or
obligations or liabilities for, the Company or any of its Subsidiaries.
13
(h) Employee Benefits.
-----------------
(i) For purposes of this Agreement, "Compensation and Benefit
Plans" means, collectively, each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, severance, compensation, medical,
health, or other plan, agreement, policy or arrangement, whether
written or oral, that covers employees or directors of the Company or
any of its Subsidiaries, or pursuant to which former employees or
directors of the Company or any of its Subsidiaries are entitled to
current or future benefits. The Company has made available to Parent
copies of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
----- -------------
employee welfare benefit plans" (as defined in Section 3(1) of ERISA
and all other Compensation and Benefit Plans maintained by, or
contributed to, the Company or any of its Subsidiaries or any person
or entity that, together with the Company and its Subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended (the "Code") (the
Company and each such other person or entity, a "Commonly Controlled
-------------------
Entity") for the benefit of any current employees, officers or
------
directors of the Company or any of its Subsidiaries. The Compensation
and Benefit Plans are listed on Section 5(h)(i) of the Company
Disclosure Schedule. The Company has also made available to Parent
true, complete and correct copies of (1) the most recent annual report
on Form 5500 filed with the Internal Revenue Service with respect to
each Compensation and Benefit Plan (if any such report was required),
(2) the most recent summary plan description for each Compensation and
Benefit Plan for which such summary plan description is required and
(3) each trust agreement and group annuity contract related to any
Compensation and Benefit Plan. Each Compensation and Benefit Plan has
been administered in all material respects in accordance with its
terms. All of the Compensation and Benefit Plans are in substantial
compliance with applicable provisions of ERISA and the Code.
(ii) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such
Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since
the date of its most recent determination letter or application
therefor that would adversely affect its qualification or materially
increase its costs. Each Compensation and Benefit Plan is in
substantial compliance with all reporting and disclosure requirements
of ERISA and the Code and the Company, its Subsidiaries and each
Commonly Controlled Entity is, in respect of each such plan, in
compliance with the fiduciary responsibility provisions of ERISA.
(iii) Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been
obligated to contribute to any Compensation and Benefit Plan that is
subject to Title IV of ERISA.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely
made. Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity nor any officer, director or employee of
any of them has, in respect of any Compensation and Benefit Plan,
14
committed any prohibited transaction under ERISA Sections 406 or 407
or Code Section 4975 or otherwise incurred excise tax liability under
Chapters 43 and 47 under Subtitle D of the Code.
(v) Except as specifically disclosed on Section 5.1(h)(i) of the
Company Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (x) entitle any employees of
the Company or any of the Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Compensation and Benefit
Plans or (z) result in any payments under, any of the Compensation and
Benefit Plans which would not be deductible under Section 162(m) or
Section 280G of the Code.
(vi) All amendments and actions required to bring each of the
Compensation and Benefit Plans into conformity with all of the
applicable provisions of ERISA and other applicable laws have been
made or taken except to the extent that such amendments or actions are
not required by law to be made or taken until a date after the Closing
Date.
(vii) Except as disclosed in Section 5.1(h)(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries
provides any welfare benefits including health, life, or disability
insurance, pursuant to a welfare benefit plan (as defined in ERISA
Section 3(1)) or otherwise to any former employee except pursuant to
Section 4980B of the Code.
(viii) All Compensation and Benefit Plans maintained outside of
the United States comply in all material respects with applicable
local law. The Company and its Subsidiaries have no material unfunded
liabilities with respect to any such Compensation and Benefit Plan.
(i) Compliance with Laws. Except as otherwise specifically disclosed
--------------------
herein, the businesses of each of the Company and its Subsidiaries have not
been, and are not being, conducted in violation of any law, ordinance,
regulation, judgment, order, injunction, decree, arbitration award, license
or permit of any Governmental Entity (collectively, "Laws"), except for
violations or possible violations that, individually and in the aggregate,
have not had and are not reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement. To the knowledge of the Company, no material change is required
in the Company's or any of its Subsidiaries' processes, properties or
procedures in connection with any such Laws, and the Company has not
received any notice or communication of any material noncompliance with any
such laws that has not been cured as of the date hereof. The Company and
its Subsidiaries each has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and
approvals necessary to conduct its business as presently conducted except
those the absence of which are not, individually and in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to
consummate the Merger and the other transactions contemplated by this
Agreement.
15
(j) Takeover Statutes. No "fair price", "moratorium" or "control share
-----------------
acquisition" anti-takeover statute or regulation of the States of Delaware
or California (each a "Takeover Statute") is applicable to the Company, the
----------------
Shares, the Offer, the Merger or any of the other transactions contemplated
by this Agreement. The Company's Board has approved the Offer, the Merger
and this Agreement, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement, and the transactions contemplated
by this Agreement the provisions of Section 203 of DGCL to the extent, if
any, such Section is applicable to the Offer, the Merger, this Agreement
and the transactions contemplated by this Agreement.
(k) Environmental Matters.
---------------------
(i) The term "Environmental Laws" means any Federal, state, local
------------------
or foreign statute, treaty, ordinance, rule, regulation, policy,
permit, consent, approval, license, agency requirement, judgment,
order, decree, common law or injunction relating to: (A) Releases (as
defined in 42 U.S.C.(S) 9601(22)) or threatened Releases of Hazardous
Material (as hereinafter defined) into the environment, (B) the
generation, treatment, storage, presence, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C)
natural resources, or (D) the protection of human health or the
environment, and includes all "Environmental Laws" as they are defined
in any indemnification provision in any contract, lease, or agreement
to which Company is a party. The term "Hazardous Material" means (1)
------------------
any substance regulated under any Environmental Law due to its harmful
or potentially harmful effects, including hazardous substances (as
defined in 42 U.S.C. (S) 9601(14)), (2) petroleum, including crude oil
and any fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) asbestos and/or asbestos containing materials,
(5) PCBs or materials containing PCBs, (6) radioactive materials, and
(7) "Hazardous Substance" or "Hazardous Material" as those terms are
defined in any indemnification provision in any contract, lease, or
agreement to which the Company is a party.
(ii) Except as specifically disclosed on Section 5.1(k) of the
Company Disclosure Schedule, during the period of ownership or
operation by the Company and its Subsidiaries of any of their current
or previously owned, leased or operated properties, (A) there have
been no Releases of Hazardous Material or contamination in, on, under
or affecting such properties or any surrounding site, and (B) neither
the Company nor any of its Subsidiaries has disposed of any Hazardous
Material in a manner that has led, or could reasonably be anticipated
to lead to a Release or contamination except as disclosed in the
Company Reports. The Company and its Subsidiaries have not received
any notice of, or entered into any order, settlement, contract,
indemnity or decree relating to: (1) any violation of or liability
under any Environmental Laws or the institution, pendency or threat of
any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged
violation of Environmental Laws; or (2) the investigation, response to
or remediation of Hazardous Material at or arising from any property.
The properties currently owned or operated by the Company or any of
its Subsidiaries possess all material permits, licenses,
authorizations and approvals required under applicable Environmental
Laws with respect to the conduct of business thereat and are in
compliance with all Environmental Laws.
(iii) Except as specifically disclosed on Section 5.1(k) of the
Company Disclosure Schedule, none of the properties of the Company or
any Subsidiary contains any
16
underground storage tanks, asbestos-containing material, lead
products, or polychlorinated biphenyls and there are no other
circumstances or conditions involving the Company or any Subsidiary
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or
transfer of any property in connection with any Environmental Law.
(iv) The Company has delivered to Purchaser copies of all
environmental reports, studies, assessments, sampling data and other
material environmental information in its possession relating to the
Company or any Subsidiary or any of their current or former properties
or operations.
(l) Taxes. Except as set forth on Section 5.1(l) of the Company
-----
Disclosure Schedule, (i) the Company and its Subsidiaries have timely filed
or will timely file all returns and reports required to be filed by them
with any taxing authority with respect to Taxes for any period ending on or
before the date hereof, taking into account any extension of time to file
granted to or obtained on behalf of the Company or any of its Subsidiaries,
and all such returns and reports are correct and complete in all material
respects; (ii) all Taxes shown to be payable on such returns or reports
that are due prior to the date hereof have been timely paid; (iii) as of
the date hereof, no deficiency for any amount of Tax has been asserted or
assessed or, to the Company's knowledge, has been threatened or is likely
to be assessed by a taxing authority against the Company or any of its
Subsidiaries other than deficiencies as to which adequate reserves have
been provided for in the Company's consolidated financial statements; (iv)
the Company has provided in accordance with GAAP adequate reserves in its
consolidated financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns; (v) no claim has ever
been made by an authority in a jurisdiction where the Company or any of its
Subsidiaries does not file tax returns that any of the Company or its
Subsidiaries is or may be subject to taxation by that jurisdiction; and
(vi) neither the Company nor any Subsidiary has been included in any
consolidated, combined or unitary tax return (other than for a group of
which the Company is the common parent) provided for under the laws of the
United States, any state or locality with respect to Taxes for any taxable
period for which the statute of limitations has not expired; and neither
the Company nor any Subsidiary has any liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. For purposes of this Agreement, "Taxes" means any
-----
and all taxes, fees, levies, duties, tariffs, imposts and other charges of
any kind (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any
Governmental Entity or other taxing authority, including taxes or other
charges on or with respect to net or gross income, franchises, windfall or
other profits, gross receipts, property, sales, use, Capital Stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customers' duties,
tariffs and similar charges. Neither the Company nor any of its
Subsidiaries is subject to any Tax sharing agreement. No payments to be
made to any of the employees of the Company or any of its Subsidiaries
will, as a direct or indirect result of the Offer or the consummation of
the Merger, be subject to the deduction limitations of Section 280G of the
Code.
17
(m) Labor Matters. Except as disclosed in Section 5.1(m) of the
-------------
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization, nor is the Company or any of its Subsidiaries the
subject of any proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization, nor is there
pending or, to the knowledge of the Company, threatened, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving the Company
or any of its Subsidiaries. The Company has previously made available to
Parent correct and complete copies of all labor and collective bargaining
agreements, Contracts or other agreements or understandings with a labor
union or labor organization to which the Company or any of its Subsidiaries
is party or by which any of them are otherwise bound (collectively, the
"Company Labor Agreements"). The consummation of the Merger and the other
transactions contemplated by this Agreement will not entitle any third
party (including any labor union or labor organization) to any payments
under any of the Company Labor Agreements.
((n) Brokers and Finders. Neither the Company nor any of its
-------------------
Subsidiaries, officers, directors, or employees or other Affiliates has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement, except that the
Company has employed the Financial Advisor, the arrangements with which
have been partially disclosed to Parent prior to the date hereof.
(o) Certain Business Practices. Neither the Company, nor any of its
--------------------------
Subsidiaries nor any directors, officers, agents or employees of the
Company or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iii) made any other payment
prohibited by applicable Law.
(p) Insurance. All material fire and casualty, general liability,
---------
business interruption, product liability, title, and sprinkler and water
damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, and are in character
and amount at least reasonable and customary to those carried by persons
engaged in similar businesses and subject to the same or similar perils or
hazards, except for any such failures to maintain insurance policies that,
individually and in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.
(q) Intellectual Property. Except as specifically disclosed on Section
---------------------
5.1(q) of the Company Disclosure Schedule, the Company and/or each of its
Subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how,
computer software programs or applications, and tangible or intangible
proprietary information or materials that are used in the business of the
Company and its Subsidiaries as currently conducted, except for any such
failures to own, be licensed or possess that, individually and in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect, and to the
18
knowledge of the Company all patents, trademarks, trade names, service
marks and copyrights held by the Company and/or its Subsidiaries are valid
and subsisting.
(r) Rights Plan.
-----------
(i) The Company's Board has taken all necessary action such that
neither Parent, Merger Sub, nor any of Parent's other Subsidiaries
will be a "Beneficial Owner" of and shall not be deemed to
----------------
"beneficially own" any Shares of the Common Stock as a result of the
----------------
Offer, the Merger, this Agreement or any of the transactions
contemplated by this Agreement, the terms "beneficially own" and
----------------
"Beneficial Owner" carrying the meaning ascribed to those terms in
----------------
Section 1(c) of the Rights Agreement (the "Rights Agreement"), dated
----------------
as of April 3, 1989, between the Company and ChaseMellon Shareholder
Services, L.L.C. (successor under the Rights Agreement to Security
Pacific National Bank), as amended by an amendment dated as of March
23, 1999.
(ii) Pursuant to Sections 7(a) and 13(b) of the Rights Agreement,
on Closing Date the Rights Agreement and the rights of holders of rights
thereunder shall be terminated.
(s) Contracts. Except as set forth on Section 5.1(s) of the Company
---------
Disclosure Schedule, which Section sets forth by paragraph the disclosures
relating to this Section 5.1(s), neither the Company nor any of its
Subsidiaries is a party to or bound by any material Contract:
(i) pursuant to which a consent or waiver is or may be required
prior to consummation of the Offer, the Merger or the other
transactions contemplated by this Agreement;
(ii) prohibiting or limiting its ability (A) to engage in any
line of business, (B) to compete with any person, or (C) to disclose
any confidential information in its possession (and not otherwise
generally available to the public) that could reasonably be expected
to have material commercial value;
(iii) with any director, officer, employee, agent, consultant,
advisor or representative for employment or for consulting,
independent contracting or similar services or containing any
severance or termination pay obligations;
(iv) granting a Lien upon any of its properties or assets, except
for Permitted Liens;
(v) pursuant to which it purchases materials, supplies or
equipment and which calls for future payments in excess of $250,000 in
any year;
(vi) that is a joint venture agreement, a license or a
representative or distributorship agreement that purports to create a
strategic partnership between the Company or any of its Subsidiaries
and a representative or distributor;
19
(vii) providing for the acquisition or disposition after the date
of this Agreement of any significant amount of assets; or
(viii) not entered into in the ordinary course of business.
(t) Real Property and Other Assets. Each piece of real property owned
------------------------------
by the Company or its Subsidiaries is set forth on Section 5.1(t) of the
Company Disclosure Schedule. The Company and each of its Subsidiaries has
good, valid and marketable title to its respective properties and material
assets, and a valid leasehold interest in all real and personal property
leased by it, in each case free and clear of all Liens, except as set forth
on Section 5.1(t) of the Company Disclosure Schedule, and except for
Permitted Liens that are not substantial in amount and that do not detract
from the value or impair the present use of any of the property or assets
subject thereto or affected thereby or the business operations of the
Company in any material respect.
5.2. Representations and Warranties of Parent and Merger Sub. Parent and
-------------------------------------------------------
Merger Sub each hereby represents and warrants to the Company as follows:
(a) Organization, Good Standing and Qualification. Each of Parent and
---------------------------------------------
Merger Sub (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, (ii)
has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and (iii) is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the ownership or operation
of its properties or conduct of its business requires such qualification,
except where the failure to be so qualified or in such good standing, when
taken together with all other such failures, has not had and is not
reasonably likely to have a Parent Material Adverse Effect (as defined in
Section 9.2). Parent has made available to the Company a complete and
correct copy of Parent's charter documents, as amended to the date hereof.
Parent's charter documents so delivered are in full force and effect.
(b) Ownership of Merger Sub. All of the issued and outstanding Capital
-----------------------
Stock of Merger Sub is, and at the Effective Time will be, owned by Parent,
and there are no (i) other outstanding shares of Capital Stock or other
voting securities of Merger Sub, (ii) securities of Merger Sub convertible
into or exchangeable for shares of Capital Stock or other voting securities
of Merger Sub or (iii) options or other rights to acquire from Merger Sub,
and no obligations of Merger Sub to issue, any Capital Stock, other voting
securities or securities convertible into or exchangeable for Capital Stock
or other voting securities of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
(c) Corporate Authority.
-------------------
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this
Agreement and to consummate the Offer and the Merger. Assuming due
execution and delivery by the Company, this Agreement is a valid and
binding
20
agreement of Parent and Merger Sub, enforceable against each of them
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally
or by general principles of equity.
(ii) The Boards of Directors of Parent and Merger Sub have
unanimously approved this Agreement and the Merger and the other
transactions contemplated hereby, including, without limitation, the
Offer.
(d) Governmental Filings; No Violations.
-----------------------------------
(i) Other than the filings and/or notices (A) pursuant to Section
1.1, (B) under the HSR Act and the Exchange Act, (C) to comply with
state securities or "blue sky" laws, and (D) required to be made with
the NASD, no notices, reports or other filings are required to be made
by Parent or Merger Sub with, nor are any Government Consents required
to be obtained by Parent or Merger Sub from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by
Parent and Merger Sub, the Offer and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of,
or a default under, the certificate of incorporation or bylaws of
Parent or Merger Sub, (B) a breach or violation of, or a default
under, the acceleration of or the creation of a Lien on the assets of
Parent or any of its Subsidiaries (with or without notice, lapse of
time or both) pursuant to, any Contract binding upon Parent or any of
its Subsidiaries or any Law to which Parent or any of its Subsidiaries
is subject or (C) any change in the rights or obligations of any party
under any such Contract, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(e) Brokers and Finders. Neither Parent nor Merger Sub, nor any of
-------------------
their respective officers, directors, employees or other Affiliates, has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement.
(f) Financing. Parent and Merger Sub have possession of, or have
---------
available to them under existing lines of credit and on the Expiration Date
of the Offer and at the Effective Time, Parent and Merger Sub will have
possession of, or have available, all the funds necessary for the
acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all Shares validly tendered in the Offer or outstanding
as of the Effective Time.
21
(g) Share Exchange Option Agreement. Parent has entered into a binding
-------------------------------
agreement (the "Option Agreement") with Camfil AB ("Camfil") providing
---------------- ------
that, should the transactions contemplated by this Agreement, including the
purchase by Merger Sub of 100% of the Common Stock, be consummated and
should the Common Stock be delisted from the Nasdaq National Market System
and cease to be registered under the Exchange Act, Parent shall have the
option to require Camfil to purchase all of its holdings of shares of the
Surviving Corporation in exchange for shares of Camfil representing a
minority interest therein (the "Transfer"). Following the Transfer, should
it be effected, the Surviving Corporation would become a wholly owned
subsidiary of Camfil. From the Transfer Date (as defined in the Option
Agreement) forward, Camfil shall assume all of the obligations of Parent
under this Agreement.
(h) Environmental Reports. Parent has made available to the Company
---------------------
copies of all written environmental reports received by it relating to any
of the properties of the Company.
ARTICLE VI
COVENANTS
6.1. Interim Operations. The Company covenants and agrees as to itself and
------------------
its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, which approval shall not be
unreasonably withheld or delayed, and except as otherwise expressly contemplated
by this Agreement):
(a) The business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use commercially reasonable efforts to preserve its
business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
(b) It shall not, (i) issue, sell or otherwise dispose of or subject
to any Lien (other than Permitted Liens) any of its Subsidiaries' Capital
Stock owned by it; (ii) amend its charter or bylaws, except for any
amendment contemplated by this Agreement; (iii) split, combine or
reclassify its outstanding shares of Capital Stock; (iv) declare, set aside
or pay any dividend payable in cash, stock or property in respect of any
Capital Stock; (v) repurchase, redeem or otherwise acquire or permit any of
its Subsidiaries to purchase or otherwise acquire, any shares of its
Capital Stock or any securities convertible into or exchangeable or
exercisable for any shares of its Capital Stock; or (vi) adopt a plan of
complete or partial liquidation or dissolution, merger or otherwise
restructure or recapitalize or consolidate with any Person other than
Merger Sub or another wholly-owned Subsidiary of Parent;
(c) Neither it nor any of its Subsidiaries shall (i) authorize for
issuance or issue, sell or otherwise dispose of or subject to any Lien
(other than Permitted Liens) any shares of, or securities convertible into
or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its Capital
Stock of any class or any Voting Debt (other than Shares issuable pursuant
to Company Options outstanding on the date hereof); (ii) other than in the
ordinary and usual course of business, transfer, lease, license,
22
guarantee, sell or otherwise dispose of or subject to any Lien (other than
Permitted Liens) any other property or assets or incur or modify any
material indebtedness or other liability (except for additional borrowings
in the ordinary course under lines of credit in existence on the date
hereof); (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except in the ordinary course of business
and except for obligations of Subsidiaries of the Company incurred in the
ordinary course of business; (iv) make any loans to any other Person (other
than to Subsidiaries of the Company or, customary loans or advances to
employees in connection with business-related travel in the ordinary course
of business consistent with past practices); or (v) make any commitments
for, make or authorize any capital expenditures other than in amounts less
than $250,000 individually and $1,000,000 in the aggregate or, by any
means, make any acquisition of, or investment in, assets or stock of any
other Person;
(d) Except as may be required to comply with applicable law or by
existing contractual commitments, neither it nor any of its Subsidiaries
shall (i) enter into any new agreements or commitments for any severance or
termination pay to, or enter into any employment or severance agreement
with, any of its directors, officers or employees or consultants except for
reasonable severance payments made to employees in the ordinary course of
business and consistent with past practices, or (ii) terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plan or increase or accelerate the
salary, wage, bonus or other compensation of any employees or directors
(except for increases occurring in the ordinary and usual course of
business, which shall include normal periodic performance reviews and
related compensation and benefit increases, but not any general
across-the-board increases) or consultants or pay or agree to pay any
pension, retirement allowance or other employee benefit not required by any
existing Compensation and Benefit Plan;
(e) Neither it nor any of its Subsidiaries shall, except as may be
required as a result of a change in law or in GAAP, change any of the
accounting principles, practices or methods used by it;
(f) Neither it nor any of its Subsidiaries shall revalue in any
respect any of its material assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practices;
(g) Neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or terminate or materially amend or
modify any of its material Contracts or waive, release or assign any
material rights or claims;
(h) Neither it nor any of its Subsidiaries shall make any Tax election
or permit any insurance policy naming it as a beneficiary or loss-payable
payee to be canceled or terminated;
(i) Neither it nor any of its Subsidiaries shall take any action or
omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect; and
23
(j) Neither it nor any of its Subsidiaries will authorize or enter
into any agreement to do any of the foregoing.
6.2. Third Party Acquisitions.
------------------------
(a) The Company agrees that neither it nor any of its Subsidiaries nor
any of its or its Subsidiaries' employees or directors shall, and it shall
direct and use its best efforts to cause its and its Subsidiaries' agents
and representatives (including the Financial Advisor or any other
investment banker and any attorney, consultant or accountant retained by it
or any of its Subsidiaries (collectively, "Company Advisors")) not to,
----------------
directly or indirectly, initiate, solicit or otherwise facilitate any
inquiries in respect of, or the making of any proposal for, a Third Party
Acquisition (as defined in Section 6.2(b)). The Company further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
employees or directors shall, and it shall direct and use its best efforts
to cause all Company Advisors not to engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any Third Party (as defined in Section 6.2(b)) relating to the
proposal of a Third Party Acquisition, or otherwise attempt to make or
implement a Third Party Acquisition; provided, however, that if at any time
prior to the acceptance for payment of Shares pursuant to the Offer, the
Company's Board determines in good faith, after taking into consideration
the advice of its outside legal counsel, that it is likely to be required
in order for its members to comply with their fiduciary duties under
applicable law, the Company may, in response to an inquiry, proposal or
offer for a Third Party Acquisition which was not solicited subsequent to
the date hereof, (x) furnish non-public information with respect to the
Company to any such person pursuant to a confidentiality agreement on terms
substantially similar to the confidentiality agreement entered into between
the Company and Parent prior to the execution of this Agreement and (y)
participate in discussions and negotiations regarding such inquiry,
proposal or offer; and provided, further, that nothing contained in this
Agreement shall prevent the Company or the Company's Board from complying
with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard
to any proposed Third Party Acquisition or withdrawing its recommendation
of the Offer or the Merger pursuant to Section 6.2(b). The Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Third Parties conducted heretofore
with respect to any of the foregoing. The Company shall take the necessary
steps to promptly inform all Company Advisors of the obligations undertaken
in this Section 6.2(a). The Company agrees to notify Parent as promptly as
reasonably practicable in writing if (i) any inquiries relating to or
proposals for a Third Party Acquisition are received by the Company, any of
its Subsidiaries or any of the Company Advisors, (ii) any confidential or
other non-public information about the Company or any of its Subsidiaries
is requested from the Company, any of its Subsidiaries or any of the
Company Advisors, or (iii) any negotiations or discussions in connection
with a possible Third Party Acquisition are sought to be initiated or
continued with the Company, any of its Subsidiaries or any of the Company
Advisors, and thereafter shall keep Parent informed in writing, on a
reasonably current basis, on the status of any such proposals or offers and
the status of any such negotiations or discussions. The Company also agrees
promptly to request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring
the Company or any of its Subsidiaries, if any, to return all confidential
information heretofore furnished to such Person by or on behalf of the
Company or any of its Subsidiaries.
24
(b) Except as permitted by this Section 6.2(b), the Company's Board
shall not withdraw its recommendation of the Offer or the Merger and the other
transactions contemplated hereby or approve or recommend, or cause the Company
to enter into any agreement with respect to, any Third Party Acquisition.
Notwithstanding the preceding sentence, if the Company's Board determines in its
good faith judgment, after taking into consideration the advice of its outside
legal counsel, that it is likely to be required in order for its members to
comply with their fiduciary duties under applicable law, the Company's Board may
withdraw its recommendation of the Offer or the Merger and the other
transactions contemplated hereby, or approve or recommend or cause the Company
to enter into an agreement with respect to a Superior Proposal (as defined
below); provided, however, that the Company shall not be entitled to enter into
any agreement with respect to a Superior Proposal unless this Agreement is
concurrently terminated by its terms pursuant to Section 8.3(c). For purposes of
this Agreement, "Third Party Acquisition" means the occurrence of any of the
-----------------------
following events: (i) the acquisition of the Company by merger or otherwise by
any Person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) other than Parent, Merger Sub or any Affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of 15% or more
-----------
of the total assets of the Company and its Subsidiaries, taken as a whole (other
than the purchase of the Company's products in the ordinary course of business);
(iii) the acquisition by a Third Party of 15% or more of the outstanding Shares;
(iv) the adoption by the Company of a plan of partial or complete liquidation or
the declaration or payment of an extraordinary dividend; (v) the repurchase by
the Company or any of its Subsidiaries of 15% or more of the outstanding Shares;
or (vi) the acquisition by the Company or any of its Subsidiaries by merger,
purchase of stock or assets, joint venture or otherwise of a direct or indirect
ownership interest or investment in any business whose annual revenues, net
income or assets are equal to or greater than 15% of the annual revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole. For
purposes of this Agreement, a "Superior Proposal" means any bona fide
-----------------
proposal to acquire directly or indirectly for consideration consisting of cash
and/or securities more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and its Subsidiaries, taken as a
whole, and otherwise on terms which the Board of Directors of the Company by a
majority vote determines in its good faith judgment (after consultation with the
Financial Advisor or another financial adviser of nationally recognized
reputation) to be reasonably capable of being completed (taking into account all
material legal, financial, regulatory and other aspects of the proposal and the
Third Party making the proposal, including the availability of financing
therefor and the payments contemplated by Section 8.5(b)(ii)) and more favorable
to the Company's stockholders from a financial point of view than the
transactions contemplated by this Agreement.
6.3. Filings; Other Actions; Notification.
------------------------------------
(a) If a vote of the Company's stockholders is required by law in
order to consummate the Merger, the Company shall promptly, following
consummation of the Offer, prepare and file with the SEC the Proxy Statement,
which shall include the recommendation of the Company's Board that stockholders
of the Company vote in favor of the approval and adoption of this Agreement and
the written opinion of the Financial Advisor that the cash consideration to be
received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing, and
25
promptly thereafter mail the Proxy Statement to the stockholders of the Company.
The Company shall also use its best efforts to obtain all necessary state
securities law or "blue sky" permits and approvals required in connection with
the Merger and to consummate the other transactions contemplated by this
Agreement and will pay all expenses incident thereto.
(b) Upon and subject to the terms and conditions set forth in this
Agreement, the Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) all reasonable efforts to take
or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable Laws to
consummate and make effective the Offer, the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all permits, consents, approvals and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Offer, the Merger or any of the
other transactions contemplated by this Agreement; provided, however, that
nothing in this Section 6.3 shall require, or be construed to require, Parent to
proffer to, or agree to, sell or hold separate and agree to sell, before or
after the Effective Time, any material assets, businesses or any interest in any
material assets or businesses of Parent, the Company or any of their respective
Affiliates (or to consent to any sale, or agreement to sell, by the Company of
any of its material assets or businesses) or to agree to any material change in
or material restriction on the operations of any such assets or businesses;
provided, further, that nothing in this Section 6.3 shall require, or be
construed to require, a proffer or agreement that would, in the reasonable
judgment of Parent, be likely to have a material adverse effect on the
anticipated financial condition, properties, business or results of operations
of the Company or the Parent and its Subsidiaries after the Merger, taken as a
whole, in order to obtain any necessary or advisable consent, registration,
approval, permit or authorization from any Governmental Agency. Subject to
applicable Laws relating to the exchange of information, Parent and the Company
shall have the right to review in advance, and to the extent practicable each
will consult the other on, all the information relating to Parent or the
Company, as the case may be, and any of their respective Subsidiaries, that
appears in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity in connection with the Offer, the Merger
and the other transactions contemplated by this Agreement, including the Proxy
Statement. In exercising the foregoing right, the Company and Parent shall act
reasonably and as promptly as practicable.
(c) The Company and Parent have prior to the date hereof exchanged
information relating to the HSR Filings, and the Company agrees to file under
the HSR Act within one Business Day after the filing by Parent. Each of the
Company and Parent shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with filings pursuant to the HSR Act, the Proxy Statement or any
other statement, filing, notice or application made by or on behalf of Parent,
the Company or any of their respective Subsidiaries to any Governmental Entity
or other Person (including the NASD) in connection with the Offer, the Merger
and the other transactions contemplated by this Agreement.
26
(d) Each of the Company and Parent shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their respective Subsidiaries, from any Third Party and/or any Governmental
Entity alleging that the consent of such third party or Governmental Entity is
or may be required with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give prompt notice to the other of (i) the occurrence or non-occurrence of
any fact or event which would be reasonably likely (x) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (y) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied and (ii) any failure of the
Company, Parent or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.4. Information Supplied. Each of Parent and the Company agrees, as to
--------------------
information provided by itself and its Subsidiaries, that none of the
information included or incorporated by reference in the proxy statement, if
any, delivered by the Company to its stockholders in connection with the Merger
and any amendment or supplement thereto (the "Proxy Statement") will, at the
---------------
time the Proxy Statement is cleared by the SEC, at the date of mailing to
stockholders of the Company, and at the time of the Stockholders Meeting (as
defined in Section 6.5), 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, in light of the circumstances under which they were
made, not misleading.
6.5. Stockholders Meeting.
--------------------
(a) If a vote of the Company's stockholders is required by law in
order to consummate the Merger, the Company will, following consummation of the
Offer, take, in accordance with applicable Law and its certificate of
incorporation and bylaws, all action necessary to convene a meeting of holders
of Shares (the "Stockholders Meeting") as promptly as practicable after the
--------------------
Proxy Statement is cleared by the SEC to consider and vote upon the approval of
this Agreement. The Proxy Statement shall include a statement that the Company's
Board approved this Agreement and recommended that the Company's stockholders
vote in favor of this Merger, and the Company shall use all reasonable and
customary efforts to solicit such approval; provided, however, that if the
Company's Board determines in good faith, after taking into consideration the
advice of its outside legal counsel, that the Proxy Statement not containing
such recommendation is likely to be required in order for its members to comply
with their fiduciary duties under applicable law, then any failure of the Proxy
Statement to contain such recommendation shall not constitute a breach of this
Agreement. Notwithstanding the foregoing, if Parent, Merger Sub and/or any other
Subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after consummation of the Offer without
a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) Following the purchase of Shares, if any, pursuant to the Offer,
Parent shall ensure that all such Shares purchased continue to be held by
Parent, Merger Sub, and/or a
27
direct or indirect wholly-owned Subsidiary of Parent until such time as the
Merger is consummated. At the Stockholders Meeting, Parent agrees to cause all
Shares purchased pursuant to the Offer and all other Shares owned by Parent,
Merger Sub or any Subsidiary of Parent to be voted in favor of the Merger.
6.6. Access. Upon reasonable notice, and except as may otherwise be
------
required by applicable law or relevant contractual provisions contained in such
agreements, the Company shall (and shall cause its Subsidiaries to) (i) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives (collectively, "Representatives") access, during normal business
---------------
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, (ii) furnish promptly to
Parent all information concerning its business, properties and personnel as may
reasonably be requested; provided, however, that no investigation pursuant to
this Section 6.6 shall affect or be deemed to modify any representation or
warranty made by the Company. All requests for information made pursuant to this
Section 6.6 shall be directed to an executive officer of the Company or such
Person as may be designated by its officers. All of the information provided to
or obtained by Parent, its Affiliates and Representatives shall be treated as
"Confidential Information" under, and the parties shall comply with, and shall
cause their respective Representatives to comply with, all their respective
obligations under, the Mutual Confidentiality Agreement entered into on December
31, 1999 between the Company and Camfil (the "Confidentiality Agreement").
-------------------------
6.7. Publicity. The initial press release concerning the Merger has been
---------
approved by Parent and the Company and thereafter the Company and its
Subsidiaries, on the one hand, and Parent and Merger Sub, on the other hand,
shall consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings with
any Governmental Entity or other Person (including the New York Stock Exchange
or the NASD) with respect hereto, except as may be required by law or by
obligations pursuant to any listing agreement.
6.8. Status of Company Employees; Employee Benefits. Parent agrees that
----------------------------------------------
following the Effective Time, the employees of the Company and its Subsidiaries
who are employed by the Surviving Corporation or its Subsidiaries ("Company
-------
Employees") shall continue participating in the employee benefit plans and
---------
arrangements maintained by the Company, and Parent shall cause the Surviving
Corporation to honor in accordance with their terms all employee benefit
obligations to current and former employees under the Compensation and Benefit
Plans in existence on the date hereof (including, without limitation, the plans
and agreements listed on Section 5.1(h)(i) of the Company Disclosure Schedule)
and all employment or severance agreements entered into by the Company
(collectively, the "Employment and Severance Agreements"); it being understood
----------------------------------- -------------------
that nothing contained herein shall limit or restrict the ability of Parent or
Camfil to modify or terminate any Compensation and Benefit Plan, or to merge any
Compensation and Benefit Plan with any other plan, other than the Employment and
Severance Agreements, following the Effective Time.
6.9. Expenses. The Surviving Corporation shall pay all charges and
--------
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV. Except as otherwise provided in
Sections 8.5, whether or not the Merger is
28
consummated, all costs and expenses incurred in connection with this Agreement
and the Merger and the other transactions contemplated by this Agreement shall
be paid by the party incurring such expense.
6.10. Indemnification.
---------------
(a) From and after the Effective Time, Parent and the Surviving
Corporation shall jointly and severally indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of this Agreement
or who becomes prior to the Effective Time a director, officer, employee or
agent of the Company or any of its Subsidiaries, excluding QF Filter Sdn. Bhd.
(when acting in such capacity) (each individually, an "Indemnified Party", and
-----------------
collectively, the "Indemnified Parties"), against any costs or expenses
--------------------
(including reasonable attorneys' fees and expenses), judgments, settlement
amounts, fines, losses, claims, demands, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
-----
investigation, whether civil, criminal or administrative (each, a "Claim")
-----
arising out of matters existing or occurring prior to or after the Effective
Time, whether threatened, asserted or claimed prior to, at or after the
Effective Time, which is based in whole or in part on, or arising in whole or in
part out of the fact that such person is or was a director (including as a
member of the Special Committee) or officer of the Company or any of its
Subsidiaries including, without limitation, all Costs based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, including the Offer and the Merger, to the
fullest extent that the Company would have been permitted under the DGCL and its
certificate of incorporation, bylaws and other agreements in effect on the date
hereof to indemnify such individual. Parent shall, or shall cause the Surviving
Corporation to, pay all Costs in advance of the final disposition of any Claim
to each Indemnified Party to the fullest extent provided in the Company's
certificate of incorporation or bylaws as in effect on the date hereof, subject
to receipt by Parent or the Surviving Corporation of an undertaking by or on
behalf of such Indemnified Party contemplated by Section 145(e) of the DGCL.
Without limiting the generality or effect of the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or after
the Effective Time) and, in the opinion of counsel to an Indemnified Party,
under applicable standards of professional conduct, there is a conflict on any
significant issue between the position of the Surviving Corporation and an
Indemnified Party, the Indemnified Parties may retain counsel of their choice,
which counsel shall be reasonably satisfactory to Parent and the Surviving
Corporation (it being understood that Xxxxxx, Xxxx & Xxxxxxxx LLP is acceptable
to Parent and the Surviving Corporation), and Parent shall, or shall cause the
Surviving Corporation to, pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received. The
Indemnified Parties as a group may not retain more than one law firm (in
addition to local counsel) to represent them with respect to each such matter
unless there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The Company,
Parent and the Merger Sub (or the Surviving Corporation after the Effective
Time) agree that all rights to indemnification, including provisions relating to
advances of Costs incurred with respect to matters occurring through the
Effective Time, shall survive six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Claim asserted or
made within such period shall continue until the disposition of such Claim.
29
(b) Any Indemnified Party wishing to claim indemnification under
subsection (a) of this Section 6.l0, upon learning of any such Claim, shall
promptly notify Parent and the Surviving Corporation thereof (but the failure so
to notify Parent and the Surviving Corporation shall not relieve them from any
liability which they may have under this Section 6.10 except to the extent such
failure materially prejudices such party). In the event of any such Claim
(whether arising before or after the Effective Time), Parent and the Surviving
Corporation shall have the right to assume the defense of any Claim for which an
Indemnified Party is entitled to indemnification under subsection (a) of this
Section 6.10 with counsel reasonably acceptable to such Indemnified Party (which
right shall not affect the right of the Indemnified Parties to be reimbursed for
fees and expenses of separate counsel under the circumstances specified in
Section 6.10(a)). Except as otherwise provided in this Section 6.10, neither the
Parent nor the Surviving Corporation shall be liable to any such Indemnified
Party for any legal expenses of other counsel or any other expenses incurred by
such Indemnified Party in connection with the defense thereof after either the
Parent or the Surviving Corporation, as the case may be, have assumed the
defense of such Claim. The Indemnified Party will cooperate in all respects as
reasonably requested by Parent or the Surviving Corporation, as the case may be,
in the defense of any such matter and in connection therewith, shall be entitled
to reimbursement by Parent of reasonable expenses incurred in connection
therewith on a current basis. Neither Parent nor the Surviving Corporation, as
the case may be, shall have any obligation hereunder to any Indemnified Party if
and when a court shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated by this Section 6.10 is prohibited by law. If
such indemnity is not available with respect to any Indemnified Party, then
Parent, the Company and the Merger Sub (or the Surviving Corporation after the
Effective Date), on the one hand, and the Indemnified Party, on the other hand,
shall contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits.
(c) The provisions of this Section 6.10 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their respective heirs and estates. Nothing in this Section 6.10 shall limit in
any way any other rights to indemnification that any current or former director
or officer of the Company or any of its Subsidiaries may have by contract or
otherwise.
(d) Without limiting the effect of subsection (a) of this Section
6.10, from and after the Effective Time, the Surviving Corporation shall
fulfill, assume and honor in all respects the obligations of the Company or any
of its Subsidiaries pursuant to the Company's or any of its Subsidiaries'
certificate of incorporation, bylaws and any indemnification agreement between
the Company or any of its Subsidiaries, excluding QF Filter Sdn. Bhd., which is
set forth on Section 6.10 of the Company Disclosure Schedule and any of their
respective directors and officers existing and in force as of the Effective
Time. The Surviving Corporation agrees that the indemnification obligations set
forth in the Company's certificate of incorporation and bylaws, in each case as
of the date of this Agreement, shall survive the Merger (and, as of or prior to
the Effective Time, Parent shall cause the bylaws of Merger Sub to reflect such
provisions). No subsequent amendment of the provisions of the bylaws of the
Surviving Corporation shall affect the indemnification obligations of Parent or
the Surviving Corporation in any manner that would adversely affect the rights
of the Indemnified Parties under this Section 6.10.
30
(e) If Parent or the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other Person and shall not
be the continuing or surviving corporation or Person of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any Person, then and in each such case, proper provisions shall be
made so that the successors and assigns of the Parent and Surviving Corporation
shall assume all of the obligations set forth in this Section 6.10.
6.11. Other Actions by the Company and Parent. If any Takeover Statute is
---------------------------------------
or may become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent and the Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute, and any
regulations promulgated thereunder, on such transactions.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect Merger. The respective
------------------------------------------------------
obligation of each party to effect the Merger is subject to the satisfaction or
waiver at or prior to the Closing of each of the following conditions:
(a) Stockholder Approval. If required by applicable law this Agreement
--------------------
shall have been duly approved by holders of the number of Shares constituting at
least the Company Requisite Vote.
(b) Regulatory Consents. The waiting period applicable to the
-------------------
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than filing the Delaware Certificate of Merger, all
filings with any Governmental Entity required to be made prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries, with, and
all Government Consents required to be obtained prior to the Effective Time by
the Company or Parent or any of their respective Subsidiaries in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company, Parent and Merger Sub shall
have been made or obtained (as the case may be),\\ except where the failure to
so make or obtain will not result in either a Company Material Adverse Effect or
a Parent Material Adverse Effect.\\
(c) Litigation. No court or other Governmental Entity of competent
----------
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the transactions contemplated by this
Agreement (collectively, an "Order"), and no Governmental Entity shall have
-----
instituted any proceeding seeking any such Order and such proceeding remains
unresolved.
31
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations of
--------------------------------------------------
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date it being understood
that representations and warranties shall be deemed to be true and correct
unless the respects in which the representations and warranties (without giving
effect to any "materiality" limitations or references to "material adverse
effect" set forth therein) are untrue or incorrect in the aggregate is likely to
have a Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Parent and Merger Sub set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date it being
understood that representations and warranties shall be deemed to be true and
correct unless the respects in which the representations and warranties (without
giving effect to any "materiality" limitations or references to "material
adverse effect" set forth therein) are untrue or incorrect in the aggregate is
likely to have a Parent Material Adverse Effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
---------------------------------------------------
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and
-----------------------------
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the stockholders of the Company, by mutual
written consent of the Company, Parent and Merger Sub, or by action of their
respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
-------------------------------------------
terminated and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company, by action of their respective Boards of
Directors if (a) any Order permanently restraining, enjoining or otherwise
prohibiting the Merger shall be entered (whether before or after the approval by
the stockholders of the Company) and such Order is or shall have
32
become nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this subsection (a) shall have used reasonable
commercial efforts to remove or lift such Order, or (b) the Minimum Condition
shall not have been satisfied on or before May 31, 2000.
8.3. Termination by the Company. This Agreement may be terminated and the
--------------------------
Merger may be abandoned at any time prior to the Effective Time, whether before
or after its approval by the stockholders of the Company, by the Company if:
(a) (i) Merger Sub fails to commence the Offer as provided in Section
1.1 or (ii) after May 31, 2000, Merger Sub shall have failed to accept the
Shares for payment pursuant to the Offer; provided, however, that the right to
terminate this Agreement pursuant to this subsection (a) shall not be available
to the Company if it has breached in any material respects its obligations under
this Agreement in any manner that shall have proximately contributed to the
failure referenced in this subsection (a);
(b) the Offer is terminated or withdrawn pursuant to its terms without
any Shares being purchased thereunder; provided, however, that the right to
terminate this Agreement pursuant to this subsection (b) shall not be available
to the Company if it has breached in any material respects its obligations under
this Agreement in any manner that shall have proximately contributed to the
termination or withdrawal of the Offer;
(c) prior to Merger Sub's purchase of Shares pursuant to the Offer,
the Company enters into a written agreement with respect to a Superior Proposal
after complying with the procedures set forth in Section 6.2; provided, however,
that notwithstanding anything in this Agreement to the contrary, the termination
of this Agreement by the Company pursuant to this subsection (c) shall not be
deemed to violate or breach other obligations of the Company under this
Agreement; or
(d) there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable or, if curable, is not cured prior to the earlier of (i) twenty
(20) days after written notice of such breach is given by the Company to Parent,
and (ii) two (2) Business Days before the date on which the Offer expires.
8.4. Termination by Parent and Merger Sub. This Agreement may be terminated
------------------------------------
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the stockholders of the Company, by Parent and
Merger Sub if:
(a) After May 31, 2000, Merger Sub shall not have accepted Shares for
payment pursuant to the Offer; provided, however, that the right to terminate
this Agreement pursuant to this subsection (a) shall not be available to Parent
and Merger Sub if either of them has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure referred to in this subsection (a);
33
(b) The Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement in a manner materially
adverse to Parent or Merger Sub; or
(c) Merger Sub shall have terminated the Offer in accordance with the
provisions of Annex A; provided, however, that the right to terminate this
Agreement pursuant to this subsection (c) shall not be available to Parent and
Merger Sub if either of them has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the termination of the Offer.
8.5. Effect of Termination and Abandonment; Termination Fee.
------------------------------------------------------
(a) If this Agreement is terminated and the Merger abandoned pursuant
to this Article VIII, this Agreement (other than as set forth in this Section
8.5 and in Section 9.1) shall become void and of no further effect with no
liability of any party hereto (or any of its directors, officers, employees,
agents, stockholders, legal, accounting and financial advisors or other
representatives); provided, however, that, except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any material breach of this Agreement.
(b) (i) In lieu of any liability or obligation to pay damages, if (x)
there shall not have been a material breach of any representation, warranty,
covenant or agreement on the part of the Company and (y) Parent shall have
terminated this Agreement for any reason other than the failure of the waiting
period under the HSR Act to have been satisfied, Parent shall pay to the Company
a fee of 5% of the Transaction Value within sixty (60) calendar days of such
termination.
(ii) In lieu of any liability or obligation to pay damages, if
(x) there shall not have been a material breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub
and (y) the Company shall have the right to terminate this Agreement
pursuant to Section 8.3(c), the Company shall pay to Parent within
sixty (60) calendar days of such termination or, if earlier,
concurrently with the closing of the transaction that is the subject
of the Superior Proposal, a fee of 4% of the Transaction Value, plus
an expense allowance of $1,000,000.
(c) The parties acknowledge that the agreements contained in Section
8.5 are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, the parties would not enter into this Agreement;
accordingly, if any party fails promptly to pay the amounts required pursuant to
Section 8.5 and, in order to obtain such payment the other party commences a
suit which results in a final nonappealable judgment against the defaulting
party for such amounts, the defaulting party shall pay to the other party its
costs and expenses (including attorneys' fees) in connection with such suit.
8.6. Procedure for Termination. A termination of this Agreement pursuant to
-------------------------
this Article VIII shall, in order to be effective, be in writing specifying the
provision hereof pursuant to which such termination is made and shall require in
the case of Parent, Merger Sub or the Company, action by its Board of Directors.
34
ARTICLE IX
MISCELLANEOUS
9.1. Survival. This Article IX and the agreements of the Company, Parent
--------
and Merger Sub contained in Sections 6.8 (Benefits), 6.9 (Expenses) and 6.10
(Indemnification) shall survive the consummation of the Merger. This Article IX
and the agreements of the Company, Parent and Merger Sub contained in Section
6.9 (Expenses), Section 8.5 (Effect of Termination and Abandonment; Termination
Fee) and the Confidentiality Agreement shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement and in any certificate or schedule delivered pursuant hereto
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. Certain Definitions. For the purposes of this Agreement each of the
-------------------
following terms shall have the meanings set forth below:
(a) "Affiliate" means a Person that, directly or indirectly, through
---------
one or more intermediaries controls, is controlled by or is under common control
with the first-mentioned Person.
(b) "Business Day" means any day other than a day on which banks in
------------
the State of New York are authorized to close or the New York Stock Exchange is
closed.
(c) "Capital Stock" means common stock, preferred stock, partnership
-------------
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof.
(d) "Company Material Adverse Effect " means a material adverse effect
-------------------------------
on the financial condition, properties, business or results of operations of the
Company and its Subsidiaries, taken as a whole (it being understood that the
following shall not be taken into account in determining whether there has been
a Company Material Adverse Effect: (i) any adverse effect that is caused by
conditions affecting the economy or security markets generally; (ii) any adverse
effect that is caused by conditions generally affecting the primary industry in
which the Company currently competes; and (iii) any adverse effect that is
caused by the public announcement of the transactions contemplated by this
Agreement or actions taken by Parent or its Subsidiaries after the date of this
Agreement).
(e) "Depositary" means ChaseMellon Shareholder Services, L.L.C., which
----------
will serve as the depositary for the Offer or its duly appointed successor.
(f) "knowledge", "to the knowledge of", "has received no notice" and
--------- ------------------- ----------------------
similar terms with respect to any Person, means the current actual knowledge of
such Person and if such Person is a corporation, the knowledge of the executive
officers of the corporation.
(g) "Lien" means, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest, encumbrance, hypothecation, title defect or
adverse claim of any kind in respect of such asset.
35
(h) "Parent Material Adverse Effect" means a material adverse effect
------------------------------
on the ability of Parent or Merger Sub to conduct the Offer or consummate the
Merger or any of the other material transactions contemplated by this Agreement.
(i) "Permitted Liens" means (i) Liens for Taxes or other governmental
---------------
assessments, charges or claims the payment of which is not yet due; (ii)
statutory liens of landlords and liens of carriers, warehousemen, mechanics,
materialmen and other similar Persons and other liens imposed by applicable Law
incurred in the ordinary course of business for sums not yet delinquent or
immaterial in amount and being contested in good faith; (iii) liens specifically
identified as such in the Balance Sheet or the notes thereto; (iv) liens
constituting or securing executory obligations under any lease that constitutes
an "operating lease" under GAAP; and (v) any other Lien arising in the ordinary
course of business, the imposition of which would not constitute a Company
Material Adverse Effect; provided, however, that, with respect to each of the
foregoing clauses (i) through (iv), to the extent that any such lien arose prior
to the Audit Date and relates to, or secures the payment of, a liability that is
required to be accrued on the Balance Sheet under GAAP, such lien shall not be a
Permitted Lien unless accruals for such liability have been established therefor
on the Balance Sheet in conformity with GAAP. Notwithstanding the foregoing, no
lien arising under the Code or ERISA with respect to the operation, termination,
restoration or funding of any Compensation and Benefit Plan sponsored by,
maintained by or contributed to by the Company or any of its ERISA Affiliates or
arising in connection with any excise tax or penalty tax with respect to such
Compensation and Benefit Plan shall be a Permitted Lien.
(j) "Person" means an individual, corporation (including not-for-
------
profit), partnership, limited liability company, association, trust,
unincorporated organization, joint venture, estate, Governmental Entity or other
legal entity.
(k) "Subsidiary" or "Subsidiaries" of the Company, Parent, the
---------- ------------
Surviving Corporation or any other Person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which the Company, Parent, the Surviving Corporation or
any such other Person, as the case may be, either alone or through or together
with any other Subsidiary, owns, directly or indirectly, 50% or more of the
Capital Stock, the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such corporation
or other legal entity. For greater certainty, in the case of the Company,
"Subsidiary" includes QF Filter Sdn. Bhd.
9.3. No Personal Liability. This Agreement shall not create or be deemed to
---------------------
create any personal liability or obligation on the part of any direct or
indirect stockholder of the Company, Merger Sub or Parent, or any of their
respective officers, directors, employees, agents or representatives.
9.4. Modification or Amendment. Subject to the provisions of applicable
-------------------------
Law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.5. Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party
and may be waived by such party
36
in whole or in part to the extent permitted by applicable Law. The failure of
any party hereto to exercise any right, power or remedy provided under this
Agreement or otherwise available in respect hereof at law or in equity, or to
insist upon strict compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its rights to exercise
any such or other right, power or remedy or to demand such compliance.
9.6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.7. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the Federal courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a Delaware State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 9.8 or in such other manner as may be permitted by applicable law, shall
be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
37
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE INITIAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.7.
9.8. Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the others shall be deemed given if in writing
and delivered personally or sent by registered or certified mail (return receipt
requested) or overnight courier (providing proof of delivery), postage prepaid,
or by facsimile (which is confirmed):
If to Parent or Merger Sub:
--------------------------
Xxxx Xxxxxxxx
Forvaltnings AB Ratos (publ.)
Xxxxxxxxxxxxxx 0
XX-000 00 Xxxxxxxxx, Xxxxxx
Attention: President
Fax: 000-00-0-00-00-00
with a copy to:
--------------
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
If to the Company:
-----------------
Xxxx X. Xxxxxxxx
Xxxx Company
0000 Xxxx Xxxxx
Xx Xxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
38
with a copy to:
--------------
Xxxxxx X. Xxxxxxxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.9. Entire Agreement. This Agreement (including any schedules, exhibits or
----------------
annexes hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
9.10. No Third Party Beneficiaries. Except as provided in Section 6.10
----------------------------
(Indemnification), this Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
9.11. Obligations of the Company, the Surviving Corporation, Parent and
-----------------------------------------------------------------
Camfil. Whenever this Agreement requires a Subsidiary of the Company or Parent
------
and/or Camfil to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company, Parent or Camfil, as the case may be, to
cause such Subsidiary to take such action and, after the Effective Time, on the
part of the Surviving Corporation to cause such Subsidiary to take such action.
Any obligation of Parent specified in this Agreement shall after the date of the
Transfer be an obligation of Camfil only and not of Parent.
9.12. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.13. Interpretation. The table of contents and Article, Section and
--------------
subsection headings herein are for convenience of reference only, do not
constitute a part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Schedule, Annex or Exhibit, such reference shall
be to a Section of, or Schedule, Annex or Exhibit to, this Agreement, unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
39
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors and assigns
and, in the case of an individual, to his or her heirs and estate, as
applicable.
9.14. Assignment. This Agreement shall not be assignable by operation of
----------
law or otherwise and any attempted assignment of this Agreement in violation of
this sentence shall be void, provided that the Transfer contemplated by Section
5.2(g) shall not violate this Section 9.14.
40
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties hereto as of the date hereof.
XXXX COMPANY
By: Xxxx Xxxxx
__________________________
Name: Xxxx Xxxxx
Title: Chairman
FORVALTNINGS AB RATOS
By: Bo Jungner
__________________________
Name: Bo Jungner
Title: Senior Investment Manager
RATOS ACQUISITION CORP.
By: Bo Jungner
__________________________
Name: Bo Jungner
Title: Senior Investment Manager
41
ANNEX A
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 Merger Sub's obligation to pay for or return tendered shares
after termination or withdrawal of the Offer, neither Merger Sub nor Parent
shall be required to accept for payment or pay for any Shares tendered pursuant
to the Offer, and, if required by Section 1.1(b) of this Agreement, Merger Sub
shall extend the Offer by one or more extensions until May 31, 2000, as provided
in Section 1.1(b) of the Agreement, and, except as otherwise provided in this
Agreement, may terminate the Offer at any time after May 31, 2000 if (i) less
than the number of Shares necessary to satisfy the Minimum Condition have been
tendered pursuant to the Offer prior to the expiration of the Offer and not
withdrawn; (ii) any applicable waiting period under the HSR Act has not expired
or terminated prior to the Expiration Date of the Offer; or (iii) at any time
after the date of this Agreement, and before acceptance for payment of any
Shares, any of the following events shall occur and be continuing on or after
May 31, 2000:
(a) There shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any domestic
or foreign court or other Governmental Entity (other than the application of the
waiting period provisions of the HSR Act to the Offer or to the Merger) that, in
the reasonable judgment of Merger Sub, would be expected to, directly or
indirectly, (i) prohibit or impose any material limitations on Merger Sub,
Camfil or Parent's ownership or operation of all or a material portion of the
Company's businesses or assets, or compel Merger Sub, Camfil or Parent to
dispose of or hold separate any material portion of its businesses or assets or,
where applicable, its Subsidiaries' business or assets, or the business or
assets of the Company or its Subsidiaries, in each case taken as a whole, (ii)
prohibit, or make illegal, the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (iii) result in the material delay in or
restrict the ability of Merger Sub, or render Merger Sub unable, to accept for
payment, pay for or purchase some or all of the Shares, or (iv) impose material
limitations on the ability of Merger Sub effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders;
(b) (i) The representations and warranties of the Company set forth in
this Agreement shall not be true and correct in any material respect as of the
date of this Agreement and as of consummation of the Offer as though made on or
as of such date (except for representations and warranties made as of a
specified date) but only if the respects in which the representations and
warranties made by the Company are inaccurate would in the aggregate have a
Company Material Adverse Effect, (ii) the Company shall have failed to comply
with its covenants and agreements contained in this Agreement in all material
respects which failure is likely to have a Company Material Adverse Effect and,
with respect to any breach or failure
A-1
described in clause (b)(i) or (b)(ii) above that can be cured, the breach or
failure shall not have been cured prior to ten (10) Business Days after Merger
Sub has furnished the Company written notice of such breach or failure, or (iii)
there shall have occurred any events or changes which have had or which are
likely to have a Company Material Adverse Effect; or
(c) There shall have occurred and continue to exist (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange (other than a shortening of trading hours or any coordinated
trading halt triggered solely as a result of a specified increase or decrease in
a market index), (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks, or any limitation (whether or not
mandatory) by any Governmental Entity on, or other event materially adversely
affecting, the extension of credit by lending institutions in the United States,
or (iii) a commencement of a war or armed hostilities directly involving the
United States, which has and continues to have a material adverse effect on the
trading of securities on the New York Stock Exchange.
In any event, Merger Sub may terminate the Offer immediately if:
(a) The Board of Directors of the Company shall have withdrawn, or
modified or changed in a manner adverse to Parent (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, this Agreement or the Merger,
or recommended another proposal or offer for the acquisition of the Company, or
the Board of Directors of the Company shall have resolved to do any of the
foregoing; or
(b) This Agreement shall have terminated in accordance with its terms.
The foregoing conditions, other than the Minimum Condition, are for
the sole benefit of Parent and Merger Sub and may be waived upon the mutual
agreement of Parent and Merger Sub, in whole or in part at any time and from
time to time. The failure by Merger Sub or Parent at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time, except as otherwise provided in this Agreement.
A-2
Company Disclosure Schedule
Section 5.1(a)(i)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
Place of Jurisdictions in Percentage
Company Name: Incorporation Which Qualified Ownership
--------------------------- ------------- ---------------- ----------
XXXX COMPANY Delaware Arizona, Arkansas, 100
California, Florida,
Georgia, Illinois,
Massachusetts,
Michigan, Mississippi,
North Carolina, New Jersey,
New York, Oklahoma, Pennsylvania,
Tennessee,
Texas, Utah, Washington
XXXX INC. Quebec, Can. British Columbia, 000
Xxxxxxxx, Xxxxxxx
XXXX COMPANY INTERNATIONAL
California none 000
XXXX XXXXXX XXXXXXX Xxxxxx Xxxxxxx none 100
XXXX FILTRATION LIMITED England none 000
XXXX XXXXXXX XXXXXX Xxxxxx none 100
XXXX INTERNATIONAL, INC.
Virgin Islands none 100
QF FILTER SDN. BHD. Malaysia none 50
METALCRAFT FILTERS, INC.
North Carolina none 100
(no assets, not operating-to be dissolved shortly)
Section 5.1(f)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
(i) None.
(ii) None.
(iii) None.
(iv) None.
Since the Audit Date, Employment Continuation Agreements have been adopted for
the benefit of the Company which involve Xxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxx
Xxxx and Xxxx Xxxxxxx. Copies of these agreements, each of which is dated
February 15, 2000, have been provided to Parent.
The Company purchased land and improvements in Robersonville North Carolina in
the first quarter of 2000.
Section 5.1(g)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
(i) Hydro-Quebec, Plaintiff, vs. Xxxxx & Xxxxxxx Canada, Inc. and Xxxxx &
Whitney Canada, Inc. vs. Xxxx Inc. This action, which was filed in the
province of Quebec, district of Montreal, arises out a claim that damages
of $948,000.00 (Canadian) were caused by an alleged failure of filters
supplied by Xxxx Inc. to Xxxxx & Xxxxxxx Canada, Inc. on equipment sold to
Hydro-Quebec.
(ii) Matters responsive to 5.1(g)(ii) are set forth in Schedule 5.1(k).
Section 5.1(h)(i)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
COMPENSATION AND BENEFIT PLANS:
-------------------------------
Xxxx Company 401(k) Retirement Plan, as Restated January 1, 1996
Xxxx Company Employee General Insurance Plan under MetLife policy No. 101035-G
Xxxx Company Employee Benefit Plan under Group Benefit Agreement effective
1/1/96
Xxxx Company Personal Accident Insurance Plan for Office Employees (Hartford
Policy Form 7582, employee paid, voluntary participation)
Xxxx Company Short Term Disability Plan (MetLife Group Policy No. 101035-G,
employee paid, voluntary participation)
Xxxx Company Supplementary Executive Savings Plan adopted November 21, 1995
1983 Stock Option Plan For Key Employees of Xxxx Company
1993 Stock Option Plan For Key Employees of Xxxx Company
1991 Stock Option Plan For Non-Employee Directors of Xxxx Company
Non-Qualified Deferred Compensation Plan, dated July 31, 1987
Deferred Compensation Plan for Directors dated April 30, 1981
Deferred Compensation Plan for Directors dated November 5, 1980
Sheet Metal Production Workers Group Insurance Benefit Plan
Teamsters Health and Welfare Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Incentive Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Dental and Prescription Drug Plan (part of 1997-2000 Agreement with
Local 986)
Teamsters Death Benefit Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Pension Plan (part of 1997-2000 Agreement with Local 986)
Xxxx Company 2000 Management Incentive Plan (to be adopted March 26, 2000)
Employment Continuation Agreements of: Xxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxx
and Xxxx Xxxxxxx dated February 15, 2000
Employment Agreement of H. Xxxx Xxxxx dated September 15, 1999
Annuity contract from Mutual of Omaha Life Insurance Company (which funds the
pension benefit of H. Xxxx Xxxxx pursuant to his September 15, 1999 Employment
Agreement)
Trust Agreement dated January 17, 2000 between Xxxx Company and Farmers and
Merchants Trust Company for the benefit of H. Xxxx Xxxxx
Xxxx Inc. Pension Plan for Salaried Employees Amended and Restated as of January
1, 1992
Xxxx Filtration Limited Pension Plan created as of June 30, 1980
The Company and its Subsidiaries are also party to various other employment
related agreements, job offer letters and arrangements entered into in the
ordinary course of business, and have other policies, arrangements or
agreements, either written or oral, regarding employment, termination,
severance, compensation, medical or health. The Company has disclosed all of
such agreements, plans, policies or arrangements which either individually or in
the aggregate are material to the Company and its Subsidiaries or which cover
either the officers or directors of the Company.
CONSUMMATION TRIGGERED EFFECTS
-------------------------------
The vesting of stock options issued under the following three plans may be
accelerated:
1983 Stock Option Plan For Key Employees of Xxxx Company
1993 Stock Option Plan For Key Employees of Xxxx Company
1991 Stock Option Plan For Non-Employee Directors of Xxxx Company
Employment Continuation Agreements dated February 15, 2000 with Xxxx Xxxxxxxx,
Xxxxx Xxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxxx provide for severance payments to be
made in the event their employment is terminated under certain circumstances
during a period commencing on the change of control of the Company and running
for twenty-four (24) months.
XXXX COMPANY - OUTSTANDING STOCK OPTIONS
Total # Option No. Of Exerciseable Non-vested
ISO's : to date to date
----------------------------------------------------------------
Date of Name of of shs. price Exerc'd. Cancelled Cummul. # of # of
grant Grantee granted per sh. Cur.yr. Cur.yr. # Ex.& shares shares
Canc
----------------------------------------------------------------------------------------------------------------
EMPLOYEE'S ISO PLAN :
------------------------
20-Mar-96 Banks, M. 1,125.0 4.111 0.0 0.0 0.0 1,125.0 0
15-JUL-97 Xxxxxx, S. 3,000.0 10.667 0.0 0.0 0.0 1,500.0 1,500
16-Feb-99 Xxxxxx, S. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
28-MAR-94 Xxxxxxxxxx, 1,125.0 2.833 0.0 0.0 0.0 1,125.0 0
G.
28-MAR-95 Xxxxxxxxxx, 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0
G.
29-APR-97 Xxxxxxxxxx, 1,500.0 8.000 0.0 0.0 0.0 750.0 750
G.
20-MAR-96 Xxxx, H. 2,250.0 4.111 0.0 0.0 0.0 2,250.0 0
16-Feb-99 Xxxx, M. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
12-JAN-95 Xxxxxxxx, J. 99,000.0 2.222 0.0 0.0 0.0 99,000.0 0
29-APR-97 Xxxxxxxx, J. 30,000.0 8.000 0.0 0.0 0.0 15,000.0 15,000
25-MAR-98 Xxxxxxxx, J. 22,500.0 12.750 0.0 0.0 0.0 11,250.0 11,250
16-Feb-99 Xxxxxxxx, J. 15,000.0 9.500 0.0 0.0 0.0 3,750.0 11,250
29-APR-97 Xxxxx, C. 3,000.0 8.000 0.0 0.0 0.0 1,500.0 1,500
25-MAR-98 Xxxxx, C. 3,000.0 12.750 0.0 0.0 0.0 1,500.0 1,500
16-Feb-99 Xxxxx, C. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
00-XXX-00 Xxxxx, D. 1,125.0 4.111 0.0 0.0 0.0 1,125.0 0
15-JUL-97 Xxxxxx, R. 15,000.0 10.667 0.0 0.0 0.0 7,500.0 7,500
25-MAR-98 Xxxxxx, R. 22,500.0 12.750 0.0 0.0 0.0 11,250.0 11,250
16-Feb-99 Xxxxxx, R. 5,000.0 9.500 0.0 0.0 0.0 1,250.0 3,750
28-MAR-95 Xxxxxx, J. 1,125.0 3.056 0.0 0.0 843.8 281.0 0
29-APR-97 Xxxxxx, J. 1,500.0 8.000 0.0 0.0 375.0 375.0 750
16-Feb-99 Xxxxx, X.X. 250,000.0 9.500 0.0 0.0 0.0 250,000.0 0
28-MAR-95 Mignacco, D. 2,250.0 3.056 0.0 0.0 563.0 1,687.0 0
29-APR-97 Mignacco, D. 1,500.0 8.000 0.0 0.0 0.0 750.0 750
16-Feb-99 Mignacco, D. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
16-Feb-99 Xxxxxx, L. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
20-Mar-96 Ozgowicz, M. 1,125.0 4.111 0.0 0.0 843.0 282.0 0
Options Outstanding
at end of period
----------------------------------------------------------
Date of # of Option
grant shares Price
----------------------------------------------------------
EMPLOYEE'S ISO PLAN ( QTD >>>>>>)
-------------------
20-Mar-96 1,125.0 4,625.00
15-JUL-97 3,000.0 32,000.00
16-Feb-99 2,000.0 19,000.00
28-MAR-94 1,125.0 3,187.50
28-MAR-95 2,250.0 6,875.00
29-APR-97 1,500.0 12,000.00
20-MAR-96 2,250.0 9,250.00
16-Feb-99 2,000.0 19,000.00
12-JAN-95 99,000.0 220,000.00
29-APR-97 30,000.0 240,000.00
25-MAR-98 22,500.0 286,875.00
16-Feb-99 15,000.0 142,500.00
29-APR-97 3,000.0 24,000.00
25-MAR-98 3,000.0 38,250.00
16-Feb-99 2,000.0 19,000.00
20-MAR-96 1,125.0 4,625.00
15-JUL-97 15,000.0 160,000.00
25-MAR-98 22,500.0 286,875.00
16-Feb-99 5,000.0 47,500.00
28-MAR-95 281.3 859.38
29-APR-97 1,125.0 9,000.00
16-Feb-99 250,000.0 2,375,000.00
28-MAR-95 1,687.0 5,154.72
29-APR-97 1,500.0 12,000.00
16-Feb-99 2,000.0 19,000.00
16-Feb-99 2,000.0 19,000.00
20-Mar-96 282.0 1,159.33
29-APR-97 Ozgowicz, M. 1,500.0 8.000 0.0 0.0 750.0 0.0 750 750.0 6,000.00
03-Aug-98 Pegg, S. 20,000.0 10.750 0.0 0.0 0.0 5,000.0 15,000 20,000.0 215,000.00
16-Feb-99 Pegg, S. 5,000.0 9.500 0.0 0.0 0.0 1,250.0 3,750 5,000.0 47,500.00
12-MAR-91 Semonza 1,575.0 4.778 0.0 0.0 0.0 1,575.0 0 1,575.0 7,525.00
18-MAR-92 Semonza 2,250.0 5.000 0.0 0.0 0.0 2,250.0 0 2,250.0 11,250.00
28-MAR-94 Semonza 3,375.0 2.833 0.0 0.0 0.0 3,375.0 0 3,375.0 9,562.50
28-MAR-95 Semonza 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Xxxxxxxxx, 1,500.0 8.000 0.0 0.0 0.0 750.0 750 1,500.0 12,000.00
D.
28-MAR-94 Xxxxxxx, J. 2,250.0 2.833 0.0 0.0 0.0 2,250.0 0 2,250.0 6,375.00
28-MAR-95 Xxxxxxx, J. 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Xxxxxxx, J. 3,000.0 8.000 0.0 0.0 0.0 1,500.0 1,500 3,000.0 24,000.00
16-Feb-99 Xxxxxxx, J. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500 2,000.0 19,000.00
28-MAR-94 Vu, H. 4,500.0 2.833 0.0 0.0 0.0 4,500.0 0 4,500.0 12,750.00
28-MAR-95 Vu, H. 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Vu, H. 1,500.0 8.000 0.0 0.0 0.0 750.0 750 1,500.0 12,000.00
16-Feb-99 Xxxxxxxxx, 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500 2,000.0 19,000.00
P.
Subtotals - EE ISO plan 552,075 448,950 99,750 548,700 $ 4,439,323
------------------------------------------------------------------------------------------------------------------------------------
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN :
----------------------------------------
0.0 0.0 0.00
28-Jul-94 Batinovich, 4,500.0 2.389 0.0 0.0 0.0 4,500.0 4,500.0 10,750.00
R.
28-Mar-95 Batinovich, 4,500.0 3.056 0.0 0.0 0.0 4,500.0 4,500.0 13,750.00
R.
20-Mar-96 Batinovich, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
18-Feb-97 Batinovich, 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
R.
17-Feb-98 Batinovich, 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
R.
16-Feb-99 Batinovich, 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
R.
24-Mar-91 Xxxxxxxxxx, 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
R.
05-May-92 Xxxxxxxxxx, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
23-Mar-93 Xxxxxxxxxx, 4,500.0 2.222 0.0 0.0 0.0 4,500.0 4,500.0 10,000.00
R.
28-Mar-94 Xxxxxxxxxx, 4,500.0 2.833 0.0 0.0 0.0 4,500.0 4,500.0 12,750.00
R.
12-Sep-95 Xxxxxxxxxx, 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
R.
20-Mar-96 Xxxxxxxxxx, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
18-Feb-97 Xxxxxxxxxx, 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
R.
17-Feb-98 Xxxxxxxxxx, 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
R.
16-Feb-99 Xxxxxxxxxx, 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
R.
18-Feb-97 Xxxxx, D. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Xxxxx, D. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Xxxxx, D. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
28-Apr-98 Gerstell, F. 4,500.0 13.000 0.0 0.0 0.0 4,500.0 4,500.0 58,500.00
16-Feb-99 Gerstell, F. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
28-Mar-95 Xxxxx, J. 4,500.0 3.056 0.0 0.0 0.0 4,500.0 4,500.0 13,750.00
20-Mar-96 Xxxxx, J. 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
18-Feb-97 Xxxxx, J. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Xxxxx, J. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Xxxxx, J. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
24-Mar-91 Xxxxx 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
05-May-92 Xxxxx 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
23-Mar-93 Xxxxx 4,500.0 2.222 0.0 0.0 0.0 4,500.0 4,500.0 10,000.00
28-Mar-94 Xxxxx 4,500.0 2.833 0.0 0.0 0.0 4,500.0 4,500.0 12,750.00
16-Jul-96 Xxxxxxxx, J. 4,500.0 5.722 0.0 0.0 0.0 4,500.0 4,500.0 25,750.00
18-Feb-97 Xxxxxxxx, J. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Xxxxxxxx, J. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Xxxxxxxx, J. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
0.0 0.0 0.00
------------------------------------------------------------------------------------------------------------------------------------
Subtotals Director Plan 148,500 148,500 0 148,500 $ 991,750
------------------------------------------------------------------------------------------------------------------------------------
Combined Plans' Totals 700,575 597,450 99,750 697,200 $ 5,431,073
------------------------------------------------------------------------------------------------------------------------------------
Section 5.1(i)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
The Company is currently barred from making sales directly into the United Arab
Emirates or Bahrain until it reaches satisfactory arrangements to terminate its
moribund relationships with previously existing commercial sales agents in these
countries.
Section 5.1(k)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
(ii)
The Company has disposed of Hazardous Material in a manner which led to claims
against the Company for contribution to the costs to clean up two former
landfill sites being administered by the United States Environmental Protection
Agency. These sites were both in California, the Operating Industries, Inc.
Landfill Superfund Site and the Casmalia, Landfill Superfund Site. The Company
was eligible to and participated in de minimus settlements for both sites. The
de minimus payments have been made and no further expense associated with these
sites is anticipated.
There have been releases of Hazardous Material at the following current or
former properties owned or leased by the Company as follows:
Former Properties
-----------------
Rialto, California (remediation completed) Rosecrans Avenue property in El
Segundo, California (remediation completed)
Current Properties
------------------
All items specifically identified as potentially requiring remediation in the
phase I or phase II reports prepared in anticipation of the transaction by
Environmental Strategies Corporation at the direction of Xxxxxxxx and Xxxxxxxx
concerning the Company's existing properties. These include relatively minor or
moderate contamination, and similarly immaterial expense for potential
remediation at facilities in Delano, California; Crystal Lake, Illinois and
Jonesboro, Arkansas.
At the Company's Birmingham, England facility there have been releases of
chlorinated solvents at the location of the current and a prior above ground
solvent storage tank and hydrocarbons at the location of underground storage
tanks. These releases have caused contamination of the soil with hydrocarbons
and chlorinated solvents. The levels of contamination and details of the
investigation have been disclosed to Parent. The specific results of tests for
the chlorinated solvent investigation is attached as annex 5.1(k)(ii).
There have been releases of Hazardous Material (fuel oil and other materials) at
the Company's Robersonville, North Carolina facility by prior owners. These
releases were reported to governing authorities and remedial work completed
prior to purchase of the property by the Company.
(iii)
The Company's manufacturing facilities, including the recently purchased
property in Robersonville, North Carolina, contain asbestos-containing materials
and lead products in a variety of applications common to their time of
construction. Asbestos containing materials are present in varying quantities in
floor tiles, pipe and other insulating materials and ceiling materials. Lead
containing materials are present in paint, plumbing fixtures, piping and
solder. To the Company's knowledge none of such applications pose a threat to
human health or safety and do not require remediation under any currently
applicable Environmental Laws.
Underground storage tanks ("USTs") are present at the following Company
properties:
Robersonville, North Carolina (1 UST)
Washington, North Carolina (1 UST)
Birmingham, England (3 USTs)
ANNEX 5.1(K)(ii)
Preliminary Summary of Detectable Concentrations in Soil Samples (mg/kg)
------------------------------------------------------------------------------------------------------------------------------------
Compound Sample Number SB1A SB1B SB2A SB2B SB3A SB3B SB4A SB5A SB5B
Depth (m bgl) 1-1.1 4.5-4.6 0.5-0.6 4.7-4.8 3-3.1 4.9-5 1.5-2.6 0.5-0.6 1.9-2
------------------------------------------------------------------------------------------------------------------------------------
TPH 600 nd 76 nd 2,100 80 1,140 na na
Benzene nd nd nd nd 0.20 nd nd nd nd
Toluene nd nd 0.009 nd 1.82 nd nd 0.22 0.006
Ethylbenzene nd nd nd nd 1.74 nd nd nd nd
Xylene nd nd nd nd 7.95 nd nd 0.30 0.011
1,1 dichloroethene na na na na na na na 0.26 0.007
2,2 dichloroethene na na na na na na na 6.79 0.087
1,1,1 trichloroethane na na na na na na na 9.44 0.043
Xxxxxxxxxxxxxxx xx xx xx xx xx xx xx 000 0.72
Tetrachloroethene na na na na na na na 0.46 0.006
Trimethylbenzene na na na na na na na 0.13 nd
Total PAHs 7.1 nd 4.5 nd nd nd nd 0.2 nd
Di-n-butylphthalate nd 0.6 0.8 1.1 nd nd nd nd 0.9
------------------------------------------------------------------------------------------------------------------------------------
nd - not detectable
na - not analysed
ENVIRONMENTAL SETTING AT 411150 284200
1.1 Geology, Hydrogeology And Hydrology
The site is underlain by the Xxxxxx Marls, which is the confining layer
for the Triassic Sandstone (a regional major aquifer). The Xxxxxx Marls
are predominantly silty mudstone with occasional variable beds of fine-
grained sandstone, siltstone and gypsum. The Xxxxxx Marls attains a
maximum thickness of 300m. The boulder clays appear to be present near
the site.
The Xxxxxx Xxxx is classified as a non aquifer by the Environment Agency,
which can yield small supplies where sandstone beds are locally present.
Groundwater flow within the strata is likely to be fissure and fracture
dominated and springs are rare.
The nearest water courses the River Xxxx, located some 1km to the west of
the site, and Grand Union Canal, some 500m north of the site. The River
Xxxx and Grand Union Canal have been classified by Environment Agency as
Quality D (Fair) and Canal Quality C (Fair) respectively.
1.2 Historic and Neighbouring Land-Use
Historic Land Use
. 1888 to 1904: open ground or agricultural
. 1916 to 1938: the site was occupied by Xxxxxx Brake Works
. 1939 to 1955: the site appeared to have been heavily industrialised
(no Info)
. 1956 to 1982: the site and surrounding areas have been occupied by a
variety of industrial works.
Environmental Setting
A database search conducted within a 1km radius of the site revealed
the following:
. Three water abstraction sites
. 22 discharge consents and one red-listed discharge consent
. Two landfill sites including the one BGS recorded
. One prosecution relating to controlled waters
. 32 pollution incidents to controlled waters
. Three waste treatment or disposal sites
. 8 waste transfer sites, two of which are located within 250m
. 6 IPC registered waste sites
1.3 Over Site Sensitivity
Overall sensitivity of the site appears to be low to medium given the
site is underlain by the Xxxxxx Marls (non aquifer).
References:
Environment Agency, 1994. Policy and practice for the protection of
groundwater, Xxxxxx Xxxxx Region.
British Geological Survey, 1978. Geological map (one inch series).
Solid and drift edition (Sheet 168).
Ordnance Survey, 1992. Sheet 139 (1:50000).
Groundwater Vulnerability Map Sheet 22 (1:100000)
Section 5.1(l)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
The Company has failed to timely pay property taxes on unimproved land it owns
in Copperas Cove, Texas and such taxes are now a lien on the property. The
Company intends to deed the property back to the City of Copperas Cove in lieu
of payment of the taxes.
The State of Florida asserted that the Company was obligated to report and pay
taxes in Florida. The Company subsequently investigated its obligation to do so
and in response became qualified to do business in the State of Florida in
1999, satisfied all reporting requirements and paid all back taxes owed.
Please refer to Schedule Section 5.1(h) regarding payment to be made to
employees of the Company and 280G of the Code.
Section 5.1(m)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
TEAMSTERS UNION LOCAL 986.
SHEET METAL WORKERS INTERNATIONAL ASSOCIATION LOCAL 371
METALLURGISTES UNIS D'AMERIQUE, LOCAL 8990
A.E.E.U. and M.S.F.U.
Section 5.1(q)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
The Company continues to manufacture products and pay license fees (in Canada
through Xxxx Inc.) for products covered by a now expired license with American
Warming and Ventilating Inc., dated May 9, 1988, a relationship which has been
in existence for approximately 36 years.
Section 5.1(s)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
(i)
Business Loan Agreement for $10,000,000 dated May 13, 1999 between Bank of
America and the Company (as amended August 26, 1999).
Loan agreement for $2,000,000 Canadian (revolving overdraft facility) dated May
21, 0000 xxxxxxx Xxxx Xxxx Xxxx xx Xxxxxx and Xxxx Inc.
Joint Venture Agreement between Xxxx Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
Standard Industrial/Commercial Multi-Tenant Lease - Gross between Xxxx Company
and Fujita Investors of California dated January 17, 1997. (Lease for Santa Fe
Springs, California facility)
(ii)
Joint Venture Agreement between Xxxx Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
Expired license between Xxxx Inc. and American Warming and Ventilating Inc.
dated May 9, 1988.
Private Label Supply Agreement For Heavy Duty Marine Products between Xxxx
Company and Racor Division of Xxxxxx-Xxxxxxxx Corporation dated as of December
1, 1999.
License agreements identified in subsection 5.1(s)(vi).
(iii)
Agreements with officers are described in Schedule Section 5.1(h)(i).
(iv)
Bank Guarantee Facility between Bank Bumiputra Malaysia Berhad and QF Filter SDN
BHD dated 5th February 1998 for RM40,000.00.
(v)
International Private Label Agreement between Xxxx Company and Delta Filtration
dated January 19, 2000.
(vi)
Joint Venture Agreement between Xxxx Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
STRATEGIC PARTNERS* CITY, STATE
------------------- -----------
AIR FILTER SYSTEMS, INC. CONWAY, AR
AIR FILTER SYSTEMS, INC. (BRANCH) FORT XXXXX, AR
AIR FILTER SYSTEMS, INC. (BRANCH) SPRINGDALE, AR
FILT-AIRE CORPORATION DARBY, PA
AIR FILTER SALES & SERVICE TUCKER, GA
THERMAL RECOVERY SYSTEMS INC. TUCKER, GA
EXFIL KALAMAZOO, MI
EXFIL (BRANCH) INDIANAPOLIS, IN
EXFIL (BRANCH) NILES, MI
EXFIL BRANCH) STERLING HEIGHTS, MI
EXFIL (BRANCH) WYOMING, MI
XXXXXX-XXXXXX ASSOCIATES, INC. LENEXA, KS
XXXXXX-XXXXXX ASSOCIATES, INC. (BRANCH) WICHITA, KS
FILTRATION SYSTEMS, INC. ST. LOUIS PARK, MN
GENERAL AIRE SYSTEMS, LLC KENILWORTH, NJ
FILT-AIRE CORPORATION DARBY, PA
FILTRATION SALES & ENGINEERING HOUSTON, TX
XXXXXXXX, XXXX & XXXXXX HOUSTON, TX
*Strategic Partnership agreements are on the Company's standard form of
strategic partner covenant delivered to Parent with the exception of variations
which are not material.
INTERNATIONAL LICENSE AGREEMENTS* CITY, COUNTRY
--------------------------------- -------------
CASIBA S.A. BUENOS AIRES, ARGENTINA
WILECTEC CO., LTD. HONG KONG, CHINA
ANFILCO LTD. GURGAON, INDIA
NIHON SPINDLE GIKEN CO. LTD. AMAGASAKI, JAPAN
XXXXXX XXXXXXXXXXX XXXXXX XXXX, XXXXX XXXXX
INDUSTRIAS FILVAC S.A. DE C.V. MEXICO CITY, MEXICO
TAYMAC CHRISTCHURCH, NEW ZEALAND
GENMECH ENGINEERING (S) PTE LTD SINGAPORE
MSA (AFRICA PTY) LTD SOUTH AFRICA
ANTUNG TRADING CORP. TAIPEI HSIEN, TAIWAN
QF FILTER SDN. BHD. KUALA LUMPUR, MALAYSIA
*License agreements, with the exception of the license with the Company's joint
venture, QF Filter SDN. BHD., are all on a relatively standard form, copies of
which have been delivered to Parent, and which are similar with the exception of
variations which are not material.
(vii)
Total capital expenditure approvals for the year 2000 budget of approximately
$3,170,000, plus approximately $500,000 for the big round filter project
approved in January 2000, of which the significant items are: crane and
associated equipment for big round filter project approx. $200,000; powder coat
paint system $852,000; automated assembly equipment for
30/30 line approx. $321,000; manipulator welding system approx. $129,000; plate
bending machine for big round filter project approx. $80,000.
(viii)
Employment Continuation Agreements and employment arrangements with H. Xxxx
Xxxxx as disclose in Schedule Section 5.1(h)(i).
Letter of understanding with Xxxxxx Xxxxxxx Xxxxxx Gull dated November 9, 1999
concerning services as exclusive financial advisor to the Company.
Section 5.1(t)
of the
XXXX COMPANY DISCLOSURE SCHEDULE
UNITED STATES
-------------
0000 Xxxx Xxxxx, Xx Xxxxxxx, Xxxxxxxxxx
0000 Xxxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxx
0000 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
5883 Robersonville Product Road, Robersonville, North Carolina
0000 Xxx. 00X, Xxxxxxx, Xxxxx Xxxxxxxx
000 X. Xxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx
000 Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxx
Industrial Circle, Copperas Cove, Texas (subject to tax liens as described in
Schedule 5.1(l))
CANADA
------
0000 Xxxxxx Xxxxxxx Xxxxxx, Xxxxx, Xxxxxx
XXXXXX XXXXXXX
--------------
000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx, Xxxxxxx
MALAYSIA
--------
00 Xxxxx Xxxxxx, Xxxxxxx Xxxx, 00000 Xxxxx Xxxxxx, Xxxxxxxx
Exceptions to warranty of good, valid and marketable title:
------------------------------------------------------------
0000 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx*
1. Deed of Trust dated 2/3/94. Principal amount is not disclosed. Mortgagor is
Xxxx Company. Mortgagee is Bank of America National Trust and Savings
Association.
2. Financing Statement filed on 12/27/85 by the City of Jonesboro listing Xxxx
Company.
3. A judgment was filed against Xxxx Company by the State of Arkansas and a
Certificate of Assessment was filed by the state on 7/7/99 against the
property. Amount $20,087.07
000 X. Xxxx Xxxxxx, Xxxxxxx Xxxx, XX*
1. Mortgage by Xxxx Company to First Commercial Bank, dated 3/24/87. Amount
$8,000,000.
000 Xxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxx*
1. Deed of Trust by Xxxx Company to Mississippi Business Finance Corporation.
Dated 8/8/91. Amount $2,500,000.
0000 Xxxx Xxxxx, Xx Xxxxxxx, Xxxxxxxxxx*
1. Deed of Trust to Santa Xxxxxx Bank for $5,660,000.
* The Company represents and warrants that the underlying debt obligations
listed above for properties in Jonesboro, Arkansas; El Segundo, California;
Crystal Lake, Illinois and Xxxxx Springs, Mississippi have been extinguished by
satisfaction of the amounts owed prior to December 31, 1999.
Section 6.10
of the
XXXX COMPANY DISCLOSURE SCHEDULE
None
