AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 26, 1998
BY AND AMONG
SALTON/MAXIM HOUSEWARES, INC.
COLUMBIA ACQUISITION CORP.
AND
TOASTMASTER INC.
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated
as of August 26, 1998, is by and among Salton/Maxim Housewares,
Inc. a Delaware corporation ("Parent"), Columbia Acquisition
Corp., a Missouri corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and Toastmaster Inc., a Missouri
corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company,
Parent and Purchaser have determined that the merger of Purchaser
with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, would be
fair and in the best interests of their respective stockholders,
and such Boards of Directors have approved such Merger, pursuant
to which each issued and outstanding share of common stock, par
value $.10 per share ("Common Stock"), of the Company (the
"Shares") (other than (a) Shares owned, directly or indirectly,
by the Company or any subsidiary (as defined in Section 9.4) of
the Company or by Parent and (b) Dissenting Shares) will be
converted into the right to receive $7.00 per share in cash;
WHEREAS, the Merger and this Agreement require the
affirmative vote, in accordance with applicable law and the
Restated Articles of Incorporation and By-laws of the Company, of
at least two-thirds of the outstanding Shares entitled to vote
thereon for the approval thereof (the "Company Shareholder
Approval");
WHEREAS, Parent and Purchaser are unwilling to enter into
this Agreement unless, contemporaneously with the execution and
delivery of this Agreement, certain beneficial and record
stockholders of the Company enter into an agreement (the
"Shareholders Agreement") granting to Parent an option to
purchase all Shares beneficially owned by such shareholders under
certain circumstances;
WHEREAS, Parent, Purchaser 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; and
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement,
the parties agree as follows:
ARTICLE I.
THE MERGER
1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the provisions of The General and Business Corporation Law of
Missouri (the "MBCL"), Purchaser shall be merged with and into
the Company at the Effective Time (as defined in Section 1.3).
Upon the Effective Time, the separate existence of Purchaser
shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue,
under the name "Toastmaster Inc.," to be governed by the laws of
the State of Missouri. Purchaser and the Company are sometimes
hereinafter referred to collectively as "Constituent
Corporations."
1.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 8.1 and subject to the
satisfaction or waiver in writing by the applicable party or
parties of the latest to occur of the conditions set forth in
Article VII, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date not later than the second business
day after such satisfaction or waiver of the conditions set forth
in Article VII (or as soon as practicable thereafter) (the
"Closing Date"), at the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx,
0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, unless another date,
time or place is agreed to in writing by the parties hereto.
1.3. Effective Time. As soon as practicable following the
satisfaction, or waiver in writing by the applicable party or
parties, of the conditions set forth in Article VII, the parties
shall execute appropriate Articles of Merger (the "Articles of
Merger") as provided in the MBCL and shall make such other
filings, recordings or publications required under the MBCL in
connection with the Merger. The Merger shall become effective
upon the date on which the Articles of Merger have been received
for filing by the Secretary of the State of Missouri, or such
later date as is agreed upon by the parties and specified in the
Articles of Merger, and the time of such effectiveness is
hereinafter referred to as the "Effective Time."
1.4. Effects Of The Merger. The Merger shall have the
effects set forth in Section 351.450 of the MBCL.
1.5. Articles Of Incorporation; By-laws; Purposes. (a) At
the Effective Time of the Merger, and without any further action
on the part of the Company, Parent or Purchaser, the Restated
Articles of Incorporation of Purchaser, as in effect immediately
prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter
amended, as provided therein and under the MBCL.
(b) At the Effective Time of the Merger, and
without any further action on the part of the Company or Parent
or Purchaser, the By-laws of Purchaser as in effect at the
Effective Time shall be the By-laws of the Surviving Corporation
until thereafter amended as provided therein or by applicable
law.
1.6. Directors. The directors of Purchaser at the
Effective Time shall be the initial directors of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified,
as the case may be.
1.7. Officers. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed
and qualified, as the case may be.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1. Conversion of Shares. At the Effective Time and by
virtue of the Merger, automatically and without any action on the
part of the holders of the Shares or of the capital stock of
Parent or Purchaser:
(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled
pursuant to Subsection 2.1(b) below and Dissenting Shares) shall
be converted into the right to receive $7.00 in cash (the "Merger
Consideration"). All such Shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.3.
(b) Each Share held in the treasury of the Company,
if any, and each Share owned by Parent, Purchaser or the Company,
or by any direct or indirect subsidiary of any of them, shall be
cancelled and retired without payment of any consideration
therefor.
(c) All shares of common stock, par value $.01 per
share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into that number of validly
issued, fully paid and non-assessable shares of common stock, par
value $.01 per share, of the Surviving Corporation equal to the
aggregate number of shares of the Company issued and outstanding
immediately prior to the Effective Time.
2.2. Stock Options. The Company shall (i) terminate its
Non-Statutory Stock Option Plan, Non-Employee Directors Stock
Option Plan, 1997 Non-Employee Directors Stock Option Plan and
Incentive Stock Option Plan (collectively the "Option Plans"),
immediately prior to the Effective Time without prejudice to the
rights of the holders of options awarded pursuant thereto and
(ii) grant no additional options or similar rights under the
Option Plans or otherwise on or after the date hereof. As used
hereafter in this Section 2.3, "Options" shall include each stock
option granted by the Company, whether pursuant to the Option
Plans or otherwise.
The Company shall use its reasonable best efforts to obtain
the consent of each holder of any Options (whether or not then
exercisable) that it does not have the right to cancel to the
cancellation of his Options (irrespective of their exercise
price), and upon obtaining such consent, shall cancel the options
covered by such consent or, in the case of Options that the
Company has the right to cancel, shall cancel such Options, such
cancellation (whether or not consent is required therefor) to
take effect immediately after the Effective Time. In
consideration of each cancellation of Options, the Company shall
agree to and shall pay to such holders, immediately after the
Effective Time, in respect of each Option (whether or not then
exercisable) so cancelled, an amount equal to the excess, if any,
of the Merger Consideration over the exercise price thereof,
multiplied by the number of Shares subject thereto, reduced by
the amount of withholding or other taxes required by law to be
withheld.
2.3. Surrender of Certificates.
(a) From and after the Effective Time, a bank
or trust company to be designated by Parent, with the prior
approval of the Company (the "Exchange Agent"), shall act as
exchange agent in effecting the exchange, for the Merger
Consideration multiplied by the number of Shares formerly
represented thereby, of certificates (the "Certificates") that,
prior to the Effective Time, represented Shares entitled to
payment pursuant to Section 2.1. As of the Effective Time,
Parent shall, on behalf of Purchaser, deposit with the Exchange
Agent, for the benefit of the holders of Shares (excluding any
Shares described in Section 2.1(b) and Dissenting Shares, if
any), for the payment in accordance with this Article II, through
the Exchange Agent, cash in an amount equal to the Merger
Consideration multiplied by the number of outstanding Shares
immediately prior to the Effective Time (excluding any Shares
described in Section 2.1(b) and Dissenting Shares, if any) (such
cash being hereinafter referred to as the "Payment Fund"). Upon
the surrender of each Certificate and the delivery by the
Exchange Agent of the Merger Consideration in exchange for the
Shares represented by such Certificate multiplied by the number
of Shares represented by such Certificate, such Certificate shall
forthwith be cancelled. Until so surrendered and exchanged, each
such Certificate (other than Certificates representing Shares
held by Parent, Purchaser or the Company or any direct or
indirect subsidiary of Parent, Purchaser or the Company and
Dissenting Shares, if any) shall represent solely the right to
receive the Merger Consideration applicable to the Shares
represented by such Certificate multiplied by the number of
Shares represented by such Certificate. No interest shall be
paid or shall accrue on any amount payable on and after the
Effective Time by reason of the Merger upon the surrender of any
such Certificate. Upon the surrender and exchange of such an
outstanding Certificate, the holder shall receive the Merger
Consideration applicable to the Shares represented thereby,
without any interest thereon. If the Merger Consideration is to
be paid to a person other than the person in whose name the
Certificate representing Shares surrendered in exchange therefor
is registered, it shall be a condition to such payment or
exchange that such Certificate so surrendered be properly
endorsed or otherwise be in proper form for transfer, and that
the person requesting such payment or exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of
the payment of such Merger Consideration to a person other than
the registered holder of the Certificate surrendered, or such
person shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any Merger
Consideration or interest delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(b) Promptly following the date of the first
anniversary of the Effective Time, the Exchange Agent shall
return to the Surviving Corporation all cash in its possession
relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder
of a Certificate formerly representing Shares may surrender such
Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat or similar laws) receive
in exchange therefor the Merger Consideration applicable to the
Shares represented thereby, without any interest thereon, but
shall have no greater rights against the Surviving Corporation
than may be accorded to general creditors of the Surviving
Corporation under applicable law.
(c) Promptly after the Effective Time, the Exchange
Agent shall mail, to each record holder of Certificates that
immediately prior to the Effective Time represented Shares, a
form of letter of transmittal and instructions, approved by the
parties, for use in surrendering such Certificates and receiving
the Merger Consideration therefor.
(d) At and after the Effective Time, holders of
Certificates shall cease to have any rights as shareholders of
the Company except for the right to surrender such Certificates
in exchange for the Merger Consideration applicable to the Shares
represented thereby or the right, if any, to receive payment from
the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Section 351.455 of the MBCL and
Section 2.4 hereof, and there shall be no transfers on the stock
transfer books of the Company or the Surviving Corporation of any
Shares that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Merger Consideration, as provided
in Section 2.1 hereof, subject to applicable law in the case of
Dissenting Shares.
(e) The Exchange Agent shall invest any cash
included in the Payment Fund, as directed by the Surviving
Corporation, provided that such investment shall be
(i) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the
Effective Time, (ii) certificates of deposit, eurodollar time
deposits and bankers' acceptances with maturities not exceeding
six months and overnight bank deposits with any commercial bank,
depository institution or trust company incorporated or doing
business under the laws of the United States of America, any
state thereof or the District of Columbia, provided that such
commercial bank, depository institution or trust company has, at
the time of investment, (A) capital and surplus exceeding
$250 million and (B) outstanding short-term debt securities which
are rated at least A-1 by Standard & Poor's Rating Group Division
of The XxXxxx-Xxxx Companies, Inc. or at least P-1 by Moody's
Investors Services, Inc. or carry an equivalent rating by a
nationally recognized rating agency if both of the two named
rating agencies cease to publish ratings of investment, (iii)
repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (i) and
(ii) above entered into with any financial institution meeting
the qualifications specified in clause (ii) above, (iv)
commercial paper having a rating in the highest rating
categories from Standard & Poor's Rating Group Division of The
McGraw-Hills Companies, Inc. or Xxxxx'x Investors Services, Inc.
or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease to
publish ratings of investments and in each case maturing within
six months of the Effective Time and (v) money market mutual or
similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall
be paid to the Surviving Corporation.
Section 2.4. Dissenting Shares. Notwithstanding any
provision of this Agreement to the contrary, if required by the
MBCL, but only to the extent required thereby, Shares which are
issued and outstanding immediately prior to the Effective Time
and which are held by holders of such Shares who have properly
demanded appraisal rights with respect thereto in accordance with
Section 351.455 of the MBCL, and who have not failed to perfect
or who have not effectively withdrawn or who have not lost their
rights to appraisal and payment under Section 351.455 of the MBCL
(the "Dissenting Shares") will not be converted into the right to
receive the Merger Consideration, but such holder thereof shall
be entitled only to such rights to appraisal and payment under
the MBCL. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such Shares
will thereupon be treated as if they had been converted into and
have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon,
as provided in Section 2.1 hereof. Upon the Company's receipt of
any notice of election to dissent in accordance with the
provisions of such Section 351.455, the Company shall promptly
provide Parent with a copy of such notice of election to dissent.
The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such election to
dissent or offer to settle or settle any such election to
dissent.
Section 2.5. Withholding Rights. The Surviving
Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
person such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code (as defined
herein), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to a person in
respect of which such deduction and withholding was made by the
Surviving Corporation.
Section 2.6. Lost Certificates. If any Certificates
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 the Surviving
Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will pay the
Merger Consideration in accordance with the terms of this
Agreement to the registered owner of such Shares.
Section 2.7. Further Assurances. If at any time after
the Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper
(a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises,
properties or assets of either of the Constituent Corporations,
or (b) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations
in the Merger, all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of such Constituent
Corporations, all such other acts and things necessary, desirable
or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation
and otherwise to carry out the purposes of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
as follows:
Section 3.1. Organization, Standing and Power. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of Missouri and has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted.
The Company is duly qualified to do business, and is in good
standing, in each jurisdiction set forth in Schedule 3.1, which
are the only jurisdictions where the character of its properties
owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect. For purposes
of this Agreement, a "Material Adverse Change" or "Material
Adverse Effect" means any change or effect, either individually
or in the aggregate, that is or may be reasonably expected to be
materially adverse to the business, assets, liabilities,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Attached to
Schedule 3.1 are complete and correct copies of the Restated
Articles of Incorporation and By-Laws of the Company as currently
in effect.
Section 3.2. Capital Structure. (a) The authorized
capital stock of the Company consists of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value
$0.01 per share ("Preferred Stock"). At the close of business on
July 31, 1998: (i) 7,551,950 shares of Common Stock were issued
and outstanding; (ii) 93,900 shares of Common Stock were reserved
for issuance upon the exercise of outstanding options; and
(iii) 44,825 shares of Common Stock were held in the treasury of
the Company. At the close of business on July 31, 1998: (i) no
shares of Preferred Stock were issued and outstanding; and
(ii) no shares of Preferred Stock were held in the treasury of
the Company. Except as set forth above, no shares of capital
stock or other equity securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are validly issued, fully paid and
nonassessable and not subject to preemptive rights. Since
July 31, 1998, (i) no shares of the Company's capital stock have
been issued other than pursuant to the exercise of Company stock
options already in existence and outstanding on such date, and
(ii) the Company has not granted any stock options, warrants,
convertible securities or other rights to acquire any capital
stock of the Company.
(b) At the close of business on July 31, 1998, there are
outstanding options issued by the Company to purchase 93,900
shares of Common Stock. Schedule 3.2 contains a complete and
correct list of each outstanding option to purchase shares of
Common Stock, including: (i) the name of the holder of such
option issued by the Company; (ii) the number of shares subject
thereto; (iii) the exercise or "strike" price; (iv) the grant
date; (v) the expiration date; and (vi) the vesting terms. The
Company has delivered to Parent complete and correct copies of
all outstanding options to purchase Shares. There are no
outstanding bonds, debentures, notes or other indebtedness or
other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the
Company may vote. As of August 24, 1998, the only outstanding
indebtedness for borrowed money of the Company and its
subsidiaries is: (i) debt under the Loan and Security Agreement
dated as of November 19, 1993, as amended, between the Company
and Fleet Capital Corporation (successor in interest to Barclays
Credit Inc.) of $46,156,993; and (ii) other indebtedness for
borrowed money not exceeding $1,752,790, the sources of which,
and amounts attributable to each such source, are set forth in
Schedule 3.2.
(c) Except as otherwise set forth in this Section 3.2 or
in Schedule 3.2, there are no outstanding securities, options,
warrants, rights, calls, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of
the Company or any of its subsidiaries, including any securities
pursuant to which rights to acquire capital stock become
exercisable only after a change of control of the Company or upon
the acquisition of a specified amount of the Common Stock or
voting powers of the Company, or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, agreement arrangement or
undertaking.
(d) Except as set forth in Schedule 3.2, there are no
outstanding contractual obligations, commitments, understandings
or arrangements of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of the Company or any of
its subsidiaries and there are no irrevocable proxies with
respect to shares of capital stock of the Company or any of its
subsidiaries. Except as set forth in Schedule 3.2, there are no
agreements or arrangements pursuant to which the Company is or
could be required to register any Shares or other securities
under the Securities Act of 1933, as amended (the "Securities
Act") or other agreements or arrangements with or among the
Company and any securityholders of the Company with respect to
securities of the Company. Except as set forth in Schedule 3.2,
there are no securities issued by the Company or any of its
subsidiaries or agreements, arrangements or other understandings
to which the Company or any of its subsidiaries is a party giving
any person any right to acquire equity securities of the
Surviving Corporation or any of its subsidiaries at or following
the Effective Time and all securities, agreements, arrangements
and understandings relating to the right to acquire equity
securities of the Company (whether pursuant to the exercise of
options, warrants or otherwise) provide that, at and following
the Effective Time, such right shall entitle the holder thereof
to receive the consideration such holder would have received in
the Merger had such holder exercised such right immediately
before the Effective Time.
(e) Except as set forth in Schedule 3.2, there are no
voting trusts or other agreements or understandings with respect
is the voting of the capital stock of the Company or any of its
subsidiaries to which the Company or any of its subsidiaries is a
party.
Section 3.3. Subsidiaries. (a) Schedule 3.3 sets forth
each subsidiary of the Company and the jurisdiction of
incorporation of such subsidiary. Except as set forth in
Schedule 3.3, all of the outstanding shares of capital stock and
other ownership interests of the Company's subsidiaries have been
validly issued and are fully paid and nonassessable and are
owned, directly or indirectly, by the Company. Except as set
forth in Schedule 3.3, none of the shares or ownership interests
of the subsidiaries owned or held by the Company, directly or
indirectly, is subject to any Lien (as defined in Section
3.4(b)).
(b) Each subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has all
requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as currently
conducted. Each subsidiary of the Company is duly qualified to
do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the
nature of its activities make such qualification necessary,
except where the failure to be so qualified would not have a
Material Adverse Effect. The Company has delivered to Parent
complete and correct copies of the respective articles or
certificates of incorporation or by-laws, as amended to the date
hereof, of each of its subsidiaries.
(c) Except for its subsidiaries or as otherwise set forth
in Schedule 3.3, the Company does not directly or indirectly own
any capital stock of or other equity interest in any corporation,
partnership or other person and neither the Company nor any of
its subsidiaries is a member of or participant in any
partnership, joint venture or similar person.
Section 3.4. Authority and Absence of Conflict.
(a) Subject to obtaining the Company Shareholder
Approval, the Company has the requisite corporate power and
authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and unanimously
authorized by the Board of Directors of the Company, and, except
for the Company Shareholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and (subject, with respect
to consummation of the Merger, to the receipt of the Company
Shareholder Approval, and assuming that this Agreement
constitutes the valid and binding obligation of Parent and
Purchaser) constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect affecting the
enforcement of creditors' rights generally, or by general
equitable principles regardless of whether enforceability is
considered in a proceeding in equity or at law.
(b) Except as set forth in Schedule 3.4, and assuming the
receipt of the Company Shareholder Approval, neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions
hereof, will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance or payment required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or other encumbrance
(collectively, "Liens") upon any of the properties or assets of
the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the Restated Articles of
Incorporation or by-laws of the Company or any of its
subsidiaries, or (y) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a
party or to which any of them or any of their respective
properties or assets may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to the Company and its subsidiaries or
any of their respective properties or assets, except for (A) any
such violation, conflict, breach, default, termination,
acceleration, Lien that would not have a Material Adverse Effect
or prevent or delay the consummation of the transactions
contemplated hereby, (B) the filing of premerger notification
reports by the parties under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the
expiration of the applicable waiting period, (C) the filing with
the Securities and Exchange Commission (the "Commission") of a
proxy statement in definitive form relating to the meeting of the
Company's shareholders to be held in connection with the Merger
(the "Proxy Statement") and such reports under Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and such other compliance with the Exchange Act and the
rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated
hereby, and (D) the filing of the Missouri Articles of Merger
with the Secretary of the State of Missouri.
(c) Other than in connection with or in compliance with
the provisions of the MBCL, the HSR Act, and the Exchange Act, no
notice to, filing with, or authorization, consent or approval of,
any state or local government or any court, tribunal,
administrative agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental
Entity") is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
Section 3.5. SEC Documents. (a) Since January 1, 1996,
the Company has filed with the Commission all reports, schedules,
statements and other documents required to be filed by it under
the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act (as such documents have been filed prior to the
date hereof, and amended since the time of their filing prior to
the date hereof, and in each case including all exhibits and
schedules thereto and documents incorporated by reference
therein, collectively, the "Company SEC Documents"). As of their
respective dates (or if amended or superseded by a filing prior
to the date hereof, then on the date of such filing), the Company
SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Company SEC Documents (including any
and all financial statements included therein) contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated
financial statements of the Company included in all of the
Company SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules
and regulations of the Commission with respect thereto, have been
prepared in accordance with United States generally accepted
accounting principles ("GAAP") (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of
the Commission) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position
of the Company and its consolidated subsidiaries as at the dates
thereof and the results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(b) Except as set forth in the Company SEC Documents,
neither the Company nor any of its subsidiaries has any liability
or obligation of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected
on a balance sheet, or in the notes thereto, prepared in
accordance with GAAP, except for (i) liabilities and obligations
incurred in the ordinary course of business consistent with past
practice since January 1, 1998 which could not reasonably be
expected to have a Material Adverse Effect, and (ii) liabilities
incurred under this Agreement.
(c) The Company has heretofore made available or promptly
shall make available to Parent a complete and correct copy of any
amendments or modifications, which have not yet been filed with
the Commission, to agreements, documents or other instruments
which previously have been filed with the Commission pursuant to
the Exchange Act.
Section 3.6. Absence of Certain Events. Except as set
forth on Schedule 3.6, since January 1, 1998, the Company and its
subsidiaries have operated their respective businesses only in
the ordinary course consistent with past practice and, except as
set forth in Schedule 3.6 or in the Company SEC Documents, there
has not occurred (i) any event, occurrence or condition which,
individually or in the aggregate, has, or is reasonably likely to
have, a Material Adverse Effect; (ii) any entry into any
commitment or transaction that, individually or in the aggregate,
has or is reasonably likely to have, a Material Adverse Effect;
(iii) any change by the Company in its accounting methods,
principles or practices; (iv) any amendments or changes in the
respective articles or certificate of incorporation or
organization or by-laws of the Company or any of its
subsidiaries; (v) any revaluation by the Company or any of its
subsidiaries of any of their respective assets; (vi) any damage,
destruction or loss which resulted in or is reasonably likely to
result in a Material Adverse Effect; (vii) any declaration,
setting aside or payment of any dividend or other distribution
with respect to any shares of capital stock of the Company or any
of its 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; (viii) any grant of any severance or termination
pay to any director, officer or employee of the Company or any of
its Subsidiaries; (ix) any entry into any employment, deferred
compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee
of the Company or any of its subsidiaries; (x) any increase in
benefits payable under any existing severance or termination pay
policies or employment agreements with any director, officer or
employee of the Company or any of its subsidiaries; (xi) any
increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its
subsidiaries (except for salary increases to employees other than
officers in the ordinary course of business); or (xii) any other
action that would be prohibited by Section 5.1 on and after the
date of this Agreement.
Section 3.7. Litigation. Except as set forth in
Schedule 3.7 or the Company SEC Documents, there are no actions,
suits or proceedings pending or, to the best of the Company's
knowledge, threatened against the Company or any of its
subsidiaries, at law or in equity, or before or by any federal,
state or local government or any court, tribunal, administrative
agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") or any arbitrator
or arbitration tribunal, and no development has occurred with
respect to any pending or threatened action, suit or proceeding
that is reasonably likely to result in a Material Adverse Effect
or prevent or delay the consummation of the transactions
contemplated hereby.
Section 3.8. Compliance with Applicable Law. The
Company and its subsidiaries hold and at all required times have
held, all permits, licenses, variances, exceptions, orders and
approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Permits"), except
for the failure to hold any such Permit that could not reasonably
be expected to have a Material Adverse Effect. The Company and
its subsidiaries are, and at all times have been, in compliance
with the terms of the Permits, except for any failure to comply
which could not reasonably be expected to have a Material Adverse
Effect. The businesses of the Company and its subsidiaries are
not being, and have not been, conducted in violation of any
applicable law, ordinance or regulation of any Governmental
Entity, except for any failure to comply which could not
reasonably be expected to have a Material Adverse Effect. Except
as set forth in Schedule 3.8, no investigation or review by any
Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the best of the Company's
knowledge, threatened, nor has any Governmental Entity, to the
best of the Company's knowledge, indicated an intention to
conduct the same.
Section 3.9. Employee Plans. (a) Schedule 3.9 is a list
of each "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (hereinafter a "Pension Plan"),
"employee welfare benefit plan" (as defined in Section 3(1) of
ERISA, hereinafter a "Welfare Plan"), and each other agreement,
plan, arrangement, program or policy relating to any bonus,
profit sharing, retirement, pension, group insurance, death
benefit, cafeteria, flexible spending account, medical, dependent
care, stock options, stock purchases, stock appreciation rights,
savings, compensation, employment, consulting, deferred
compensation, severance, termination pay, fringe benefits or
other employee benefits, in each case maintained or contributed
to, or required to be maintained or contributed to, by the
Company, any of its subsidiaries or any other person that,
together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (as hereinafter
defined) (each a "Commonly Controlled Entity") for the benefit of
any present or former employees of the Company or any of its
subsidiaries (all the foregoing being herein called "Benefit
Plans"). The Company has made available to Parent true, complete
and correct copies of (i) each Benefit Plan, (ii) the most recent
annual report on Form 5500 as filed with the Internal Revenue
Service with respect to each applicable Benefit Plan, (iii) the
most recent summary plan description (or similar document) with
respect to each applicable Benefit Plan and (iv) each trust
agreement and insurance or annuity contract relating to any
Benefit Plan.
(b) Except as set forth in Schedule 3.9, each Benefit
Plan has been administered in all material respects in accordance
with its terms. Except as set forth in Schedule 3.9, the
Company, its subsidiaries and all the Benefit Plans are in
compliance in all material respects with the applicable
provisions of ERISA, the Code, and all other laws, ordinances or
regulations of any Governmental Entities. Except as set forth in
Schedule 3.9, to the best of the Company's knowledge, there are
no investigations by any Governmental Entities, termination
proceedings or other claims (except claims for benefits payable
in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting
any rights to or claims for benefits under any Benefit Plan.
(c) Except as set forth in Schedule 3.9, (i) all
contributions to the Benefit Plans required to be made by the
Company or any of its subsidiaries in accordance with the terms
of the Benefit Plans, any applicable collective bargaining
agreement and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made, (ii) there has
been no application for or waiver of the minimum funding
standards imposed by Section 412 of the Code with respect to any
Benefit Plan that is a Pension Plan, excluding any Pension Plan
which is a multiemployer pension plan as defined in
Section 4001(a)(3) of ERISA (hereinafter a "Company Pension
Plan") and (iii) no Company Pension Plan had an "accumulated
funding deficiency" within the meaning of Section 412(a) of the
Code as of the end of the most recently completed plan year.
(d) Except as set forth in Schedule 3.9, (i) each Company
Pension Plan that is intended to be a tax-qualified plan has been
the subject of a determination letter from the Internal Revenue
Service to the effect that such Company Pension Plan and each
related trust is qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code,
(ii) no such determination letter has been revoked, and to the
best of the Company's knowledge, revocation has not been
threatened, (iii) no event has occurred and no circumstances
exist that would adversely affect the tax-qualification of such
Company Pension Plan and (iv) such Company Pension Plan has not
been amended since the effective date of its most recent
determination letter in any respect that might adversely affect
its qualifications, increase its cost or require security under
Section 307 of ERISA. The Company has made available to Parent a
copy of the most recent determination letter received with
respect to each Company Pension Plan for which such a letter has
been issued, as well as a copy of any pending application for a
determination letter. The Company has also provided to Parent a
list of all Company Pension Plan amendments as to which a
favorable determination letter has not yet been received.
(e) Except as set forth in Schedule 3.9: (i) no non-
exempt "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) has occurred that involves the
assets of any Benefit Plan; (ii) no Company Pension Plan has been
terminated or has been the subject of a "reportable event" (as
defined in Section 4043 of ERISA and the regulations thereunder)
for which the 30-day notice requirement has not been waived by
the Pension Benefit Guaranty Corporation ("PBGC"); and (iii) none
of the Company, any of its subsidiaries or, to the best of the
Company's knowledge, any trustee, administrator or other
fiduciary of any Benefit Plan has engaged in any transaction or
acted in a manner that could, or has failed to act so as to,
subject the Company, any such subsidiary or any trustee,
administrator or other fiduciary to any liability for breach of
fiduciary duty under ERISA or any other applicable law.
(f) Except as set forth in Schedule 3.9, as of the most
recent valuation date for each Company Pension Plan that is a
"defined benefit pension plan" (as defined in Section 3(35) of
ERISA (hereinafter a "Defined Benefit Plan")), there was not any
material amount of "unfunded benefit liabilities" (as defined in
Section 4001(a)(18) of ERISA) under such Defined Benefit Plan,
and the Company is not aware of any facts or circumstances that
would change the funded status of any such Defined Benefit Plan.
The Company has made available to Parent the most recent
actuarial report or valuation with respect to each Defined
Benefit Plan.
(g) Except as set forth in Schedule 3.9, no Commonly
Controlled Entity has incurred any liability to a Pension Plan
(other than for contributions not yet due) or to the PBGC (other
than for the payment of premiums not yet due).
(h) No Commonly Controlled Entity has (i) engaged in a
transaction described in Section 4069 of ERISA that could subject
the Company to a liability at any time after the date hereof or
(ii) acted or failed to act, in a manner that could reasonably be
excepted to result in fines, penalties, taxes or related charges
under (x) Section 502(c), (i) or (1) of ERISA, (y) Section 4071
of ERISA or (z) Chapter 43 of the Code.
(i) Except as set forth in Schedule 3.9, no Commonly
Controlled Entity has announced an intention to withdraw, but has
not yet completed withdrawal, from a "multiemployer pension plan"
(as defined in Section 4001(a)(3) of ERISA). Except as set forth
in Schedule 3.9, no action has been taken, and no circumstances
exist, that could reasonably be excepted to result in either a
partial or complete withdrawal from such a multiemployer pension
plan by any Commonly Controlled Entity. Schedule 3.9 also lists
for each Benefit Plan that is a multiemployer pension plan the
Company's reasonable estimate, based upon the information
supplied to it by each multiemployer pension plan, of the amount
of withdrawal liability that would be incurred if each Commonly
Controlled Entity were to make a complete withdrawal from each
such plan as of the dates specified in Schedule 3.9.
Schedule 3.9 also lists for each Benefit Plan that is a
multiemployer pension plan the Company's reasonable estimate,
based upon the information supplied to it by each multiemployer
pension plan, of the amount of "unfunded vested benefits" (within
the meaning of Section 4211 of ERISA) as of the dates specified
in Schedule 3.9.
(j) The list of Welfare Plans in Schedule 3.9 discloses
whether each Welfare Plan is (i) unfunded, (ii) funded through a
"welfare benefit fund", as such term is defined in Section 419(e)
of the Code, or other funding mechanism or (iii) insured. Except
as disclosed in Schedule 3.9, and to the best of the Company's
knowledge, there are no understandings, agreements or
undertakings, written or oral, that would prevent any such
Welfare Plan from being amended or terminated at any time after
the Closing Date. The Company and its subsidiaries comply with
the applicable requirements of Section 4980B(f) of the Code with
respect to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code.
(k) Except as provided in the employment and severance
agreements listed in Schedule 3.9, no employee of the Company or
any of its subsidiaries will be entitled to any additional
material benefits or vesting of any benefits under any Benefit
Plan as a result of the transactions contemplated by this
Agreement.
(l) Except as set forth in Schedule 3.9, during the
period beginning on January 1, 1998 and ending on the date of
this Agreement, there has been no change (i) in any actuarial or
other assumption used to calculate funding obligations with
respect to any Company Pension Plan or (ii) in the manner in
which contributions to any Company Pension Plan are made or the
basis on which such contributions are determined.
(m) Except as set forth in Schedule 3.9, any amount that
could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangements or Benefit
Plans currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in
Section 280G(B)(1) of the Code). Schedule 3.9 sets forth (i) the
Company's reasonable estimate of the maximum amount that could be
paid to each executive officer of Company as a result of the
transactions contemplated by this Agreement under all employment,
severance and termination agreements, other compensation
arrangements and Benefit Plans currently in effect and (ii) the
Company's reasonable estimate of the "base amount" (as such term
is defined in Section 280(b)(3) of the Code) for each such
executive officer calculated as of the date of this Agreement.
Section 3.10. Employment Relations. Except as set forth
in Schedule 3.10 and except for any acts or omissions to act or
matters referred to below which could not reasonably be expected
to have a Material Adverse Effect, (i) the Company and its
subsidiaries are, in compliance with all federal, state or other
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and are
not engaged in any unfair labor practice; (ii) no unfair labor
practice complaint against the Company or any of its subsidiaries
is pending before the National Labor Relations Board; (iii) there
is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving the Company or any of
its subsidiaries; (iv) no representation question has been raised
with the Company respecting the employees of the Company or any
of its subsidiaries; (v) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement;
(vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its subsidiaries; (vii) no
grievance is pending or threatened against the Company or any of
its subsidiaries; (viii) neither the Company nor any of its
subsidiaries is liable for any severance pay or other payments to
any employee or former employee arising from the termination of
employment under any benefit or severance policy, practice,
agreement, plan, or program of the Company or any of its
subsidiaries, nor will the Company or any of its subsidiaries
have any liability which exists or arises, or may be deemed to
exist or arise, under any applicable law or otherwise, as a
result of or in connection with the transactions contemplated
hereunder or as a result of the termination by the Company and
each of its subsidiaries of any persons employed by the Company
or any of its subsidiaries on or prior to the Effective Time;
(ix) each of the Company and each of its subsidiaries is in
compliance with its obligations pursuant to the Worker Adjustment
and Retraining Notification Act of 1988, and all other employee
notification and bargaining obligations arising under any
collective bargaining agreement, statute or otherwise; and (x)
neither the Company nor any of its subsidiaries has experienced
any strike, threatened strike, picketing or union election during
the last three years.
Section 3.11. Contracts. To the best of the Company's
knowledge, Schedule 3.11 sets forth a complete and accurate list
of any of the following (including all amendments and/or
modifications to the following) to which the Company or any of
its subsidiaries is a party or by which Company or any of its
subsidiaries is bound (collectively, "Scheduled Contracts"):
(i) all deeds, indentures, leases, subleases or
other instruments by which an ownership, leasehold or other
interest in real property is held by the Company or any of
its subsidiaries;
(ii) all contracts, commitments or agreements,
including contracts or licenses pertaining to the payment of
royalties, to the extent that any such agreement
individually includes provisions that do or could involve
payments or commitments (whether fixed or contingent) to or
from the Company or any of its subsidiaries for a fixed
amount, or a reasonably expected amount, in excess of
$100,000;
(iii) all management, compensation, employment or
severance contracts, commitments or agreements or contracts
or agreements entered into with any director, officer or
employee of the Company or any of its subsidiaries;
(iv) all contracts or agreements under which the
Company or any of its subsidiaries has any outstanding
indebtedness, obligation or liability for borrowed money or
the deferred purchase price of property or has the
obligation to incur any such indebtedness, obligation or
liability, in each case in an amount greater than $100,000;
(v) all bonds or agreements of guarantee or
indemnification in which the Company or any of its
subsidiaries acts as surety, guarantor or indemnitor with
respect to any individual obligation (fixed or contingent)
in a fixed amount or a reasonably expected amount greater
than $100,000; and
(vi) all secrecy, noncompete or other agreements
which (A) restrict the right of the Company or any of its
subsidiaries to engage in any business or (B) would restrict
the right of Parent or any of affiliates to engage in any
business after the consummation of the transactions
contemplated by this Agreement;
Except as set forth on Schedule 3.11, (i) neither the
Company nor any of its subsidiaries is in default under the terms
of any Scheduled Contract, (ii) no other party thereto is in
default under the terms of any Scheduled Contract and (iii) each
Material Contract is in full force and effect.
Section 3.12. Environmental Laws and Regulations. Except
as disclosed in Schedule 3.12 and to the best of the Company's
knowledge:
(i) The Company and its subsidiaries hold and
are in material compliance with all Environmental Permits
(as defined below), and the Company and its subsidiaries are
otherwise in compliance with all Environmental Laws (as
defined below), except for any failure to hold any
Environmental Permit, or be in compliance with any
Environmental Permit or Environmental Law that could not
reasonably be expected to have a Material Adverse Effect,
and there are no conditions that might prevent or interfere
in any material respect with such compliance in the future;
(ii) As of the date hereof, neither the
Company nor any of its subsidiaries has received any
Environmental Claim (as defined below) and there is no
threatened Environmental Claim;
(iii) Neither the Company nor any of its
subsidiaries has entered into any consent decree, order or
agreement under any Environmental Law;
(iv) There are no (A) underground storage
tanks, (B) polychlorinated biphenyls, (C) friable asbestos
or asbestos-containing materials, (D) surface impoundments,
or (E) landfills, or present at any facility currently
owned, leased or operated by the Company or any of its
subsidiaries;
(v) There are no past (including, without
limitation, with respect to assets or businesses formerly
owned, leased or operated by the Company or any of its
subsidiaries) or present actions, activities, events,
conditions or circumstances, including without limitation
the release, threatened release, emission, discharge,
generation, treatment, storage or disposal of Hazardous
Materials;
(vi) No modification, revocation, reissuance,
alteration, transfer, or amendment of the Environmental
Permits, or any review by, or approval of, any third party
of the Environmental Permits is required in connection with
the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby or the
continuation of the business of the Company or its
subsidiaries following such consummation;
(vii) Hazardous Materials have not been
generated, transported, treated, stored, disposed of,
released or threatened to be released at, on, from or under
any of the properties or facilities currently owned, leased
or otherwise used by the Company or any of its subsidiaries,
in violation of, or so as could result in liability under,
any Environmental Laws;
(viii) None of the Company or its subsidiaries
has contractually assumed any liabilities or obligations
under any Environmental Laws;
(ix) For purposes of this Agreement, the
following terms shall have the following meanings:
(A) "Environmental Claim" means any written notice, claim,
demand, action, suit, complaint, proceeding or other
communication by any person alleging liability or potential
liability (including without limitation liability or
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages,
property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (1)
the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, owned,
leased or operated by the Company or any of its subsidiaries
or (2) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental
Permit or (3) otherwise relating to obligations or
liabilities under any Environmental Laws; (B) "Environmental
Permits" means all permits, licenses, registrations and
other governmental authorizations required under
Environmental Laws for the Company and its subsidiaries to
conduct their operations and businesses on the date hereof
and consistent with past practices; (C) "Environmental Laws"
means all applicable federal, state and local statutes,
rules, regulations, ordinances, orders, decrees and common
law relating in any manner to contamination, pollution or
protection of the environment, including without limitation
the Comprehensive Environmental Response, Compensation and
Liability Act, the Solid Waste Disposal Act, the Clean Air
Act, the Clean Water Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking
Water Act, all as amended, and similar state laws; and
(D) "Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum
(including crude oil or any fraction thereof) and petroleum
products, friable asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials,
and substances regulated pursuant to, or that could
reasonably be expected to provide the basis of liability
under, any Environmental Law.
Section 3.13. Property and Leases. (a) Schedule 3.13
sets forth all of the real property owned by the Company and each
of its subsidiaries (the "Owned Real Property"). Schedule 3.13
sets forth all of the real property and interests in real
property leased by the Company and each of its subsidiaries (the
"Leased Real Property", and together with the Owned Real
Property, the "Company Property"). Each of the Company or its
subsidiaries, as the case may be, has good and marketable fee
title to the Owned Real Property, subject only to Permitted Liens
(as defined below) and those Liens described in (b) below, except
for (a) Liens set forth on Schedule 3.13, (b) Liens reflected in
the Company SEC Documents, and (c) Liens, easements, restrictions
and reservations that are reflected in the title reports or
surveys, if any, delivered to Purchaser in connection with the
transactions contemplated hereby. Each of the Company or its
subsidiaries, as the case may be, has a valid and existing
leasehold interest in all Leased Real Property, subject only to
Permitted Liens and those Liens described in (b) below, except
for (a) Liens set forth on Schedule 3.13 and (b) Liens reflected
in the Company SEC Documents.
(b) All Company Property and personal properties owned by
the Company or any of its subsidiaries are owned free and clear
of all Liens or leased free and clear of all Liens applicable to
such leasehold interest, except for (i) Liens for taxes and
assessments or governmental charges or levies which are not at
the time of Closing due or payable or which are being contested
in good faith and (ii) Liens in respect of pledges or deposits
under workers' compensation laws or similar legislation,
carriers', warehousemen's, mechanics', laborers' and
materialmen's and similar Liens, which have been incurred in the
ordinary course of business, so long as the obligations secured
by such Liens are not then delinquent or which are being
contested in good faith. The Owned Real Property and personal
properties owned by the Company or any of its subsidiaries are
not subject to any Liens, building or use restrictions,
exceptions, variances, reservations or limitations of any nature
whatsoever which interfere with or are violated by the existence
of the improvements thereon or the current use and operation of
each such Owned Real Property or personal properties,
respectively, to which it relates in the business of the Company
and its subsidiaries as currently conducted, except for any
interference or violation that could not reasonably be expected
to have a Material Adverse Effect.
Section 3.14. Intellectual Property. (a) Schedule 3.14
lists all Intellectual Property (as defined below) owned or used
by the Company or its subsidiaries, which is the subject of a
registration or application for registration submitted to any
Governmental Entity, and summarizes the nature of the Company's
or its subsidiaries' rights therein and thereto.
(b) The Company and its subsidiaries own or have the
right to use all Intellectual Property reasonably necessary for
the Company and its subsidiaries to conduct their business as it
is currently conducted and consistent with past practice.
(c) Except as set forth on Schedule 3.14 and except for
acts or omissions or matters referred to below which could not
reasonably be expected to have a Material Adverse Effect:
(i) all of the registered Intellectual Property of the Company
and its subsidiaries listed on Schedule 3.14 is subsisting and
unexpired, free of all Liens, has not been abandoned and, to the
best of the Company's knowledge, does not infringe or otherwise
impair the intellectual property rights of any third party;
(ii) none of the Intellectual Property owned by the Company or
its subsidiaries is the subject of any license, security interest
or other agreement granting rights therein to any third party;
(iii) to the best of the Company's knowledge, no judgment,
decree, injunction, rule or order has been rendered by any
Governmental Entity which would limit, cancel or question the
validity of, or the Company's or its subsidiaries' rights in and
to, any Intellectual Property; (iv) the Company has not received
notice of any pending or threatened suit, action or proceeding
that seeks to limit, cancel or question the validity of, or the
Company's or its subsidiaries' rights in and to, any Intellectual
Property; and (v) the Company and its subsidiaries take
reasonable steps to protect, maintain and safeguard the
Intellectual Property owned by the Company or its subsidiaries,
including any Intellectual Property for which improper or
unauthorized disclosure would impair its value or validity.
(d) For purposes of this Agreement "Intellectual
Property" shall mean all rights, privileges and priorities
provided under U.S., state and foreign law relating to
intellectual property, including without limitation all
(i) (A) inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments,
technology, new and useful improvements thereof and know-how
relating thereto, whether or not patented or eligible for patent
protections; (B) copyrights and copyrightable works, including
computer applications, programs, software, databases and related
items; (C) trademarks, service marks, trade names, and trade
dress, the goodwill of any business symbolized thereby, and all
common-law rights relating thereto; (D) trade secrets and other
confidential information; and (ii) all registrations,
applications, recordings, and licenses or other similar
agreements related to the foregoing.
Section 3.15. Insurance. The Company has provided to
Parent copies of all policies of insurance maintained by or on
behalf of the Company or its subsidiaries. The insurance
coverage provided by such policies of insurance will be continued
through the Effective Time and will not terminate or lapse by
reason of the transactions contemplated by this Agreement.
Except as set forth in Schedule 3.15, neither the Company nor any
of its subsidiaries has been denied insurance coverage by any
carrier in the last three years.
Section 3.16. Takeover Statutes. The Board of Directors
of the Company has taken all appropriate action to render the
restrictions on business combinations contained in
Section 351.459 of the MBCL inapplicable to this Agreement and
the Shareholders Agreement and the consummation of the
transactions contemplated hereunder and thereunder, including,
without limitation, the purchase of securities pursuant to the
Shareholders Agreement.
Section 3.17. Taxes. (a) For purposes of this Agreement,
(i) "Tax" or "Taxes" shall mean all Federal, state, county,
local, municipal, foreign and other taxes, assessments, duties or
similar charges of any kind whatsoever, including all corporate
franchise, income, sales (including bulk sales), use, ad valorem,
intangible, receipts, value added, profits, license, withholding,
payroll, employment, excise, premium, real property, personal
property, personal property, customs, net worth, estimated,
capital, gains, transfer, stamp, documentary, social security,
alternative minimum, accumulated earnings, goods and services,
recapture, recording, severance, environmental (including but not
limited to, taxes under Section 59A of the Code), occupation and
other taxes, and including any interest, penalties and additions
imposed with respect to such amounts; (ii) "Code" shall mean the
Internal Revenue Code of 1986, as amended, and reference to any
Section of the Code shall refer to that Section in effect at the
date hereof; (iii) "Taxing Authority" shall mean any domestic,
foreign, federal, national, state, county or municipal or other
local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory
authority; and (iv) "Return" or "Returns" shall mean all returns,
reports, estimates, information returns and statements, including
any related or supporting information filed with respect to any
of the foregoing, maintained, filed or to be filed with any
Taxing Authority in connection with the determination,
assessment, collection or administration of any Taxes.
(b) Except as set forth in Schedule 3.17, the Company and
each of its subsidiaries has timely filed, with the appropriate
Taxing Authority all material Returns required to be filed on or
prior to the date hereof and each such Return was complete in all
material respects at the time of filing.
(c) Except as set forth on Schedule 3.17, all Taxes
(including Taxes for which no Returns are required to be filed
and including payroll and wage withholding Taxes) of the Company
and any of its subsidiaries ("Covered Taxes"), which are due and
payable have been duly and timely paid.
(d) Except as set forth on Schedule 3.17, the Company has
made available for inspection by Parent (i) complete and correct
copies of all Returns of the Company and each of its
subsidiaries, with respect to Federal, state, provincial, county,
local, municipal, foreign and other income, profits, corporate
franchise, receipts, sales, excise, property, net worth and all
other Taxes, that are or have been required to be filed for
taxable periods ending with or within the last five calendar
years (ii) complete and correct copies of all material ruling
requests, private letter rulings, revenue agent reports,
information document requests and responses thereto, notices of
proposed deficiencies, deficiency notices, applications for
changes in method of accounting, protests, petitions, closing
agreements, settlement agreements, and any similar documents
submitted by, received by or agreed to by or on behalf of the
Company or any of the subsidiaries and relating to Covered Taxes.
(e) Except as set forth on Schedule 3.17 and for taxes
not yet due, no material Liens for Taxes exist with respect to
any of the assets or properties of the Company or any of its
subsidiaries. Schedule 3.17 lists all federal, state and local
income Returns filed with respect to the Company for taxable
periods ended on or after December 31, 1994, indicates those
Returns that have been audited, and indicates those Returns that
currently are the subject of audit or any administrative or
judicial proceeding. Except as set forth on Schedule 3.17, each
deficiency resulting from any audit or examination relating to
Covered Taxes by any Taxing Authority has been paid and no issues
were raised in writing by the relevant Taxing Authority during
any such audit or examination that might apply to taxable periods
other than the taxable period to which such audit or examination
related. Except as set forth on Schedule 3.17, (i) to the best
of the Company's knowledge, no Returns with respect to Federal
income Taxes are currently under audit or examination by the
Internal Revenue service and any other Taxing Authority, (ii) to
the best of the Company's knowledge, no audit or examination
relating to Covered Taxes is currently being conducted by the
Internal Revenue Service or any other Taxing Authority and
(iii) neither the Internal Revenue Service nor any other Taxing
Authority has given notice in writing that it will commence any
such audit or examination.
(f) Except as set forth on Schedule 3.17, as of the date
hereof no Taxing Authority is asserting or, to the best of the
Company's knowledge, threatening to assert, any deficiency or
claim for Covered Taxes or any adjustment to any item of income,
gain, deduction, loss, credit, or tax basis entering into the
computation of Covered Taxes.
(g) Except as set forth in Schedule 3.17, (i) no person
has made with respect to the Company or any of its subsidiaries,
or with respect to any property held by the Company or any of its
subsidiaries, any consent under Section 341 of the Code, (ii) no
property owned by the Company or any of its subsidiaries
constitutes "tax-exempt use property" (as defined in
Section 169(h) of the Code), (iii) to the best of the Company's
knowledge, neither the Company nor any of its Subsidiaries is a
party to any lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect prior to
the date of enactment of the Tax Equity and Fiscal Responsibility
Act of 1982 and (iv) none of the assets owned by the Company or
any of its Subsidiaries is subject to a lease under
Section 7701(h) of the Code or under any predecessor.
(h) There is no agreement extending, or having the effect
of extending, the period of assessment or collection of any
Covered Taxes and no unrevoked power of attorney with respect to
any Covered Taxes has been executed or filed with the Internal
Revenue Service or any other Taxing Authority.
(i) Since January 1, 1995, the Company has not been a
member of any affiliated or consolidated, combined, unitary or
aggregate group for purposes of filing Returns or paying Taxes at
any time except for a group for which the Company is a parent.
(j) Except as set forth in Schedule 3.17, none of the
Company or any of its subsidiaries is a party to or is bound by
any Tax sharing agreements with any of its affiliates, or with
any Taxing Authority.
(k) Except as set forth on Schedule 3.17, none of the
Company or any of the subsidiaries will be required in a taxable
period beginning on or after the Closing Date to include any
amount in income pursuant to Section 481 of the Code, by reason
of a change in accounting methods or otherwise, as a result of
actions taken prior to the Closing Date.
(l) Schedule 3.17 lists each state, county, local,
municipal or foreign jurisdiction in which Company or any of the
subsidiaries files or, has filed a Return or is or has been
liable for Tax on a "nexus" basis for the current and preceding
three years.
(m) The Company has an estimated consolidated net
operating carryover for regular Federal income tax purposes as of
December 31, 1997 of approximately $3,400,000 for the year ended
December 31, 1997 and approximately $507,000 for the year ended
December 31, 1996. The Company has tax credit carryforwards as
of December 31, 1997 of approximately $300,000 for the year ended
December 31, 1993 and approximately $222,000 for the year ended
December 31, 1996.
Section 3.18. Customers. Schedule 3.18 sets forth a list
of the twenty (20) largest customers of the Company and its
subsidiaries, as measured by the dollar amount of purchases by
such customers, during the year ended December 31, 1997 and the
six months ended June 30, 1998, calculated based on the
approximate total sales by the Company and its subsidiaries to
each such customer during each such period. To the best of the
Company's knowledge, since December 31, 1997, no customer listed
on Schedule 3.18 has (i) cancelled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship
with the Company or any of its subsidiaries, or (ii) materially
changed, or requested a material change in the price or quantity
of the goods, services and products sold by the Company or any of
its subsidiaries to such customer.
Section 3.19. Interests of Certain Persons. Except as
disclosed in Schedule 3.19, no officer or director of the
Company, or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) of any such officer or director, has
any interest in any contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of
the Company or any of its subsidiaries or has indebtedness owing
to the Company or any of its subsidiaries.
Section 3.20. Information Supplied. None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement
(as defined in Section 6.1(a)) will, at the date it is first
mailed to the Company's shareholders or at the time of the
Shareholders Meeting (as defined in Section 6.1(c)), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they are made, not misleading. The Proxy Statement will
comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference
therein based on information supplied in writing by or on behalf
of Parent or Purchaser specifically for inclusion therein.
Section 3.21. Required Company Vote. The Company
Shareholder Approval, being the affirmative vote of at least
two-thirds of the outstanding Shares, are the only votes of the
holders of any class or series of the Company's securities
necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 3.22. Opinion Of Financial Advisor. The Company
has received the opinion of Credit Suisse First Boston
Corporation (the "Company Financial Advisor"), dated the date of
this Agreement, to the effect that, as of such date, the Merger
Consideration to be received by the Company's shareholders
pursuant to the Merger is fair to such holders of Shares from a
financial point of view.
Section 3.23. Board Recommendation. The Board of
Directors of the Company, at a meeting duly called and held, has
duly and unanimously, subject to the terms and conditions set
forth herein, (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are fair
to and in the best interests of the shareholders of the Company
and (ii) subject to Section 6.1(c) hereof, resolved to recommend
that the holders of Shares approve this Agreement and the
transactions contemplated herein, including the Merger.
Section 3.24. Brokers. No broker, investment banker or
other person, other than the Company Financial Advisor, the fees
and expenses of which will be paid by the Company, is entitled to
any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A
copy of the engagement letter between the Company Financial
Advisor and the Company setting forth the fees and expenses to be
paid by the Company in connection with the transactions
contemplated by this Agreement has been provided to Parent.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser each represent and warrant, jointly and
severally, to the Company as follows:
4.1. Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation and is in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated
by it, or the business conducted by it, requires such
qualification and where failure to so qualify or be in good
standing would have an Acquiror Material Adverse Effect. For
purposes of this Agreement, an "Acquiror Material Adverse Effect"
means any change or effect, either individually or in the
aggregate, that is or may be reasonably expected to be materially
adverse to the business, assets, liabilities, properties,
financial condition or results of operations of Parent and its
subsidiaries taken as a whole. Each of Parent and Purchaser has
the requisite corporate power and authority to own, operate and
use its respective properties to carry on its respective
businesses as they are now being conducted. Copies of the
respective charter documents and by-laws of Parent and Purchaser
have heretofore been delivered to the Company, and such copies
are complete and correct as of the date hereof.
4.2. Capital Stock of Parent and Purchaser. As of the
date hereof, and at all times thereafter up to and including the
Effective Time, all of the outstanding shares of common stock,
par value $.01 per share, of Purchaser shall be duly authorized,
validly issued, fully paid, non-assessable and owned directly by
Parent, free and clear of all Liens.
4.3. Authority and Absence of Conflict.
(a) Each of Parent and Purchaser has the requisite
corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have
been duly authorized by the respective Boards of Directors of
Parent and Purchaser, and by Parent as sole shareholder of
Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and (assuming that this
Agreement constitutes the valid and binding obligation of the
Company) constitutes a valid and binding obligation of each of
them, enforceable against each of them in accordance with its
terms except to the extent that its enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect affecting the
enforcement of creditors' rights generally or by general
equitable principles regardless of whether enforceability is
considered in a proceeding in equity or at law.
(b) Neither the execution and delivery of this
Agreement by Parent or Purchaser, nor the consummation by them of
the transactions contemplated hereby, nor compliance by Parent or
Purchaser with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result
in the creation of any Lien upon any of the properties or assets
of Parent or Purchaser under any of the terms, conditions or
provisions of (x) the charter documents or by-laws of Parent or
Purchaser or (y) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which Parent or Purchaser is a party, or to which
any of them, or any of their respective properties or assets, may
be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next subsection, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to Parent or Purchaser or any of their
respective properties or assets; except, in the case of each of
clauses (i)(y) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
Liens which would not prevent or delay in any material respect
the consummation of the Merger.
(c) Other than in connection with or in compliance
with the provisions of the MBCL, the HSR Act and the Exchange
Act, no notice to, filing with, or authorization, consent or
approval of, any Governmental Entity is necessary for the
consummation by Parent and Purchaser of the transactions
contemplated by this Agreement, except where the failure to give
such notices, make such filings, or obtain authorizations,
consents or approvals would not prevent or delay in any material
respect the consummation of the Merger.
4.4. Litigation. Except as set forth in Schedule 4.4,
there are no actions, suits or proceedings pending or, to
Parent's knowledge, threatened against Parent or any of its
subsidiaries, at law or in equity, or before or by any
Governmental Entity or any arbitrator or arbitration tribunal,
and no development has occurred with respect to any pending or
threatened action, suit or proceedings that is reasonably likely
to prevent or delay the consummation of the transactions
contemplated hereby.
4.5. Brokers. No agent, broker, investment banker,
financial advisor or other person or entity, other than Xxxxxxxx
Xxxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. ("Xxxxxxxx"), the
fees and expenses of which will be paid by Parent, is or will be
entitled to any brokerage commission, finder's fee or like
payment in connection with any of the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of
Parent or Purchaser.
4.6. Proxy Statement. None of the information supplied in
writing by Parent or Purchaser specifically for inclusion in the
Proxy Statement will, at the date it is first mailed to the
shareholders of the Company, at the time of the Shareholders
Meeting or at the Effective Time, 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.
4.7. Solvency Opinion. Parent has received the opinion of
Xxxxxxxx, dated the date of this Agreement, with respect to the
solvency of the Parent and its consolidated subsidiaries after
giving effect to the Merger and the related financings necessary
to consummate the transactions contemplated by this Agreement. A
copy of this opinion has been provided to the Company.
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1. Conduct Of Business Of The Company. Except as
otherwise contemplated hereby or as expressly set forth in
Schedule 5.1, the Company covenants and agrees that, unless
Parent shall otherwise agree in writing prior to the Effective
Time:
(a) The business of the Company and its subsidiaries shall
be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business,
and the Company shall use its reasonable best efforts to maintain
and preserve intact its and its subsidiaries' business
organization, assets, employees, officers and advantageous
business relationships.
(b) Neither the Company nor any of its subsidiaries shall
directly or indirectly do any of the following: (i) except in
the ordinary course of business, sell, pledge, dispose of or
encumber any assets of the Company or of any of its subsidiaries
other than any such assets the value of which do not exceed
$100,000 individually and $500,000 in the aggregate; (ii) amend
its charter or by-laws or similar organizational documents;
(iii) except with respect to the creation, amendment, or exercise
of rights under any shareholders rights plan (provided that
Parent, Purchaser and its affiliates and the transactions
contemplated by this Agreement and the Shareholders Agreement
are, and continue to be, exempt from the operation of such plan),
split, combine or reclassify any shares of its capital stock or
declare, set aside, make or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to any
of its capital stock (except for dividends by wholly-owned
subsidiaries of the Company); (iv) redeem, purchase or otherwise
acquire or offer to redeem, purchase or otherwise acquire any
capital stock of the Company; (v) adopt a plan of liquidation or
resolutions providing for the liquidation, dissolution, merger,
consolidation or other reorganization of the Company; or
(vi) authorize or propose any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing, except to the extent otherwise permitted herein.
(c) Neither the Company nor any of its subsidiaries shall,
directly or indirectly, (i) except for Shares issuable upon
exercise of options outstanding under the Option Plans on the
date hereof, issue, sell, pledge, dispose of or encumber, or
authorize, propose or agree to the issuance, sale, pledge,
disposition or encumbrance of, any shares of, or any options,
warrants or rights of any kind to acquire any shares of or any
securities convertible into or exchangeable or exercisable for
any shares of, its capital stock of any class or any other
securities in respect of, in lieu of, or in substitution for
Shares outstanding on the date hereof; (ii) make any material
acquisition, by means of merger, consolidation or otherwise, or
material disposition (other than disposition of assets in the
ordinary course of business), of assets or securities, or make
any loans, advances or capital contributions to, or investment
in, any individual or entity (other than to the Company or a
wholly-owned subsidiary of the Company); (iii) except in the
ordinary course of business, incur any indebtedness or issue any
debt securities or assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or
otherwise) for, the obligations of any other individual or
entity; (iv) change the capitalization of the Company (other than
the incurrence of indebtedness otherwise permitted in this
Agreement); (v) except in the ordinary course, change any
assumption underlying, or method of calculating, any bad debt,
contingency or other reserve; (vi) pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued,
contingency or otherwise), other than the payment, discharge or
satisfaction of liabilities in the ordinary course of business or
as required by applicable law; (vii) waive, release, grant or
transfer any rights of value or modify or change in any material
respect any existing license, lease, contract or other document,
other than in the ordinary course of business; or
(viii) authorize any of the foregoing, or enter into or modify
any contract, agreement, commitment or arrangement to do any of
the foregoing.
(d) Neither the Company nor any of its subsidiaries shall
(except as required pursuant to any agreements in effect at the
date hereof) adopt or amend or take any actions to accelerate any
rights or benefits under (except as may be required by law) any
bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment, severance,
termination or other employee benefit plan, agreement, trust,
fund or other arrangement for the benefit or welfare of any
employee or any officer or director or former employee or,
increase (except for increases to employees other than officers
in the ordinary course of business) the compensation or fringe
benefits of any employee or former employee or pay any benefit
not permitted by any existing plan, arrangement or agreement;
provided, however, the Company may take the action, prior to the
Effective Time, with respect to the SERP (as defined in Section
6.8) and the Rabbi and Secular Trusts, as contemplated by Section
6.8.
(e) Except in the ordinary course of business, neither the
Company nor any of its subsidiaries shall make any tax election
or, except in the ordinary course of business, settle or
compromise any federal, state, local or foreign income tax
liability.
(f) Except in the ordinary course of business, neither the
Company nor any of its subsidiaries shall permit any insurance
policy naming it as beneficiary or a loss payee to be cancelled
or terminated without notice to Parent.
(g) Neither the Company nor any of its subsidiaries shall
agree, in writing or otherwise, to take any of the foregoing
actions or any action which would make any representation or
warranty in Article III hereof untrue or incorrect.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Preparation Of Proxy Statement; Shareholders Meeting.
(a) Promptly following the date of this Agreement, the Company
shall prepare a proxy statement relating to the Shareholders
Meeting (the "Proxy Statement"), and the Company shall prepare
and file with the Commission the Proxy Statement. Parent will
cooperate with the Company in connection with the preparation of
the Proxy Statement including, but not limited to, furnishing to
the Company any and all information regarding Parent and
Purchaser and their affiliates as may be required to be disclosed
therein. The information provided and to be provided by Parent
and the Company, respectively, for use in the Proxy Statement
shall, at the date it is first mailed to the Company's
shareholders and on the date of the Shareholders Meeting referred
to below, be true and correct in all material respects and shall
not omit to state any material fact required to be stated therein
or necessary in order to make the statements in such information,
in light of the circumstances under which they are made, not
misleading, and the Company and Parent each agree to correct any
information provided by it for use in the Proxy Statement which
shall have become false or misleading in any material respect.
(b) The Company will as promptly as practicable notify
Parent of (i) the receipt of any comments from the Commission and
(ii) any request by the Commission for any amendment to the Proxy
Statement or for additional information. All filings by the
Company with the Commission, including the Proxy Statement and
any amendment thereto, and all mailings to the Company's
shareholders in connection with the Merger, including the Proxy
Statement, shall be subject to a reasonable opportunity to review
and comment thereon and receipt of approval by Parent (such
approval not to be unreasonably withheld or delayed). Parent
will furnish to the Company the information relating to it and
its affiliates, including Purchaser, the financing for the
transactions contemplated by this Agreement and the Shareholders
Agreement and any other matters required by the Exchange Act and
the rules and regulations promulgated thereunder to be set forth
in the Proxy Statement.
(c) The Company will: (i) as promptly as practicable
following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its shareholders (the "Shareholders
Meeting") for the purpose of approving this Agreement and the
transactions contemplated hereby to the extent required by the
MBCL and the Company's Restated Articles of Incorporation; and
(ii) through its Board of Directors, recommend to its
shareholders approval of the foregoing matters; provided; however
that the Board of Directors may fail to make or withdraw such
recommendation, but only if the Board of Directors of the Company
shall have concluded in good faith on the basis of written advice
from outside counsel that such action is required to prevent the
Board of Directors of the Company from breaching its fiduciary
duties to the shareholders of the Company under applicable law.
Any such recommendation, together with a copy of the opinion
referred to in Section 3.22, shall be included in the Proxy
Statement.
6.2. Access To Information; Confidentiality. (a) From and
after the date of this Agreement and until the earlier of the
Effective Time or termination of this Agreement, the Company
shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford to Parent, and to the officers,
employees and agents of Parent, reasonable access, during normal
business hours, to the officers, employees, agents, properties,
books, records and contracts of the Company and its subsidiaries,
provided that such access shall not unreasonably disrupt the
Company's business or employees and the Company receives
reasonable advance notice of a request for such access.
(b) Parent and Purchaser each hereby confirms to the
Company that the confidentiality agreement dated as of July 15,
1998 by and between Parent and the Company ("the Confidentiality
Agreement") is in full force and effect. Purchaser hereby agrees
to be bound by and to comply with the Confidentiality Agreement
to the same extent as Parent is bound thereby, and Parent and
Purchaser each agrees that it will cause the affiliates of Parent
and Purchaser to be bound by and to comply with that Agreement to
the same extent that Parent is bound thereby, and Parent and
Purchaser shall cause Parent's, Purchaser's and such affiliates'
officers, employees, agents and representatives, including,
without limitation, attorneys, accountants, consultants,
financial advisers and lenders and their respective counsel to
comply therewith as though they were parties thereto.
6.3. Filings; Commercially Reasonable Best Efforts. (a)
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its commercially reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations or otherwise to consummate and
effect the transactions contemplated by this Agreement and the
Shareholders Agreement, including but not limited to
(i) determining whether any filings are required to be made or
consents, approvals, waivers, licenses, permits or authorizations
are required to be obtained (or, which if not obtained, would
result in an event of default, termination or acceleration of any
agreement) under any applicable law or regulation or from any
governmental entities or third parties, including parties to loan
agreements or other debt instruments, in connection with the
transactions contemplated by this Agreement, including the Merger
and the transactions contemplated hereby, (ii) promptly making
any such filings, furnishing information required in connection
therewith and timely seeking to obtain any such consents,
approvals, permits or authorizations, (iii) obtaining the
necessary approval of this Agreement and the transactions
contemplated hereby by the shareholders of the Company, and
(iv) doing all things necessary, proper or advisable to remove
any injunctions or other impediments or delays, legal or
otherwise, to the consummation of the Merger and the other
transactions contemplated by this Agreement.
(b) In the event Parent elects to engage in a debt
offering between the date hereof and the Effective Time, then
upon the request of Parent, the Company will use its reasonable
best efforts to cause its independent accountants to promptly
deliver to Parent a consent and letter in form reasonably
satisfactory to Parent and customary in scope for comfort letters
with respect to the Company's financial information included in
the debt offering memorandum.
(c) Notwithstanding the foregoing, none of Parent,
Purchaser or the Company shall be obligated to use its
commercially reasonable best efforts or take any action pursuant
to this Section 6.3 if it determines in good faith, based on the
advice of outside legal counsel, that such actions would be in
breach of its Board of Directors' fiduciary duties under
applicable law.
6.4. Public Announcements. Parent, Purchaser and the
Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to
the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by law, legal process or any listing agreement
with a national securities exchange.
6.5. Notification of Certain Matters. The Company, Parent
and Purchaser each agree to give prompt notice (a "Default
Notice") to each other at any time from the date hereof to the
Effective Time of the obtaining by it of knowledge as to the
occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause a breach of any covenant,
representation or warranty contained in this Agreement so as to
result in a Material Adverse Effect or in an Acquiror Material
Adverse Effect; provided that delivery of any such notice
pursuant to this Section 6.5 shall not cure such breach or
noncompliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.6. Indemnification And Insurance. (a) The Restated
Articles of Incorporation and By-laws of the Company (and the
articles of incorporation and By-laws of the Surviving
Corporation after the Effective Time) shall contain the
provisions with respect to indemnification set forth in the
Restated Articles of Incorporation and By-Laws of the Company on
the date of this Agreement, which provisions, and the provisions
of those certain Indemnification Agreements in effect as of the
date hereof between the Company and the persons identified on
Schedule 6.6, shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in
any manner that would adversely affect the rights thereunder of
any individual who at any time prior to the Effective Time was
an employee, agent, director or officer of the Company or any of
the Company's subsidiaries, together with each such person's
heirs, representatives, successors and assigns (individually, an
"Indemnified Party" and collectively the "Indemnified Parties")
in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions
contemplated by the Agreement). Parent shall cause the Company
(or the Surviving Corporation if after the Effective Time) to,
and the Company (or the Surviving Corporation if after the
Effective Time) shall, maintain in effect for not less than six
years after the Effective Time the current policies of
directors' and officers' liability insurance maintained by the
Company and the Company's subsidiaries on the date hereof
(provided that the Company may substitute therefor policies
having at least substantially the same coverage and containing
terms and conditions which are no less advantageous in any
material respect to the persons currently covered by such
policies as insureds) with respect to matters existing or
occurring at or prior to the Effective Time ; provided, however,
that if the aggregate annual premiums for such insurance at any
time during such period shall exceed 200% of the per annum rate
of premium currently paid by the Company and its subsidiaries for
such insurance on the date of this Agreement, then Parent shall
cause the Company (or the Surviving Corporation if after the
Effective Time) to, and the Company (or the Surviving Corporation
if after the Effective Time) shall, provide the maximum coverage
that shall then be available at an annual premium equal to 200%
of such rate. The Company represents to Parent that such per
annum rate of premium currently paid by the Company and its
subsidiaries is approximately $95,000. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, any
matter, including the transactions contemplated hereby, existing
or occurring at or prior to the Effective Time , then to the
extent permitted by law, Parent shall cause the Company (or the
Surviving Corporation if after the Effective Time) to, and the
Company (or the Surviving Corporation if after the Effective
Time) shall, periodically advance to such Indemnified Party its
legal and other expenses (including the cost of any investigation
and preparation incurred in connection therewith), subject to the
provision by such Indemnified Party of an undertaking to
reimburse the amounts so advanced in the event of a final
determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto. Parent shall cause
the Company (or the Surviving Corporation if after the Effective
Time) to, and the Company (or the Surviving Corporation if after
the Effective Time) shall, pay all expenses, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing
the indemnity and other obligations provided for in this
Section 6.6.
(b) The provisions of this Section 6.6 are intended for the
benefit of, and shall be enforceable by, the respective
Indemnified Parties and shall be binding on all successors and
assigns of Parent, Purchaser, the Company and the Surviving
Corporation.
6.7. Solicitation. (a) The Company (and its subsidiaries
and affiliates) will not, and the Company (and its subsidiaries
and affiliates) will use their reasonable best efforts to ensure
that their respective directors, officers, employees,
representatives and agents do not, directly or indirectly,
solicit or initiate inquiries or proposals from, or provide any
confidential information to, or participate in any discussions or
negotiations with, any person or entity (other than Parent and
its subsidiaries and their respective directors, officers,
employees, representatives and agents) concerning (i) any merger,
sale of assets not in the ordinary course (except for any sale of
assets otherwise permitted under the terms of this Agreement), or
other similar transaction involving the Company or any subsidiary
or division of the Company, or the sale of any equity interest in
the Company or any subsidiary, or (ii) any sale by the Company or
its subsidiaries of authorized but unissued Shares or of any
shares (whether or not outstanding) of any of the Company's
subsidiaries (all such inquiries and proposals being referred to
herein as "Acquisition Proposals"), provided, however, that
nothing contained in this Section 6.7 shall prohibit the Company
or its Board of Directors from (i) subject to the provisions of
Section 6.4, issuing a press release, filing any report, proxy
statement or other document with the Commission pursuant to the
Exchange Act or otherwise publicly disclosing the terms of this
Agreement, including, without limitation, this Section 6.7;
(ii) proceeding with the transactions contemplated by this
Agreement; or (iii) communicating to the Company's shareholders a
position as contemplated by Rule 14e-2 promulgated under the
Exchange Act; and, provided, further, that the Board of Directors
of the Company may, on behalf of the Company, furnish or cause to
be furnished information and may direct the Company, its
directors, officers, employees, representatives or agents to
furnish information, in each case pursuant to appropriate
confidentiality agreements, and to participate in discussions or
negotiations with any person or entity concerning any Acquisition
Proposal which was not solicited by the Company or any of its
subsidiaries or affiliates or any of their respective directors,
officers, employees, representatives or agents, or which did not
otherwise result from a breach of this Section 6.7, if (x) the
Board of Directors of the Company shall conclude in good faith,
after consultation with its financial advisor, that such person
or entity has made a bona fide Acquisition Proposal for a
transaction more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated
hereby, and (y), in the opinion of the Board of Directors of the
Company, only after receipt of advice from independent legal
counsel to the Company, the failure to provide such information
or access or to engage in such discussions or negotiations would
cause the Board of Directors of the Company to violate its
fiduciary duties to the Company's shareholders under applicable
law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company
will immediately notify Parent of the terms of any proposal,
discussion, negotiation or inquiry (and will disclose any written
materials received by the Company in connection with such
proposal, discussion negotiation, or inquiry) and the identity of
the party making such proposal or inquiry which it may receive in
respect of any such transaction. The Company shall, and shall
cause each subsidiary to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations
by the Company, any subsidiary of the Company or any officer,
director or employee of, or investment banker, attorney,
accountant or other advisor or representative of, the Company or
any subsidiary with parties conducted heretofore with respect to
any of the foregoing.
(b) Except as set forth herein, neither the Board of
Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or the Purchaser, the approval or
recommendation by the Board of Directors of the Company or any
such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition
Proposal, or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, the Board
of Directors of the Company may (subject to the terms of this and
the following sentence) withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or
recommend a Superior Proposal or enter into an agreement with
respect to a Superior Proposal at any time after the second
business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person
making such Superior Proposal; provided that the Company shall
not enter into an agreement with respect to a Superior Proposal
unless the Company shall have furnished Parent with written
notice not later than noon (Chicago time) two business days in
advance of any date that it intends to enter into such agreement
and shall have caused its financial and legal advisors to
negotiate with Parent to make such amendments to the terms and
conditions of this Agreement as would make this Agreement as so
amended at least as favorable to the Company's shareholders from
a financial point of view as the Superior Proposal (without
taking into account Parent's option to purchase Shares
beneficially owned by certain shareholders of the Company
pursuant to the Shareholders Agreement); provided further that
the Company shall not be required to make such amendments if the
Board of Directors in good faith determines that the transactions
contemplated by this Agreement as so amended are not reasonably
capable of being consummated. In addition, if the Company enters
into an agreement with respect to any Acquisition Proposal, it
shall concurrently with entering into such agreement pay, or
cause to be paid, to Parent the Termination Amount (as defined in
Section 9.2) subject to the provisions of Section 9.2.
6.8. Supplemental Executive Retirement Plan Funding.
Immediately prior to the Closing, the Company (a) shall fund
fully the obligations under the Company's Supplemental Executive
Retirement Plan (the "SERP"), and (b) shall execute and deliver
the amendment to the SERP, the amendment to the Supplemental
Executive Retirement Plan II and the indemnification agreement in
the form previously delivered to Parent.
6.9. TMI Letter Agreement. The letter agreement dated
June 2, 1998 between TMI Acquisition Corp. and the Company, as
amended and supplemented to date (the "TMI Letter") hereby is
terminated and is of no further force or effect. Each of Parent
and Purchaser jointly and severally agrees to indemnify and hold
harmless the Company and its subsidiaries and their respective
directors, officers, employees, representatives, agents and
attorneys from, against and in respect of any and all damages,
liabilities, losses, obligations and reasonable costs and
expenses (including reasonable attorneys' fees and expenses)
arising out of any claim, action or proceeding by TMI Acquisition
Corp. or any of its current or former shareholders, officers,
directors, employees, representatives, agents, attorneys or any
other person or entity that has any financial or other interests
arising out of or based upon the TMI Letter.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1. Conditions To Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver in writing on or
prior to the Closing on the Closing Date of the following
conditions:
(a) Company Shareholder Approval. The Company Shareholder
Approval shall have been obtained.
(b) Antitrust. The waiting periods (and any extensions
thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired and, if applicable, the
waiting periods (and any extensions thereof) applicable to the
transactions contemplated by this Agreement under the HSR Act
shall have been terminated or shall have expired.
(c) Statutes. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any domestic
government or any governmental agency or authority of competent
jurisdiction which prohibits the consummation of the Merger or
the transactions contemplated hereby or the performance of this
Agreement.
(d) Violation of Law. Consummation of the Merger shall not
result in violation of any applicable United States federal or
state law.
(e) Litigation. No preliminary or permanent injunction,
decree or other order issued by any federal or state court of
competent jurisdiction in the United States preventing the
consummation of the Merger or the transactions contemplated
hereby or the performance of this Agreement shall be in effect;
provided, however, that the parties hereto shall use their
reasonable best efforts to have any such injunction or order
vacated.
7.2. Conditions To Obligations Of Parent. The obligations
of Parent to effect the Merger are further subject to 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 each case 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 as though made on
the Closing Date and as of the Closing, except where the failure
of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not reasonably
be expected to have a Material Adverse Effect.
(b) Performance Of Obligations Of The Company. The Company
shall have performed the obligations required to be performed by
it under this Agreement at or prior to the Closing (except for
such failures to perform as have not had a Material Adverse
Effect), and Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect, to their
best knowledge.
(c) No Litigation. There shall not be instituted or
pending any suit, action or proceeding (having a substantial
likelihood of success) against Parent, Purchaser, the Company or
any subsidiary of the Company (i) challenging the acquisition by
Parent or Purchaser of any Shares, seeking to restrain or
prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the performance of
this Agreement or seeking to obtain from the Company, Parent or
Purchaser any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company, Parent or any
of the respective subsidiaries or to compel the Company, Parent
or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of the
Company or Parent and their respective subsidiaries, in each case
taken as a whole, (iii) seeking to impose material limitations on
the ability of Parent or Purchaser to acquire or hold, or
exercise full rights of ownership of, the shares of capital stock
of the Surviving Corporation, including the right to vote such
capital stock on all matters properly presented to the
stockholders of the Surviving Corporation, (iv) seeking to
prohibit or impose material limitations on the ability of Parent
to effectively control in any material respect the business or
operations of the Company or its subsidiaries or (v) which
otherwise is reasonably likely to have a Material Adverse Effect.
(d) Statutes. There shall not be any statute, rule,
regulation, judgment, order or injunction enacted, entered,
enforced, promulgated, or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a governmental
entity, to the Merger, or any other action shall be taken by any
governmental entity, other than the application or the Merger of
applicable waiting periods under HSR Act or any other applicable
foreign law, that is substantially likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i)
through (v) of Section 7.2(c) above.
(e) Dissenters Rights. The Company shall not have
received notice of the intent of shareholders of the Company
holding an aggregate of 7.5% or more of the outstanding Shares to
object to the Merger and exercise appraisal rights pursuant to
the MBCL in respect of the Merger.
(f) Shareholders Agreement. If Parent shall have
exercised the Acquiror Option (as defined in the Shareholders
Agreement), the closing of the purchase of Shares pursuant to the
Acquiror Option shall have been consummated.
7.3. Conditions To Obligation Of The Company. The
obligation of the Company to effect the Merger is further subject
to the following conditions:
(a) Representations And Warranties. The
representations and warranties of Parent and Purchaser set forth
in this Agreement shall be true and correct, in each case 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 as though made on the Closing Date and as of the
Closing, except where the failure of such representations and
warranties to be so true and correct (without giving effect to
any limitation as to "materiality" or "material adverse effect"
set forth therein) would not reasonably be expected to adversely
affect the ability of Parent to consummate the Merger and the
transactions contemplated hereby or to perform this Agreement.
(b) Performance Of Obligations Of Parent. Parent
shall have performed the obligations required to be performed by
it under this Agreement at or prior to the Closing Date (except
for such failures to perform as have not had a material adverse
effect on the ability of Parent to consummate the Merger and the
transactions contemplated hereby or to perform this Agreement).
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the
Merger by the shareholders of the Company:
(a) by mutual written consent of Parent and the
Company; or
(b) by either Parent or the Company if any
governmental body or regulatory authority of the United States of
America or any state thereof shall have issued an order, decree
or ruling or taken any other action, in each case permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and non-appealable; provided that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be
available to any party that has breached any of its material
agreements or obligations under Section 6.3; or
(c) by either Parent or the Company if the Merger
shall not have been consummated on or before March 31, 1999
(other than due to the failure of the party seeking to terminate
this Agreement) to perform its material obligations under this
Agreement required to be performed at or prior to the Effective
Time); or
(d) by either Parent or the Company if at the duly
held meeting of the shareholders of the Company (including any
adjournment thereof) held for the purpose of voting on the
Merger, this Agreement and the consummation of the transactions
contemplated hereby, the holders at least two-thirds of the
outstanding Shares shall not have approved the Merger, this
Agreement and the consummation of the transactions contemplated
hereby; or
(e) by the Board of Directors of Parent, (i) if the
Company shall have breached any of its representations and
warranties or failed to comply with any of the covenants or
agreements (without, in each instance, giving effect to any
limitation as to "materiality" or "material adverse effect" set
forth therein) contained in this Agreement to be complied with or
performed by the Company at or prior to consummation of the
Merger and such breach or failure shall have resulted in a
Material Adverse Effect and shall not have been cured within 20
business days following receipt by the Company of notice of such
breach or failure, or (ii) the Company shall have received from a
third party a bona fide Acquisition Proposal, and the Board of
Directors of the Company, shall have accepted such a proposal or
(iii) the Board of Directors of the Company shall have failed to
recommend to the Company Shareholders that they give the Company
Shareholder Approval or shall have withdrawn or modified in a
manner adverse to Parent or Purchaser its approval or
recommendation with respect to the Merger, or
(f) by the Board of Directors of the Company, if
(i) Parent or Purchaser shall have breached any of its
representations and warranties or failed to comply with any of
the covenants or agreements (without, in each instance, giving
effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) contained in this Agreement to be
complied with or performed by Parent or Purchaser at or prior to
consummation of the Merger and such breach or failure shall have
resulted in an Acquiror Material Adverse Effect and shall not
have been cured within 20 business days following receipt by the
breaching party of notice of such breach or failure, or (ii) if
the Company enters into a written agreement concerning a
transaction that constitutes a Superior Proposal, provided that
the Company shall have complied with the provisions of
Section 6.7(a) and (b) hereof (including the payment of the
Termination Amount).
8.2. Effect Of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in
Section 8.1, no party hereto (or any of its directors, officers,
employees, agents, legal and financial advisors or other
representatives) shall have any liability or further obligation
to any other party to this Agreement, except as provided in this
Section 8.1 and Sections 6.2(b), 9.1 and 9.2 of this Agreement,
and except that nothing herein will relieve any party from
liability for its breach of this Agreement.
ARTICLE IX.
GENERAL PROVISIONS
9.1. Nonsurvival Of Representations And Warranties. The
representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall expire
with, and be terminated and extinguished upon, consummation of
the Merger. This Section 9.1 have no effect upon any other
obligation of the parties hereto, whether to be performed before
or after the Effective Time. The Confidentiality Agreement shall
survive the termination of this Agreement and the provisions of
such Confidentiality Agreement shall apply to all information and
material delivered by any party hereunder.
9.2. Payment Of Certain Fees and Expenses. (a) All costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the
party incurring such expenses.
(b) Notwithstanding the foregoing, if this
Agreement is terminated pursuant to Section 8.1(d), 8.1(e)(ii) or
(iii) or 8.1(f)(ii) hereof, then the Company shall pay to Parent
(i) concurrently with such termination, an amount equal to U.S.
$2.0 million (the "Termination Fee"), plus (ii) promptly, but in
no event later than two days after being furnished documentation
in respect thereto by Parent ("Documentation"), Parent's or its
affiliates' out-of-pocket fees and expenses (including legal,
investment banking, financing commitment fees, and commercial
banking fees and expenses) actually incurred in connection with
the Merger, due diligence investigation, the negotiation and
execution of this Agreement and the transactions contemplated
hereby in an amount not to exceed $750,000 in the aggregate (the
"Termination Expenses"), and together with the Termination Fee,
the "Termination Amount"). Any payments required to be made
pursuant to this Section shall be made by wire transfer of same
day funds to an account designated by Parent.
9.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given; as of the date of delivery, if delivered personally;
upon receipt of confirmation, if telecopied or upon the next
business day when delivered during normal business hours to an
overnight courier service, such as Federal Express, in each case
to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice;
unless the sending party has knowledge that such notice or other
communication hereunder was not received by the intended
recipient:
(a) If to Parent or Purchaser:
Salton/Maxim Housewares, Inc.
000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, esq.
Telecopy: (000) 000-0000
If to the Company:
Toastmaster Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx, Mag & Fizzell P.C.
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
9.4. Certain Definitions; Interpretation. (a) When a
reference is made in this Agreement to subsidiaries of Parent,
Purchaser or the Company, the word "subsidiaries" means any
corporation 50 percent or more of whose outstanding voting
securities, or any partnership, joint venture or other entity 50
percent or more of whose total equity interest, is directly or
indirectly owned by Parent, Purchaser or the Company, as the case
may be. As used in this Agreement, the term "affiliate(s)" shall
have the meaning set forth in Rule 12b-2 under the Exchange Act
and the term "knowledge" means the actual knowledge of any of the
executive officers of the parties and, with respect to Section
3.9 and Section 3.12, the actual knowledge of the most senior
officer or employee in charge of employee benefit and
environmental matters, respectively, in each cause with the
requirement of due inquiry but without any attribution of
knowledge from any other person.
(b) References to "includes" and "including" mean
"includes without limitation" and "including without limitation.
(c) No provision of this Agreement or the
Shareholders Agreement shall be interpreted in favor of, or
against, any of the parties by reason of the extent to which any
such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
9.5. Entire Agreement. This Agreement (including the
Schedules and the exhibits hereto), the Shareholders Agreement
and the Confidentiality Agreement contain the entire agreement
between the parties with respect to the transactions contemplated
hereby, and supersedes all written or oral negotiations,
representations, warranties, commitments, offers, bids, bid
solicitations, and other understandings prior to the date hereof,
including, without limitation, the letter agreement dated June 2,
1998 between TMI Acquisition Corp and the Company.
9.6. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
9.7. Severability. If any term or provision of this
Agreement or the Shareholders Agreement or the application
thereof to either party or set of circumstances shall, in any
jurisdiction and to any extent, be finally held invalid or
unenforceable, such term or provision shall only be ineffective
as to such jurisdiction, and only to the extent of such
invalidity or unenforceability, without invalidating or rendering
unenforceable any other terms or provisions of this Agreement or
the Shareholders Agreement under any other circumstances, and the
parties shall negotiate in good faith a substitute provision
which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a
position as nearly comparable as possible to the position it
would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9.8. Captions. The captions of the various Articles and
Sections of this Agreement have been inserted only for
convenience of reference and shall not be deemed to modify,
explain, enlarge or restrict any provision of this Agreement or
affect the construction hereof.
9.9. Amendment. Subject to the applicable provisions of
the MBCL, this Agreement may be amended by the parties hereto, at
any time before or after any required approval of matters
presented in connection with the Merger by the shareholders of
the Company; provided, however, that after any such approval,
there shall be made no amendment that by law requires further
approval by such shareholders without the further approval of
such shareholders. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
9.10. Waiver. Subject to the applicable provisions of the
MBCL, at any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, or
(b) subject to the proviso of Section 9.9, waive compliance with
any of the agreements or conditions contained herein. At any
time prior to consummation of the Merger any party hereto may
waive any inaccuracies in the representations and warranties
contained herein or in any documents delivered pursuant hereto.
Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in
writing signed by such party. Except as otherwise provided in
this Agreement, neither the failure nor any delay by a any party
in exercising any right, power or privilege under this Agreement
or the document referred to in this Agreement or therein will
operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power or privilege
will preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or
privilege.
9.11. No Third-Party Beneficiaries; Assignability. Except
for Sections 2.2, 2.3 and 6.6 (which are intended for the benefit
of, and may be enforced by, the persons or entities specified
therein), this Agreement is not intended to confer or impose upon
any person not a party hereto any rights, remedies, obligations
or liabilities hereunder. This Agreement shall not be assigned
by any party hereto, by operation of law or otherwise. Subject
to the preceding two sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
9.12. Inclusion of Information in Schedules. The inclusion
of any information in any disclosure schedule (i) shall not be
deemed an admission that any such information is material for
purposes of the representation and warranty to which it relates
or any other representation and warranty or for any other purpose
related to the Agreement or the transactions contemplated hereby,
including, without limitation, for purposes of any covenants,
closing conditions or any other remedies the parties may have,
and (ii) shall not be used or interpreted in any manner to create
a standard of materiality for any such purpose.
9.13. Exclusive Jurisdiction and Consent to Service of
Process. The parties agree that any action arising out of or
relating to this Agreement or the transactions contemplated
hereby shall be brought by the parties only in a Missouri state
court or a federal court sitting in that state, which shall be
the exclusive venue of any such action. Each party waives any
objection which such party may now or hereafter have to the
laying of venue of any such action, and irrevocably consents and
submits to the jurisdiction of any such court (and the
appropriate appellate courts) in any such action. Any and all
service of process and any other notice in any such action shall
be effective against such party when transmitted in accordance
with Section 9.3. Nothing contained herein shall be deemed to
affect the right of any party to serve process in any manner
permitted by law.
9.14. Waiver of Jury Trial. THE COMPANY, PARENT AND
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT
THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
9.15. Governing Law. The validity, interpretation and
effect of this Agreement shall be governed exclusively by the
laws of the State of Missouri, without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written
above by their respective officers thereunder duly authorized.
SALTON/MAXIM HOUSEWARES, INC.
By: /s/ Xxxxx Xxxxx
Title: Chairman and Chief
Executive Officer
COLUMBIA ACQUISITION CORP.
By: /s/ __________________
Title: President
TOASTMASTER INC.
By: /s/ Xxxxxx X. Xxxxxxx
Title: President
TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER . . . . . . . . . . . . . . . . . . . . 1
1.1. The Merger. . . . . . . . . . . . . . . . . . . . 1
1.2. Closing . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time. . . . . . . . . . . . . . . . . . 2
1.4. Effects Of The Merger . . . . . . . . . . . . . . 2
1.5. Articles Of Incorporation; By-laws; Purposes. . . 2
1.6. Directors . . . . . . . . . . . . . . . . . . . . 2
1.7. Officers. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS . . . . . . . . 3
2.1. Conversion of Shares . . . . . . . . . . . . . . . . 3
2.2. Stock Options. . . . . . . . . . . . . . . . . . . . 3
2.3. Surrender of Certificates. . . . . . . . . . . . . . 4
2.4. Dissenting Shares. . . . . . . . . . . . . . . . . . 6
2.5. Withholding Rights . . . . . . . . . . . . . . . . . 6
2.6. Lost Certificates. . . . . . . . . . . . . . . . . . 6
2.7. Further Assurances . . . . . . . . . . . . . . . . . 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . 7
3.1. Organization, Standing and Power . . . . . . . . . . 7
3.2. Capital Structure. . . . . . . . . . . . . . . . . . 7
3.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . 9
3.4. Authority and Absence of Conflict. . . . . . . . . . 10
3.5. SEC Documents. . . . . . . . . . . . . . . . . . . . 11
3.6. Absence of Certain Events. . . . . . . . . . . . . . 12
3.7. Litigation . . . . . . . . . . . . . . . . . . . . . 12
3.8. Compliance with Applicable Law . . . . . . . . . . . 13
3.9. Employee Plans . . . . . . . . . . . . . . . . . . . 13
3.10. Employment Relations. . . . . . . . . . . . . . 16
3.11. Contracts . . . . . . . . . . . . . . . . . . . 17
3.12. Environmental Laws and Regulations. . . . . . . 18
3.13. Property and Leases . . . . . . . . . . . . . . 19
3.14. Intellectual Property . . . . . . . . . . . . . 20
3.15. Insurance . . . . . . . . . . . . . . . . . . . 21
3.16. Takeover Statutes . . . . . . . . . . . . . . . 21
3.17. Taxes . . . . . . . . . . . . . . . . . . . . . 21
3.18. Customers . . . . . . . . . . . . . . . . . . . 24
3.19. Interests of Certain Persons. . . . . . . . . . 24
3.20. Information Supplied. . . . . . . . . . . . . . 24
3.21. Required Company Vote . . . . . . . . . . . . . 24
3.22. Opinion Of Financial Advisor. . . . . . . . . . 24
3.23. Board Recommendation. . . . . . . . . . . . . . 25
3.24. Brokers . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER . . . . . . . . . . . . . . . . . . . 25
4.1. Organization and Qualification . . . . . . . . . . . 25
4.2. Capital Stock of Parent and Purchaser. . . . . . . . 26
4.3. Authority and Absence of Conflict. . . . . . . . . . 26
4.4. Litigation . . . . . . . . . . . . . . . . . . . . . 27
4.5. Brokers. . . . . . . . . . . . . . . . . . . . . . . 27
4.6. Proxy Statement. . . . . . . . . . . . . . . . . . . 27
4.7. Solvency Opinion . . . . . . . . . . . . . . . . . . 27
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR
TO MERGER . . . . . . . . . . . . . . . . . . . 27
5.1. Conduct Of Business Of The Company . . . . . . . . . 27
ARTICLE VI. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . 29
6.1. Preparation Of Proxy Statement; Shareholders
Meeting. . . . . . . . . . . . . . . . . . . . . . . 29
6.2. Access To Information; Confidentiality . . . . . . . 30
6.3. Filings; Commercially Reasonable Best Efforts. . . . 31
6.4. Public Announcements . . . . . . . . . . . . . . . . 31
6.5. Notification of Certain Matters. . . . . . . . . . . 32
6.6. Indemnification And Insurance. . . . . . . . . . . . 32
6.7. Solicitation . . . . . . . . . . . . . . . . . . . . 33
6.8. Supplemental Executive Retirement Plan Funding . . . 35
6.9. TMI Letter Agreement . . . . . . . . . . . . . . . . 35
ARTICLE VII. CONDITIONS PRECEDENT . . . . . . . . . . . . . . 35
7.1. Conditions To Each Party's Obligation To
Effect The Merger. . . . . . . . . . . . . . . . . . 35
7.2. Conditions To Obligations Of Parent. . . . . . . . . 36
7.3. Conditions To Obligation Of The Company. . . . . . . 37
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER . . . . . . . 37
8.1. Termination. . . . . . . . . . . . . . . . . . . . . 37
8.2. Effect Of Termination. . . . . . . . . . . . . . . . 39
ARTICLE IX. GENERAL PROVISIONS. . . . . . . . . . . . . . . . 39
9.1. Nonsurvival Of Representations And Warranties. . . . 39
9.2. Payment Of Certain Fees and Expenses . . . . . . . . 39
9.3. Notices. . . . . . . . . . . . . . . . . . . . . . . 39
9.4. Certain Definitions; Interpretation. . . . . . . . . 40
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . 41
9.6. Counterparts . . . . . . . . . . . . . . . . . . . . 41
9.7. Severability . . . . . . . . . . . . . . . . . . . . 41
9.8. Captions . . . . . . . . . . . . . . . . . . . . . . 41
9.9. Amendment. . . . . . . . . . . . . . . . . . . . . . 41
9.10. Waiver. . . . . . . . . . . . . . . . . . . . . 42
9.11. No Third-Party Beneficiaries; Assignability . . 42
9.12. Inclusion of Information in Schedules . . . . . 42
9.13. Exclusive Jurisdiction and Consent to Service
of Process . . . . . . . . . . . . . . . . . . . . . 42
9.14. Waiver of Jury Trial. . . . . . . . . . . . . . 43
9.15. Governing Law . . . . . . . . . . . . . . . . . 43
SCHEDULES
Schedule 3.1 Organization, Standing and Power
Schedule 3.2 Capital Structure
Schedule 3.3 Subsidiaries
Schedule 3.4 Authority and Absence of Conflict
Schedule 3.6 Absence of Certain Events
Schedule 3.7 Litigation
Schedule 3.8 Compliance with Applicable Law
Schedule 3.9 Employee Plans
Schedule 3.10 Employment Relations
Schedule 3.11 Contracts
Schedule 3.12 Environmental Laws and Regulations
Schedule 3.13 Property and Leases
Schedule 3.14 Intellectual Property
Schedule 3.15 Insurance
Schedule 3.17 Taxes
Schedule 3.18 Customers
Schedule 3.19 Interests of Certain Persons
Schedule 4.4 Litigation
Schedule 6.6 Indemnification Agreements
