EXHIBIT 10.24
-------------
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXX, INC.,
WILMAR INDUSTRIES, INC.
AND
BW ACQUISITION, INC.
DATED AS OF JULY 10, 2000
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.................................................1
Section 1.1 The Merger.................................................1
Section 1.2 Effective Time of the Merger...............................2
Section 1.3 Closing....................................................2
Section 1.4 Directors and Officers of the Surviving Corporation........2
ARTICLE II CONVERSION OR CANCELLATION OF SHARES IN THE MERGER.........2
Section 2.1 Conversion (or Cancellation) of Shares.....................2
Section 2.2 Payment of Cash for Shares.................................3
Section 2.3 Exchange of Certificates...................................5
Section 2.4 Dissenting Shares..........................................5
Section 2.5 Stock Options..............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............6
Section 3.1 Organization...............................................6
Section 3.2 Capitalization.............................................7
Section 3.3 Company Subsidiaries.......................................7
Section 3.4 Authority Relative to this Agreement.......................8
Section 3.5 Consents and Approvals; No Violations......................9
Section 3.6 Company SEC Reports.......................................10
Section 3.7 Absence of Certain Changes................................10
Section 3.8 Litigation................................................11
Section 3.9 Absence of Undisclosed Liabilities........................11
Section 3.10 Contracts; No Default.....................................11
Section 3.11 Taxes.....................................................12
Section 3.12 Assets....................................................12
Section 3.13 Non-Competition Agreements................................13
Section 3.14 Employee Benefit Plans; Labor Matters.....................13
Section 3.15 Intellectual Property.....................................16
Section 3.16 Environmental Matters.....................................16
Section 3.17 Labor Matters.............................................17
Section 3.18 Employment Matters........................................17
Section 3.19 Insurance.................................................17
Section 3.20 Brokers...................................................17
Section 3.21 Information...............................................17
Section 3.22 Vote Required.............................................18
Section 3.23 Affiliate Transactions....................................18
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Page
Section 3.24 Delaware Section 203 and Other Statutes...................18
Section 3.25 Disclosure................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...19
Section 4.1 Organization..............................................19
Section 4.2 Capitalization............................................19
Section 4.3 Authority Relative to this Agreement......................19
Section 4.4 No Conflict...............................................20
Section 4.5 Litigation................................................20
Section 4.6 Information...............................................21
Section 4.7 Brokers...................................................21
Section 4.8 Financing.................................................21
ARTICLE V COVENANTS.................................................21
Section 5.1 Conduct of Business by the Company Pending the Merger.....21
Section 5.2 Access and Information....................................24
Section 5.3 Filings; Other Action.....................................25
Section 5.4 Proxy Statement...........................................25
Section 5.5 Stockholders Meeting......................................27
Section 5.6 Public Announcements......................................27
Section 5.7 Stock Exchange De-Listings................................27
Section 5.8 Employee Benefits.........................................28
Section 5.9 Company Indemnification Provision.........................28
Section 5.10 No Solicitation...........................................31
Section 5.11 Additional Matters........................................33
Section 5.12 Offer to Repurchase Certain Shares........................34
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER..................34
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger................................................34
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger................................................34
Section 6.3 Conditions to Obligations of Parent and Merger
Sub to Effect the Merger..................................35
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.........................36
Section 7.1 Termination...............................................36
Section 7.2 Effect of Termination.....................................38
Section 7.3 Amendment.................................................38
Section 7.4 Waiver....................................................38
Section 7.5 Termination Fee and Expenses..............................38
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Page
ARTICLE VIII GENERAL PROVISIONS........................................40
Section 8.1 Certain Definitions.......................................40
Section 8.2 Survival of Representations, Warranties and Agreements....40
Section 8.3 Notices...................................................41
Section 8.4 Amendments; No Waivers....................................42
Section 8.5 Expenses..................................................42
Section 8.6 Transfer Taxes............................................42
Section 8.7 Successors and Assigns....................................42
Section 8.8 Governing Law and Venue; Waiver of Jury Trial.............42
Section 8.9 Counterparts; Effectiveness...............................43
Section 8.10 Severability..............................................43
Section 8.11 Specific Performance......................................43
Section 8.12 Entire Agreement; No Third Party Beneficiaries............44
iv
INDEX OF DEFINED TERMS
SECTION
-------
Acquisition Agreement........................................... 5.10(d)
Action.......................................................... 6.1(d)
Audited Financial Statements.................................... 3.6
Benefit Plan.................................................... 3.14(a)(i)
Closing......................................................... 1.3
Closing Date.................................................... 1.3
COBRA........................................................... 3.14(a)(vi)
Code............................................................ 3.14(a)(ix)
Common Share Exchange Ratio..................................... 2.1(c)
Common Stock.................................................... 2.1(a)
Company......................................................... Introduction
Company Benefit Plan............................................ 3.13
Company Disclosure Letter....................................... Article III
Company Financial Statements.................................... 3.6
Company Intellectual Property Rights............................ 3.15(a)
Company Material Adverse Effect................................. 3.1
Company Principal............................................... Factual
Recitals
Company SEC Reports............................................. 3.5
Company Stockholders Meeting.................................... 5.4
Company Subsidiaries............................................ 3.3(a)
Company Voting Agreement........................................ Factual
Recitals
Confidentiality Agreement....................................... 5.2
Delaware Corporate Law.......................................... 1.1
Dissenting Shares............................................... 2.4
Effective Time.................................................. 1.2
Employee........................................................ 3.14
Encumbrance..................................................... 3.5
Environmental Law............................................... 3.16
ERISA........................................................... 3.14(a)(v)
Exchange Act.................................................... 3.5
Exchange Agent.................................................. 2.2(a)
Expenses........................................................ 7.5(c)
Financing....................................................... 4.8
Financing Letters............................................... 4.8
GAAP............................................................ 3.6
Governmental Entity............................................. 3.5
Governmental Requirements....................................... 3.5
Hazardous Substance............................................. 3.16
HSR Act......................................................... 3.5
Indemnification Parties......................................... 5.9(b)
Indemnified Parties............................................. 5.9(a)
Indemnifying Party.............................................. 5.9(b)
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SECTION
-------
Interim Financial Statements.................................... 3.6
Material Assets................................................. 3.11(a)
Merger.......................................................... Factual
Recitals
Merger Sub...................................................... Introduction
Merger Consideration............................................ 2.1(a)
Merger Sub Common Stock......................................... 4.2
Notice of Superior Proposal..................................... 5.10(b)
Option.......................................................... 2.5
Option Plans.................................................... 2.5
Parent Disclosure Letter........................................ Article IV
Parent Material Adverse Effect.................................. 4.1
PBGC............................................................ 3.14(a)(viii)
Permitted Encumbrances.......................................... 3.11(a)
Permitted Investments........................................... 2.2(a)
Preferred Stock................................................. 2.1(c)
Proxy........................................................... Factual
Recitals
Proxy Statement................................................. 5.4
Requisite Company Vote.......................................... 3.4
Retiree Welfare Plan............................................ 3.14(a)(iv)
SEC............................................................. 3.5
Securities Act.................................................. 5.4
Superior Proposal............................................... 5.10(d)
Surviving Corporation........................................... 1.1
Surviving Corporation Bylaws.................................... 1.1
Surviving Corporation Certificate of Incorporation.............. 1.1
Takeover Proposal............................................... 5.10(a)
Termination Fee................................................. 7.5(a)
Terminating Company Breach...................................... 7.1(g)
Terminating Parent Sub Breach................................... 7.1(h)
Transfer Taxes.................................................. 8.6
Welfare Plan.................................................... 3.14(a)(iii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of July 10,
2000, among XXXXXXX, INC., a Delaware corporation (the "Company"), WILMAR
INDUSTRIES, INC., a New Jersey corporation ("Parent") and BW ACQUISITION, INC.,
a Delaware corporation ("Merger Sub").
WHEREAS, the respective Boards of Directors of each of the Company,
Parent and Merger Sub have approved this Agreement, pursuant to which, among
other things, Merger Sub will be merged with and into the Company (the "Merger")
upon the terms and subject to the conditions set forth herein and in accordance
with the Delaware General Corporation Law, as amended ("Delaware Corporate
Law");
WHEREAS, concurrently with the execution of the Agreement, as a
condition to the willingness of Parent and Merger Sub to enter into the
Agreement, (i) Waxman Industries Inc. and Waxman USA Inc. (collectively, the
"Company Principal") entered into a Stockholder Agreement and Voting Trust
Agreement with Parent and Merger Sub (collectively, the "Company Voting
Agreement"), which provides for, among other things, the Company Principal to
deposit 6,186,530 shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), beneficially owned by the Company Principal in a
voting trust, and the agreement of the Company Principal and the voting trustee
named therein to vote all shares of Common Stock beneficially owned by the
Company Principal in favor of approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby, and (ii) the Company
Principal delivered to Parent and Merger Sub a proxy (the "Proxy") in respect of
an additional 1,000,000 of such shares of Common Stock beneficially owned by the
Company Principal.
WHEREAS, certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 8.1.
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof, at the Effective Time (as defined in Section 1.2 hereof),
Merger Sub shall be merged with and into the Company in accordance with the
applicable provisions of Delaware Corporate Law and the separate corporate
existence of Merger Sub shall thereupon cease, and the Company shall be the
surviving corporation in the Merger (sometimes referred to
1
as the "Surviving Corporation") and all of its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by the Merger. The
Merger shall have the effects set forth in Sections 251, 259 and 261 of Delaware
Corporate Law. Pursuant to the Merger, the Certificate of Incorporation of the
Surviving Corporation shall be the Certificate of Incorporation of Merger Sub in
effect immediately prior to the Effective Time (the "Surviving Corporation
Certificate of Incorporation") until amended in accordance with the terms
thereof and applicable law, except that as of the Effective Time, Article I of
such Certificate of Incorporation shall be amended to read as follows: "The name
of the corporation is Xxxxxxx, Inc." The bylaws of the Surviving Corporation
shall be the bylaws of Merger Sub in effect immediately prior to the Effective
Time (the "Surviving Corporation Bylaws") until amended in accordance with the
terms thereof and applicable law.
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when the Certificate of Merger is executed and filed with the
Secretary of State of the State of Delaware in accordance with Delaware
Corporate Law, or at such later time as the parties hereto shall have designated
in such filing as the effective time of the Merger (the "Effective Time"), which
filing shall be made as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 1.3
hereof.
Section 1.3 CLOSING. The Company shall promptly notify Parent and
Merger Sub, and Parent and Merger Sub shall promptly notify the Company, when
the conditions to such party's obligation to effect the Merger contained in
Article VI (other than those conditions that by their nature are to be satisfied
at the closing of the Merger (the "Closing"), but subject to the fulfillment or
waiver of those conditions) have been satisfied or waived in accordance with
this Agreement. The Closing shall take place at the offices of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
at 10:00 a.m., local time, on the third business day after the later of these
notices has been given (the "Closing Date"), unless another date or place is
agreed to in writing by the parties hereto.
Section 1.4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
The directors and officers of Merger Sub immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation at the
Effective Time. Immediately after the Effective Date, Xxxxxxx X. Xxxx shall be
elected to the board of directors of the Surviving Corporation. The directors
and officers of the Surviving Corporation shall hold office until their
respective successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation Certificate of Incorporation and the Surviving Corporation
Bylaws.
ARTICLE II
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
Section 2.1 CONVERSION (OR CANCELLATION) OF SHARES. At the
Effective Time, pursuant to this Agreement and by virtue of the Merger and
without any action on the
2
part of Parent, Merger Sub, the Company or the holders of any of the following
securities:
(a) Except as otherwise provided in Section 2.1(b) and
Section 2.4, each share of Common Stock issued and outstanding immediately prior
to the Effective Time (the "Shares") shall be canceled and shall be converted
automatically into the right to receive an amount equal to $13.15 in cash,
without interest (the "Merger Consideration"), payable to the holder thereof
upon surrender of the certificate formerly representing such share of Common
Stock in the manner provided in Section 2.2.
(b) Each share of Common Stock held in the treasury of
the Company and each Share owned by Parent or Merger Sub, if any, immediately
prior to the Effective Time shall be canceled without any conversion thereof and
no payment or distribution shall be made with respect thereto.
(c) Each share of Common Stock, par value $0.01 per
share, of Merger Sub ("Merger Sub Common Stock") that is issued and outstanding
immediately prior to the Effective Time shall be converted into one newly
issued, fully paid and nonassessable share of Common Stock.
Section 2.2 PAYMENT OF CASH FOR SHARES.
(a) Prior to the Effective Time, Company shall appoint
American Stock Transfer and Trust Company, or another bank or trust company
reasonably acceptable to Parent and Merger Sub (the "Exchange Agent"), to act as
exchange agent for the exchange of the Merger Consideration upon surrender of
certificates representing issued and outstanding Shares. At the Effective Time,
the Surviving Corporation shall irrevocably deposit or cause to be deposited
with the Exchange Agent, for the benefit of the holders of Shares, cash in the
aggregate amount required to pay the Merger Consideration in respect of the
Shares outstanding immediately prior to the Effective Time. Pending distribution
pursuant to Section 2.2(b) hereof of the cash deposited with the Exchange Agent,
such cash shall be held in trust for the benefit of the holders of Shares and
such cash shall not be used for any other purposes; provided that the Surviving
Corporation may direct the Exchange Agent to invest such cash, provided that
such investments (i) shall be obligations of or guaranteed by the United States
of America, in commercial paper obligations receiving the highest rating from
either Xxxxx'x Investors Services, Inc. or Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers acceptances of
domestic commercial banks with capital exceeding $250,000,000 (collectively
"Permitted Investments") or in money market funds which are invested solely in
Permitted Investments and (ii) shall have maturities that will not prevent or
delay payments to be made pursuant to Section 2.2(b) hereof. Each holder of a
certificate or certificates representing Shares canceled and extinguished at the
Effective Time pursuant to Section 2.1(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder of
such Shares, to effect the exchange of such certificate or certificates on such
holder's behalf for a period ending two hundred seventy (270) days after the
Effective Time.
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(b) After surrender to the Exchange Agent of any
certificate which prior to the Effective Time shall have represented any Shares,
the Exchange Agent shall promptly distribute to the person in whose name such
certificate shall have been registered, a check in the amount of the Merger
Consideration into which such Shares shall have been converted at the Effective
Time pursuant to Section 2.1(a) hereof, net of any required Tax withholdings.
Until so surrendered and exchanged, each such certificate shall, after the
Effective Time, be deemed to represent only the right to receive the Merger
Consideration, and until such surrender and exchange, no cash shall be paid to
the holder of such outstanding certificate in respect thereof. No interest shall
be paid or accrue on the Merger Consideration. The Surviving Corporation shall
promptly after the Effective Time cause to be distributed to such holders
appropriate materials to facilitate such surrender.
(c) If payment is to be made to a Person other than the
registered holder of the Shares represented by the certificate or certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
Shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no further
transfers on the stock transfer books of the Surviving Corporation of the Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for the consideration provided
for, and in accordance with the procedures set forth, in this Article II.
(e) If any cash deposited with the Exchange Agent for
purposes of payment in exchange for Shares remains unclaimed for two hundred
seventy (270) days after the Effective Time, such cash (together with any
interest received or accrued with respect thereto) shall be returned to the
Surviving Corporation, upon demand, and any such holder who has not converted
his Shares into the Merger Consideration prior to that time shall thereafter
look only to the Surviving Corporation for payment of the Merger Consideration.
Notwithstanding the foregoing, the Surviving Corporation and Exchange Agent
shall not be liable to any holder of Shares for any amount paid to a public
official pursuant to applicable unclaimed property laws. Any amounts remaining
unclaimed by holders of Shares seven (7) years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity (as defined in Section
3.5) shall, to the extent permitted by applicable Law, become the property of
the Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to Section 2.2(a) to pay for Shares for
which dissenter's rights have been perfected shall be returned to the Surviving
Corporation, upon demand.
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(g) No dividends or other distributions with respect to
capital stock of the Surviving Corporation with a record date after the
Effective Time shall be paid to the holder of any unsurrendered certificate for
Shares.
(h) From and after the Effective Time, the holders of
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares, other than the right to receive the
Merger Consideration as provided in this Agreement.
(i) In the event that any Share certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Share certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation or the Exchange Agent, the posting by
such Person of a bond in such reasonable amount as the Surviving Corporation or
the Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Share certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Share certificate the Merger
Consideration, to which such person is entitled pursuant to Section 2.1 upon due
surrender of and deliverable in respect of such Share certificate pursuant to
this Agreement.
Section 2.3 EXCHANGE OF CERTIFICATES. Immediately after the
Effective Time, the Surviving Corporation shall deliver to the record holder of
the certificates which immediately prior to the Effective Time represented all
the outstanding shares of Merger Sub Common Stock that were converted into the
right to receive shares of Common Stock in accordance with Section 2.1(c), in
exchange for such certificates, duly endorsed in blank, share certificates,
registered in the name of such record holder, representing the number of shares
of Common Stock to which such record holder is so entitled by virtue of Section
2.1(c).
Section 2.4 DISSENTING SHARES. Notwithstanding Section 2.1, any
Shares which are issued and outstanding immediately prior to the Effective Time
and which are held by a holder who has not voted such shares of Common Stock in
favor of the Merger and who has delivered a written demand for relief as a
dissenting stockholder in the manner provided by Delaware Corporate Law and who,
as of the Effective Time, shall not have effectively withdrawn or lost such
right to relief as a dissenting stockholder ("Dissenting Shares") shall not be
converted into or represent a right to receive the Merger Consideration. The
holders thereof shall be entitled only to such rights as are granted by Section
262 of Delaware Corporate Law. Each holder of Dissenting Shares who becomes
entitled to payment for such Dissenting Shares pursuant to Section 262 of
Delaware Corporate Law shall receive payment therefor from the Surviving
Corporation in accordance with Delaware Corporate Law; provided, however, that
if any such holder of Dissenting Shares (i) shall have failed to establish his
entitlement to relief as a dissenting stockholder as provided in Section 262 of
Delaware Corporate Law, (ii) shall have effectively withdrawn his demand for
relief as a dissenting stockholder with respect to such Shares or lost his right
to relief as a dissenting stockholder and payment for his Shares under Section
262 of Delaware Corporate Law or (iii) shall have failed to file a complaint
with the appropriate court seeking relief as to determination of the value of
all
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Dissenting Shares within the time provided in Section 262 of Delaware Corporate
Law, such holder shall forfeit the right to relief as a dissenting stockholder
with respect to such Shares and each such Share shall be converted into or
represent the right to receive the appropriate Merger Consideration without
interest thereon, from the Surviving Corporation as provided in Section 2.1. The
Company shall give Parent and Merger Sub prompt notice of any demands received
by the Company for relief as a dissenting stockholder, attempted withdrawals of
such demands, and any other instruments served pursuant to Delaware Corporate
Law received by the Company relating to stockholders' rights of appraisal, and
Parent and Merger Sub shall have the right to direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent and Merger Sub, make any payment with respect
to, any such demands, or negotiate, offer to settle, or settle any such demands
except as required by law.
Section 2.5 STOCK OPTIONS. Immediately prior to the Effective
Time, each outstanding option to purchase shares of Common Stock (an "Option")
granted under the Company's Omnibus Incentive Plan, Employee Stock Purchase Plan
and 1996 Non-Employee Director Stock Option Plan and any similar plan or
arrangement providing for the issuance of options (collectively, the "Option
Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested. At the Effective Time (A) each Option which is then
outstanding shall be canceled and each Option Plan shall be terminated and (B)
in consideration of such cancellation, and except to the extent that Parent,
Merger Sub and the holder of any such Option otherwise agree, immediately
following consummation of the Merger, the Company shall pay to such holders of
Options an amount in respect thereof equal to the product of (x) the excess of
the Merger Consideration over the exercise price thereof, if any, and (y) the
number of shares of Common Stock subject thereto (such payment to be net of
taxes required by law to be withheld with respect thereto). No payment shall be
made with respect to any Option having a per share exercise price, as in effect
at the Effective Time, equal to or greater than the Merger Consideration. In
connection herewith, the Company shall take all actions required to be taken
under Section 20 of the Employee Stock Purchase Plan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent and Merger Sub in a letter of
even date delivered to it prior to the execution hereof (which letter shall
contain appropriate references to identify the representations and warranties
herein to which the information in such letter relates) (the "Company Disclosure
Letter"), the Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted or
6
presently proposed to be conducted, except where the failure to have such power
and authority or necessary governmental approvals would not, individually or in
the aggregate have a Company Material Adverse Effect (as defined below). The
Company is duly qualified as a foreign corporation 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 business makes such qualification
necessary, except where the failure to be so qualified and in good standing
individually or in the aggregate, has not resulted and could not reasonably be
expected to result in a Company Material Adverse Effect. For purposes of this
Agreement, "Company Material Adverse Effect" means any change in or effect on
the business, assets, properties, results of operations or condition (financial
or otherwise) of the Company or any Company Subsidiary (as defined below) that
is or could reasonably be expected to be materially adverse to the Company and
the Company Subsidiaries, taken as a whole, or that could reasonably be expected
to materially impair or delay the ability of the Company to perform its
obligations under this Agreement or consummate the Merger and the other
transactions contemplated hereby.
Section 3.2 CAPITALIZATION. As of the date hereof the authorized
capital stock of the Company consists of 40,000,000 shares of Common Stock, of
which 16,263,928 shares of Common Stock as of the date of this Agreement are
issued and outstanding, and 10,000,000 shares of Preferred Stock, par value
$0.10 per share (the "Preferred Stock"), of which no shares of Preferred Stock
are issued and outstanding. As of the date of this Agreement, options to
purchase an aggregate of 1,047,050 shares of Common Stock were issued and
outstanding, as set forth in Section 3.2 of the Company Disclosure Letter. All
of the outstanding shares of Common Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth above or as
specified in Section 3.2 of the Company Disclosure Letter, as of the date of
this Agreement there are no shares of capital stock of the Company issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating the Company to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock. All of the foregoing Options shall be canceled as of the
Effective Time.
Section 3.3 COMPANY SUBSIDIARIES.
(a) Section 3.3(a) of the Company Disclosure Letter sets
forth the name of each subsidiary of the Company (collectively, the "Company
Subsidiaries") and the state or jurisdiction of its incorporation. Each Company
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority and all necessary government approvals to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority or necessary governmental approvals
would not individually or in the aggregate have a Company Material Adverse
Effect. Each Company Subsidiary is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in
7
such jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not individually or in the aggregate have a Company Material
Adverse Effect.
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Letter, the Company is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of each of
the Company Subsidiaries, there are no proxies with respect to any such shares,
and no equity securities of any Company Subsidiary are or may become required to
be issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of any capital stock
of any Company Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which the Company or any Company Subsidiary is
or may be bound to issue, redeem, purchase or sell additional shares of capital
stock of any Company Subsidiary or securities convertible into or exchangeable
or exercisable for any such shares. Except as set forth in Section 3.3(b) of the
Company Disclosure Letter, all of such shares so owned by the Company are
validly issued, fully paid and nonassessable and are owned by it free and clear
of any Encumbrances (as defined in Section 3.5), restraints on alienation, or
any other restrictions with respect to the transferability or assignability
thereof (other than restrictions on transfer imposed by federal or state
securities laws).
(c) Except for the Company Subsidiaries and as set forth
in the Financial Statements (as hereinafter defined) of the Company or in
Section 3.3(c) of the Company Disclosure Letter, the Company does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or the transactions contemplated hereby,
other than, with respect to the Merger, the adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock (the "Requisite Company Vote"). Subject to the foregoing, this
Agreement has been duly and validly executed and delivered by the Company and
(assuming this Agreement constitutes a valid and binding obligation of Parent
and Merger Sub) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles. At a meeting on July 9, 2000, the Board of Directors of
the Company (i) unanimously adopted the plan of merger set forth in Articles I
and II of this Agreement and approved this Agreement and the other transactions
contemplated by this Agreement, (ii) unanimously determined that
8
the Merger is advisable, fair to, and in the best interests of, the stockholders
of the Company and has determined to recommend to the stockholders the approval
of this Agreement, the Merger, and the other transactions contemplated hereby
and (iii) unanimously approved the Company Voting Agreement and the transactions
contemplated thereby. The Board of Directors has taken all necessary action so
as to render Section 203 of the Delaware Corporate Law and Article Seventh of
the Company's Amended and Restated Certificate of Incorporation inapplicable to
the Merger and the other transactions contemplated by this Agreement.
Section 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except (a) for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended (the "HSR Act"), the filing of the Proxy Statement (as defined
in Section 5.6) with the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), the filing of the
Certificate of Merger as required by Delaware Corporate Law or as set forth in
Section 3.5 of the Company Disclosure Letter or (b) where the failure to make
any filing with, or to obtain any permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body,
agency, commission, division, department, public body or other authority (a
"Governmental Entity") or other person would not prevent or delay the
consummation of the Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, and would not individually or in the aggregate
have a Company Material Adverse Effect, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity or other person
is necessary for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated by this
Agreement. Except as set forth in Section 3.5 of the Company Disclosure Letter,
neither the execution, delivery or performance of this Agreement by the Company,
the negotiations relating thereto, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof, will (i) conflict with or result in any breach of any
provisions of the Certificate of Incorporation or Bylaws of the Company or the
Certificate or Articles of Incorporation, as the case may be, or Bylaws of any
of the Company Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension or revocation) under, any of the terms, conditions or
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan or other instrument or obligation
to which the Company or any of the Company Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound or affected
(collectively, "Contracts"), (iii) conflict with or violate any foreign or
domestic law, statute, ordinance, rule, regulation, order, judgment or decree
("Law") applicable to the Company or any Company Subsidiary or by which any
property or asset of the Company or any Company Subsidiary is or may be bound or
affected, (iv) result in the creation or imposition of any lien, pledge, charge,
security interest, claim, option, right of first refusal, agreement, limitation
on the Company's or any Company Subsidiary's voting rights, mortgage, lease,
sublease, adverse claim or interest, title defect or other
9
encumbrance of any nature whatsoever (collectively, an "Encumbrance") on any
asset of the Company or any Company Subsidiary or (v) cause the suspension or
revocation of any Company Permit (as defined in Section 3.11), except in the
case of clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions, suspensions
or revocations which would not individually or in the aggregate have a Company
Material Adverse Effect. The Company Disclosure Letter sets forth a correct and
complete list of all material Contracts to which the Company or any Company
Subsidiary is a party, or by which it or its assets or properties are or may be
bound or affected, under which consents, approvals or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement.
Section 3.6 COMPANY SEC REPORTS. The Company has delivered to
Parent and Merger Sub true and complete copies of each registration statement,
report and proxy or information statement (including exhibits and any amendments
thereto) filed by the Company with the SEC since January 1, 1998 (collectively,
the "Company SEC Reports"). As of the respective dates the Company SEC Reports
were filed or, if any such Company SEC Reports were amended, as of the date such
amendment was filed, each of the Company SEC Reports (i) complied in all
material respects with all applicable requirements of the Securities Act and
Exchange Act (as those terms are defined below), and the rules and regulations
promulgated thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of (i) the audited consolidated
financial statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Report on Form 10-K for
the fiscal year ended June 30, 1999 (the "Audited Financial Statements") and
(ii) the unaudited consolidated interim financial statements for the Company
(including any related notes and schedules) included (or incorporated by
reference) in its Quarterly Report on Form 10-Q for the quarter ended March 30,
2000 (the "Interim Financial Statements," and together with the Audited
Financial Statements, the "Company Financial Statements"), fairly present, in
conformity with generally accepted accounting principles, as in effect in the
United States, from time to time ("GAAP") applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and the Company Subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in their financial position
for the periods then ended (subject to normal year-end adjustments and GAAP
footnotes in the case of any unaudited interim financial statements).
Section 3.7 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Section 3.7 of the Company Disclosure Letter, since June 30, 1999, there has
been no event or condition which has had (or is reasonably likely to result in)
a Company Material Adverse Effect, and the Company and the Company Subsidiaries
have in all material respects conducted their businesses in the ordinary course
consistent with past practices and have not taken any action which, if taken
after the date hereof, would violate Section 5.1 hereof, except for changes
affecting the Company's industry generally.
10
Section 3.8 LITIGATION. Except as disclosed in the notes to the
Company Financial Statements included in the Company SEC Reports or as set forth
in Section 3.8 of the Company Disclosure Letter, there is no suit, claim,
action, proceeding or investigation (whether at law or equity, before or by any
federal, state or foreign commission, court, tribunal, board, agency or
instrumentality, or before any arbitrator) pending or, to the best knowledge of
the Company, threatened against or affecting the Company or any of the Company
Subsidiaries, if adversely determined, in the reasonable, good faith judgment of
the Company, is likely individually or in the aggregate to have a Company
Material Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company or any of the Company Subsidiaries
having, or which, insofar as can reasonably be foreseen by the Company, may
reasonably be expected to result in a Company Material Adverse Effect.
Section 3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except for
liabilities or obligations which are accrued or reserved against in the Company
Financial Statements (or reflected in the notes thereto) included in the Company
SEC Reports or disclosed in Section 3.9 of the Company Disclosure Letter or
which were incurred after June 30, 1999 in the ordinary course of business and
consistent with past practices or in connection with the transactions
contemplated by this Agreement or as a reasonable result of the matters
disclosed in Section 3.9 of the Company Disclosure Letter, the Company and the
Company Subsidiaries do not have any material liabilities or obligations
(whether absolute, accrued, known or unknown, contingent or otherwise) of a
nature required by GAAP to be reflected in a consolidated balance sheet (or
reflected in the notes thereto) of the Company and which, individually or in the
aggregate, would have a Company Material Adverse Effect.
Section 3.10 CONTRACTS; NO DEFAULT. All material Contracts are
valid, binding, in full force and effect and enforceable in all material
respects against the Company or a Company Subsidiary and to the knowledge of the
Company, against each other party thereto. Except as set forth in Section 3.10
of the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or a default under) any term, condition or provision of
(a) its Articles or Certificate of Incorporation, as the case may be, or Bylaws,
(b) any Contract to which the Company or any Company Subsidiary is a party or by
which it or any of its properties or assets may be bound or affected, (c) any
Law applicable to the Company or any of the Company Subsidiaries or any of their
properties or assets, or (d) any authorization, license, permit, easement,
variance, exception, consent, certificate, approval or other of any Governmental
Entity necessary for the Company or any of the Company Subsidiaries to conduct
their respective businesses as currently conducted (collectively, the "Company
Permits"), except in the case of clauses (b), (c) and (d) above for breaches,
defaults or violations which would not individually or in the aggregate have a
Company Material Adverse Effect. Except as set forth in Section 3.10 of the
Company Disclosure Letter, no Contract contains any change of control provision,
or other terms and conditions that will result in a material provision therein
becoming applicable or
11
inapplicable as a result of the consummation of the transactions contemplated by
this Agreement. Except as set forth in Section 3.10 of the Company Disclosure
Letter, neither the Company nor any Company Subsidiary is a party to any
indemnification agreements or arrangements.
Section 3.11 TAXES.
(a) The Company and the Company Subsidiaries have (i)
duly filed (or there has been filed on their behalf) with the appropriate
governmental authorities all material tax returns required to be filed by them
on or prior to the date hereof, and (ii) duly paid in full or made provision in
accordance with GAAP (or there has been paid or provision has been made on their
behalf) for the payment of all material taxes, interest and penalties, if any,
shown on such returns, for all periods ending through the date hereof.
(b) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any taxes or tax returns of the Company or the Company Subsidiaries
wherein an adverse determination or ruling in any one such proceeding or in all
such proceedings in the aggregate could have a Company Material Adverse Effect.
(c) Neither the Company nor any of the Company
Subsidiaries has granted any requests, agreements, consents or waivers to extend
the statutory period of limitations applicable to the assessment of any taxes
with respect to any tax returns of the Company or any of the Company
Subsidiaries.
(d) Neither the Company nor any of the Company
Subsidiaries has received any notice of deficiency or assessment with respect to
any taxable year of the Company or any of the Company Subsidiaries that has not
been paid or otherwise discharged or adequately reserved against.
(e) Except as set forth in Section 3.11 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is a
party to any tax sharing, tax indemnity or other agreement or arrangement
relating to taxes. Any obligations of the Company or any of the Company
Subsidiaries under any tax sharing, tax indemnity or other agreement or
arrangement relating to taxes will be terminated as of the Effective Date.
Section 3.12 ASSETS. The Company and the Company Subsidiaries own,
or otherwise have sufficient and legally enforceable rights to use, all of the
properties and assets (real, personal or mixed, tangible or intangible),
reasonably necessary for the conduct of, or otherwise material to, their
business and operations (the "Material Assets"). The Company and the Company
Subsidiaries have good title to, or in the case of leased property have good and
valid leasehold interests in, all Material Assets, in each case free and clear
of any Encumbrances, except Permitted Encumbrances. "Permitted Encumbrances"
means (a) Encumbrances which secure debts and obligations reserved against in
the Company Financial Statements, to the extent so reserved,
12
(b) Encumbrances for taxes not yet due and payable or that are being contested
in good faith by appropriate proceedings and for which adequate reserves have
been provided in accordance with GAAP or that are statutory Encumbrances for
taxes not yet delinquent, (c) those Encumbrances that are set forth in Section
3.12 of the Company Disclosure Letter and (d) those Encumbrances that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.13 NON-COMPETITION AGREEMENTS. Neither the Company nor
any Company Subsidiary is a party to any agreement which purports to restrict or
prohibit in any material respect the Company or the Company Subsidiaries
collectively from, directly or indirectly, engaging in any business currently
engaged in by the Company or any Company Subsidiary. None of the Company's
officers, directors or key employees is a party to any agreement which, by
virtue of such person's relationship with the Company, restricts in any material
respect the Company or any Company Subsidiary from, directly or indirectly,
engaging in any of such businesses.
Section 3.14 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) For purposes of this Agreement:
(i) "Benefit Plan" means any employee benefit
plan, arrangement, policy or commitment, including, without limitation,
any employment, consulting or deferred compensation agreement,
executive compensation, bonus, incentive, pension, profit-sharing,
savings, retirement, stock option, stock purchase or severance pay
plan, any life, health, disability or accidental death and
dismemberment insurance plan, any holiday or vacation practice or any
other employee benefit plan within the meaning of Section 3(3) of
ERISA, as to which the Company has any direct or indirect, actual or
contingent liability;
(ii) "Company Benefit Plan" means any Benefit
Plan that provides benefits with respect to current or former
Employees;
(iii) "Welfare Plan" means Benefit Plan that is a
welfare plan within the meaning of and subject to ERISA Section 3(l);
(iv) "Retiree Welfare Plan" means any Welfare
Plan that provides benefits to current or former employees beyond their
retirement or other termination of service (other than coverage
mandated by COBRA, the cost of which is fully paid by the current or
former employee or his dependents);
(v) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended;
(vi) "COBRA" means the provisions of Code section
4980B and Part 6 of Title I of ERISA;
13
(vii) "Employee" means any individual employed by
the Company or any of its subsidiaries;
(viii) "PBGC" means the Pension Benefit Guaranty
Corporation; and
(ix) "Code" means the Internal Revenue Code of
1986, as amended.
(b) Section 3.14 of the Company Disclosure Letter sets
forth all Company Benefit Plans. With respect to each such plan, the Company has
delivered to the Parent and Merger Sub correct and complete copies of: (i) all
plan texts and agreements and related trust agreements or annuity contracts;
(ii) all summary plan descriptions and material employee communications; (iii)
the most recent annual report (including all schedules thereto); (iv) the most
recent annual audited financial statement and opinion applicable to each plan
intended to qualify under Code section 401(a) or 403(a); (v) if a plan is
intended to qualify under Code section 401(a) or 403(a), the most recent
determination letter, if any, received from the Internal Revenue Service; and
(vi) all material communications with any Governmental Entity or agency
(including, without limitation, the PBGC and the Internal Revenue Service).
(c) The Company has no direct or indirect, actual or
contingent liability with respect to any Benefit Plan other than to make
payments pursuant to Company Benefit Plans in accordance with the terms of such
plans.
(d) Each of the Company and the Company Subsidiaries to
date has made all material payments due under the terms of each Company Benefit
Plan.
(e) All material amounts properly accrued as liabilities
to, or expenses of, any Company Benefit Plan that have not been paid have been
properly reflected on the Financial Statements.
(f) There are no Company Benefit Plans that are subject
to any of Code section 412, ERISA section 302 or Title IV or ERISA.
(g) Each Company Benefit Plan conforms in all material
respects to, and its administration is in all material respects in compliance
with, its terms and all applicable laws and regulations.
(h) Except as disclosed in Section 3.13 of the Company
Disclosure Letter, there are no actions, liens, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Company
Benefit Plan.
(i) Each Company Benefit Plan which is intended to
qualify under Code section 401 (a) or 403(a) so qualifies.
(j) Each Company Benefit Plan which is a "group health
plan" (as defined in ERISA section 607(1)) has been operated in all material
respects in compliance with the provisions of COBRA, the Health Insurance
Portability and Accountability Act of 1996 and any applicable, similar state
law.
14
(k) Except as disclosed in Section 3.14(k) of the Company
Disclosure Letter, there is no contract or arrangement in existence with respect
to any Employee that, solely as a result of the Merger and the transactions
contemplated in connection therewith, would result in the payment of any amount
that by operation of Code section 280G would not be deductible to the Company or
any of its subsidiaries.
(l) No assets of the Company are allocated to or held in
a "rabbi trust" or similar funding vehicle.
(m) Except as disclosed in the Company Financial
Statement or in Section 3.14 of the Company Disclosure Letter, as of the date of
this Agreement there are no: (i) unfunded benefit obligations with respect to
any Employee (as defined below) that are not fairly reflected by reserves shown
on the Financial Statements, except for obligations arising from the
transactions contemplated by this Agreement or upon a similar "change of
control" of the Company, (ii) reserves, assets, surpluses or prepaid premiums
with respect to any Welfare Plan or (iii) Retiree Welfare Plans.
(n) Except as disclosed in Section 3.14 of the Company
Disclosure Letter or as contemplated in this Agreement, the consummation of the
transactions contemplated by this Agreement will not: (i) entitle any current or
former Employee to severance pay, unemployment compensation or any similar
payment; (ii) accelerate the time of payment or vesting, or increase the amount
of any compensation due to, any current or former Employee; or (iii) constitute
or involve a prohibited transaction (as defined in ERISA section 406 or Code
section 4975), constitute or involve a breach of fiduciary responsibility within
the meaning of ERISA section 502(1) or otherwise violate Part 4 of Title I of
ERISA.
(o) Neither the Company nor any entity under common
control with the Company within the meaning of Code section 414(b), (c), (m) or
(o) contributes to or otherwise a "multiple employer plan" or a "multiemployer
plan" within the meaning of the Code or ERISA.
(p) Neither the Company nor any entity under common
control with the Company within the meaning of Code section 414(b), (c), (m) or
(o) maintains or has maintained a plan that is or was subject to Title IV of
ERISA, and has no liability in respect of any such plan; no filing of a notice
of intent to terminate such a Benefit Plan has been made; and the PBGC has not
initiated any proceeding to terminate any such Benefit Plan. No event has
occurred, and no condition or circumstance exists, that presents a material risk
that any Company Benefit Plan has or is likely to experience a "partial
termination" (within the meaning of Code section 411 (d)(3)).
(q) As of the Effective Time, the Company, its
subsidiaries and any entity under common control with the Company within the
meaning of Code section 414(b), (c), (m) or (o) has not incurred any liability
or obligation under the Worker
15
Adjustment and Retraining Notification Act, as it may be amended from time to
time, and within six-month period immediately following the Effective Time, will
not incur any such liability or obligation if, during such six-month period,
only terminations of employment in the normal course of operations occur.
Section 3.15 INTELLECTUAL PROPERTY.
(a) Each of the Company and the Company Subsidiaries owns
or possesses adequate licenses or other valid rights to use all existing United
States and foreign patents, trademarks, trade names, service marks, copyrights,
trade secrets and applications therefor (the "Company Intellectual Property
Rights"), except where the failure to own or possess valid rights to use such
Company Intellectual Property Rights would not have a Company Material Adverse
Effect.
(b) The validity of the Company Intellectual Property
Rights and the title thereto of the Company or any Company Subsidiary, as the
case may be, is not being questioned in any pending litigation or proceeding to
which the Company or any Subsidiary is a party nor, to the knowledge of the
Company, is any such litigation or proceeding threatened. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect and except as set forth in Section 3.15 of the Company
Disclosure Letter, the conduct of the business of the Company and the Company
Subsidiaries as now conducted does not, to the knowledge of the Company,
infringe any valid patents, trademarks, trade names, service marks or copyrights
of others, and the consummation of the transactions completed by this Agreement
will not result in the loss or impairment of any Company Intellectual Property
Rights. To the knowledge of the Company, no third party is infringing upon any
Company Intellectual Property Rights, except for infringements that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Company Material Adverse Effect.
Section 3.16 ENVIRONMENTAL MATTERS. Except as set forth in the
Company SEC Reports or in Section 3.16 of the Company Disclosure Letter, (i) no
real property currently or, to the Company's knowledge, formerly owned or
operated by the Company or any Company Subsidiary is contaminated with any
Hazardous Substance (as defined herein) to an extent or in a manner or condition
now requiring remediation under any Environmental Law (as defined herein), (ii)
no judicial or administrative proceeding is pending or, to the knowledge of the
Company, threatened relating to liability for any off-site disposal or
contamination and (iii) the Company and the Company Subsidiaries have not
received in writing any claims or notices alleging liability under any
Environmental Law. Neither the Company nor any Company Subsidiary is in
violation of any applicable Environmental Law and no condition or event has
occurred with respect to the Company or any Company Subsidiary that would
constitute a violation of such Environmental Law, excluding in any event, such
violations, conditions and events that would not have a Company Material Adverse
Effect. "Environmental Law" means any applicable federal, state or local law,
regulation, order, decree or judicial opinion or other agency requirement having
the force and effect of law and relating to Hazardous Substances or
16
the protection of the environment. "Hazardous Substance" means any toxic or
hazardous substance that is regulated by or under authority of any Environmental
Law.
Section 3.17 LABOR MATTERS. Neither the Company nor any Company
Subsidiary is a party to or bound by any collective bargaining or similar
agreement with any labor organization or employee association applicable to
employees of the Company or any Company Subsidiary. None of the employees of the
Company or any Company Subsidiary are represented by any labor organization and
neither the Company or any Company Subsidiary has any knowledge of any current
union organizing activities among the employees of the Company or any Company
Subsidiary, nor does any question concerning representation exist concerning
such employees. There is no unfair labor practice charge or complaint against
the Company or any Company Subsidiary pending or, to the knowledge of the
Company or any Company Subsidiary, threatened before the National Labor
Relations Board. There is no labor strike, dispute, slowdown, stoppage or
lockout actually pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Company Subsidiary and during the past three (3)
years there has not been any such action. There is no grievance or arbitration
proceeding pending which could reasonably have a Company Material Adverse
Effect.
Section 3.18 EMPLOYMENT MATTERS. Except as set forth in Section
3.18 of the Company Disclosure Letter, there are no employment contracts, change
of control agreements, stay bonus agreements or severance agreements with any
employees of the Company or any Company Subsidiary and there are no written
personnel policies, rules or procedures applicable to employees of the Company
or any Company Subsidiary. To the Company's knowledge, no key employee or group
of employees has any plans to terminate their employment with the Company or any
Company Subsidiary as a result of the Merger and the transactions contemplated
by this Agreement or otherwise.
Section 3.19 INSURANCE. Section 3.19 of the Company Disclosure
Letter contains an accurate and complete description of all material policies of
fire, liability, directors' and officers' liability, workmen's compensation and
other forms of insurance owned or held by the Company and each Company
Subsidiary. All such policies are in full force and effect, all premiums due and
payable have been paid, and no notice of cancellation or termination has been
received with respect to any such policy.
Section 3.20 BROKERS. Except for the fee payable to Deutsche Banc
Alex. Xxxxx as set forth in Section 3.20 of the Company Disclosure Letter, no
person is entitled to any brokerage, financial advisory, finder's or similar fee
or commission payable by the Company in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company.
Section 3.21 INFORMATION. None of the information to be supplied
by the Company for inclusion or incorporation by reference in the Proxy
Statement (as defined in Section 5.4) will, at the time of the mailing of the
Proxy Statement and any amendments or supplements of the Proxy Statement and at
the time of the Company Stockholders Meeting (as defined in Section 5.4),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in that Proxy
17
Statement or necessary in order to make the statements in that Proxy Statement,
in light of the circumstances under which they are made, not misleading. The
Proxy Statement (except for those portions of the Proxy Statement that relate
only to Parent or Merger Sub or subsidiaries or affiliates of Parent or Merger
Sub) will comply as to form in all material respects with the provisions of the
Exchange Act.
Section 3.22 VOTE REQUIRED. The Requisite Company `Vote is the
only vote of the holders of any class or series of the Company's capital stock
necessary (under the Company's Certificate of Incorporation and By-Laws,
Delaware Corporate Law, other applicable Law or otherwise) to approve this
Agreement, the Merger or the other transactions contemplated by this Agreement.
Section 3.23 AFFILIATE TRANSACTIONS. Except as set forth in
Schedule 3.23 of the Company Disclosure Letter: (a) there are no Contracts or
other transactions, whether written or oral, to or by which the Company, on the
one hand, and any affiliate, on the other hand, are or have been a party that
involve continuing obligations, commitments or rights or have given rise to a
payment by the Company or any of the Company Subsidiaries since January 1, 1998
and (b) no officer, director, or key employee of the Company or any affiliate
that is controlled by any such person (i) owns directly or indirectly any
interest in any Person that is a supplier, customer or competitor of or lessor
to the Company (other than ownership of less than 1% of a publicly traded
company) or (ii) has a material debtor or a creditor relationship with the
Company.
Section 3.24 DELAWARE SECTION 203 AND OTHER STATUTES. The
provisions of Section 203 of Delaware Corporate Law will not apply to this
Agreement, as it may be amended from time to time, or any of the transactions
contemplated hereby. The Company has heretofore delivered to Parent and Merger
Sub a complete and correct copy of the resolutions of the Board of Directors of
the Company to the effect that pursuant to 203(a)(1) of Delaware Corporate Law,
the restrictions contained in Section 203 of Delaware Corporate Law are and
shall be inapplicable to the Merger and the transactions contemplated by this
Agreement, as it may be amended from time to time.
Section 3.25 DISCLOSURE. None of the representations or warranties
by the Company in this Agreement, including the Company Disclosure Letter, or in
the Company SEC Reports and the Company Financial Statements, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact or omits or will omit at
the Effective Time to state any material fact necessary, in light of the
circumstances under which it was made, to make the statements herein or therein
not misleading. There is no fact known to Company at the time of this Agreement
(except from matters affecting the Company's industry generally) which, insofar
as can reasonably be foreseen by the Company, may reasonably be expected to
result in a Company Material Adverse Effect, which has not been set forth in the
Company SEC Reports, the Company Financial Statements or in this Agreement,
including the Company Disclosure Letter.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as otherwise disclosed to the Company in a letter delivered to
it prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "Parent Disclosure Letter"), Parent and
Merger Sub represent and warrant to the Company as follows:
Section 4.1 ORGANIZATION. Parent and Merger Sub are corporations
duly organized, validly existing and in good standing under the laws of New
Jersey and Delaware, respectively. For purposes of this Agreement, "Parent
Material Adverse Effect" means any change in or effect on the business, assets,
properties, results of operations or condition (financial or otherwise) of
Parent and Merger Sub that is or could reasonably be expected to be materially
adverse to Parent and Merger Sub, taken as a whole, or that could reasonably be
expected to materially impair or delay the ability of Parent and Merger Sub to
perform their respective obligations under this Agreement or consummate the
Merger and the other transactions contemplated hereby.
Section 4.2 CAPITALIZATION. As of the date hereof: (i) the
authorized capital stock of Merger Sub consists of 100 shares of Merger Sub
Common Stock and (ii) 100 shares of Merger Sub Common Stock are issued and
outstanding and owned beneficially and of record by Parent and immediately prior
to the Effective Time the authorized capital shares of Merger Sub will consist
of 100 shares of Merger Sub Common Stock which shall be owned beneficially and
of record by Parent. All of the issued and outstanding shares of capital stock
of Merger Sub are validly issued, fully paid and nonassessable and free of
preemptive rights. All of the shares of Merger Sub Common Stock at the Effective
Time will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. There are no options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Merger Sub or Parent to issue, transfer, sell, redeem,
repurchase or otherwise acquire any shares of Merger Sub capital stock.
Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Merger Sub
has the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of this
Agreement by each of Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly authorized by
Parent's and Merger Sub's respective boards of directors and stockholders, and
no other corporate proceedings on the part of Parent and Merger Sub are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and (assuming this Agreement constitutes a valid and binding
obligation of the Company) constitutes a valid and binding agreement of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws
19
affecting creditors' rights generally from time to time in effect and to general
equitable principles.
Section 4.4 NO CONFLICT. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Entity or other
person will be required to be obtained or made by Parent or Merger Sub in
connection with the due execution and delivery by Parent and Merger Sub of this
Agreement and the consummation by Parent and Merger Sub of the Merger as
contemplated hereby other than (i) compliance with applicable requirements of
the Exchange Act, (ii) compliance with the HSR Act, (iii) the filing of the
Certificate of Merger in accordance with Delaware Corporate Law, (iv) consents
of Parent's lenders in connection with the Merger and the transactions
contemplated thereby and (v) where the failure to obtain such authorization,
approval or action, or to provide such notice to make such filing, individually
or in the aggregate, has not resulted and could not reasonably be expected to
result in a Parent Material Adverse Effect. Subject to the foregoing, the
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by each of Parent and Merger Sub will not:
(a) conflict with or violate any provision of any Parent
or Merger Sub charter document;
(b) conflict with or violate any foreign or domestic Law
applicable to Parent or Merger Sub or by which any property or asset of Parent
or Merger Sub is or may be bound or affected, except for any such conflicts or
violations which, individually or in the aggregate, have not resulted and could
not reasonably be expected to result in a Parent Material Adverse Effect; or
(c) result in any breach of or constitute a default (or
an event which with or without notice or lapse of time or both, would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any property or asset of Parent or Merger Sub under any Contract to which Parent
or Merger Sub is a party or by which it or its assets or properties are or may
be bound or affected, except for any such breaches, defaults or other
occurrences which, individually or in the aggregate, have riot resulted and
could not reasonably be expected to result in a Parent Material Adverse Effect.
Section 4.5 LITIGATION. There is no suit, action or proceeding
(whether at law or equity, before or by any federal, state or foreign
commission, court, tribunal, board, agency or instrumentality, or before any
arbitrator) pending or, to the best knowledge of the Merger Sub, threatened
against or affecting the Merger Sub, the outcome of which, in the reasonable
judgment of the Merger Sub, is likely individually or in the aggregate to have a
Merger Sub Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Merger Sub having, or
which, insofar as can reasonably be foreseen by Merger Sub, in the future may
have, a Parent Material Adverse Effect.
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Section 4.6 INFORMATION. None of the information to be supplied
by Parent and Merger Sub for inclusion or incorporation by reference in the
Proxy Statement (as defined in Section 5.4) will, at the time of the mailing of
the Proxy Statement and any amendments or supplements of the Proxy Statement and
at the time of the Company Stockholders Meeting (as defined in Section 5.4),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in that Proxy Statement or necessary in order to make
the statements in that Proxy Statement, in light of the circumstances under
which they are made, not misleading.
Section 4.7 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated hereby based upon
arrangements made by or on behalf of Parent or Merger Sub which may result in
any liability to the Company.
Section 4.8 FINANCING. Upon receipt of funding pursuant to the
Financing Letters (as defined below), Parent and Merger Sub will have at the
Closing sufficient cash, through a combination of committed capital from
Parent's investors and commitments from financial institutions, subject to the
conditions set forth in the Financing Letters, to enable it to pay full Merger
Consideration as provided herein, to make all other necessary payments by it in
connection with the Merger and the transactions contemplated herein (including
the repayment of certain outstanding indebtedness of the Surviving Corporation)
and to pay all of the related fees and expenses (the "Financing"). The Company
shall use all reasonable efforts to cooperate with and assist Merger Sub in
obtaining the Financing. The parties acknowledge that debt and equity financing
commitment letters have been delivered to the Board of Directors of the Company
by Parent (collectively, the "Financing Letters"). Parent has paid or caused to
be paid all commitment fees and similar fees and expenses set forth in such
Financing Letters which are due and payable. Parent and Merger Sub have no
reason to believe that Merger Sub will not be able to satisfy the terms of the
Financing Letters applicable to Parent and Merger Sub.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. From the date hereof until the Effective Time, except as set forth in
the Company Disclosure Letter or as otherwise contemplated by this Agreement,
without the prior written consent of Parent and Merger Sub (which shall not be
unreasonably withheld), the Company and the Company Subsidiaries shall conduct
their respective businesses in the ordinary course consistent with past practice
and shall use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and key employees, subject to the terms of
this Agreement. Except as set forth in the Company Disclosure Letter or as
otherwise contemplated in this Agreement, from the date hereof until the
Effective Time, without
21
the prior written consent of Parent and Merger Sub (which shall not be
unreasonably withheld):
(a) the Company shall not adopt or propose any change in
its Certificate of Incorporation or By-laws;
(b) the Company shall not declare, set aside or pay any
dividend or other distribution with respect to any shares of capital stock of
the Company, or split, combine or reclassify any of the Company's capital stock;
(c) the Company and the Company Subsidiaries shall not
split, combine, subdivide, reclassify, repurchase, redeem or otherwise acquire
any shares of capital stock or other securities of, or other ownership interests
in, the Company; provided, however, that the Company may repurchase from Waxman
Industries, Inc. or its affiliates shares of capital stock of the Company for a
price per share not greater than the Merger Consideration, as contemplated by
Section 5.12;
(d) the Company shall not, and shall not permit any
Company Subsidiary to, merge or consolidate with any other person or (except in
the ordinary course of business consistent with past practice) acquire a
material amount of assets of any other person;
(e) the Company shall not, and shall not permit any
Company Subsidiary to, sell, lease, license or otherwise surrender, relinquish
or dispose of (i) any material facility owned or leased by the Company or any
Company Subsidiary or (ii) any assets or property which are material to the
Company and the Company Subsidiaries, taken as a whole, except pursuant to
existing contracts or commitments (the terms of which have been disclosed to
Parent and Merger Sub prior to the date hereof), or in the ordinary course of
business consistent with past practice;
(f) the Company shall not, and shall not permit any
Company Subsidiary to, settle any material audit, make or change any material
tax election or file amended tax returns or settle or compromise any material
federal, state, local or foreign income tax liability;
(g) the Company and the Company Subsidiaries shall not
issue any capital stock or other securities (except for issuances of shares upon
exercise of options outstanding on the date of this Agreement) or enter into any
amendment of any material term of any outstanding security of the Company, and
the Company and the Company Subsidiaries shall not incur any indebtedness except
in the ordinary course of business pursuant to existing credit facilities or
arrangements, amend or otherwise increase, accelerate the payment or vesting of
the amounts payable or to become payable under, or fail to make any required
contribution to, any Company Benefit Plan, materially increase any non-salary
benefits payable to any employee or former employee, except in the ordinary
course of business consistent with past practice or as otherwise permitted by
this Agreement;
22
(h) except for (i) increases in salary, wages and
benefits of officers or employees of the Company or the Company Subsidiaries in
accordance with past practice, (ii) increases in salary, wages and benefits
granted to officers and employees of the Company or the Company Subsidiaries in
conjunction with new hires, promotions or other changes in job status or (iii)
increases in salary, wages and benefits to employees of the Company or the
Company Subsidiaries entered into in the ordinary course of business, the
Company and the Company Subsidiaries shall not increase the compensation or
fringe benefits payable or to become payable to its directors, officers or
employees (whether from the Company or any Company Subsidiaries) except for
year-end bonuses which were accrued on the June 30, 2000 financial statements,
which may be paid at management's discretion, or pay any benefit not required by
any existing plan or arrangement (including the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or grant
any severance or termination pay to (except pursuant to existing agreements,
plans or policies), or enter into any employment or severance agreement with,
any director, officer or other employee of the Company or any Company
Subsidiaries or establish, adopt, enter into, or materially amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except in each case to the extent
required by applicable Law; provided, however, that nothing in this Agreement
will be deemed to prohibit the payment of benefits pursuant to existing plans
and arrangements as they become due and payable;
(i) without limiting the foregoing provisions of Section
5.1(h), other than the employment contracts entered into simultaneously herewith
with the individuals referred to in Section 5.1(i) of the Parent Disclosure
Letter who are deemed to be important to the continued business and operations
of the Surviving Corporation, which contracts are being held in escrow pending
consummation of the Merger, the Company shall not, and shall not permit any
Company Subsidiary to, enter into or amend any employment agreement or other
employment arrangement with any employee of the Company or any Company
Subsidiary, except in the ordinary course of business consistent with past
practice;
(j) the Company shall not change any method of accounting
or accounting practice by the Company or any Company Subsidiary, except for any
such change required by GAAP;
(k) (i) incur, assume or prepay any indebtedness or incur
or assume any short-term indebtedness (including, in either case, by issuance of
debt securities), except that the Company and the Company Subsidiaries may
incur, assume or prepay indebtedness in the ordinary course of business
consistent with past practice under existing lines of credit and pursuant to the
Amended Revolving Credit Agreement, dated as of January 6, 1999, between the
Company and First Union National Bank of Florida, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
00
xxxxxxxx xxxxxx xx xxxxxxxx, xx (xxx) make any loans, advances or capital
contributions to, or investments in, any other person;
(l) terminate, cancel or request any material change in,
or agree to any material change in any Contract which is material to the Company
and the Company Subsidiaries taken as a whole, or enter into any Contract which
would be material to the Company and the Company Subsidiaries taken as a whole,
in either case other than in the ordinary course of business consistent with
past practice; or make or authorize any capital expenditure or acquisition,
other than capital expenditures that are provided for in the Company's budget
for the Company and the Company Subsidiaries taken as a whole for such fiscal
year (a copy of which budget has been provided to Parent and Merger Sub);
(m) waive, release, assign, settle or compromise any
material rights, claims or litigation;
(n) the Company shall not, and shall not permit any
Company Subsidiary to, agree or commit to do any of the foregoing; and
(o) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company shall not, and
shall not permit any Company Subsidiary to, (i) take, or agree or commit to
take, any action that would make any representation and warranty of the Company
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time, (ii) omit, or agree or commit to omit, to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time, provided however that the Company shall be
permitted to take or omit to take such action which (without any uncertainty)
can be cured, and in fact is cured, at or prior to the Effective Time or (iii)
take, or agree or commit to take, any action that would result in, or is
reasonably likely to result in, any of the conditions of the Merger set forth in
Article VI not being satisfied.
Section 5.2 ACCESS AND INFORMATION. The Company shall afford to
Parent and Merger Sub and to their financial advisors, legal counsel,
accountants, consultants, financing sources, and other authorized
representatives access during normal business hours throughout the period prior
to the Effective Time to all of its books, records, properties, plants and
personnel and, during such period, each shall furnish promptly to the other (a)
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws, and (b) all
other information as they reasonably may request, provided that neither party
shall disclose to the other any competitively sensitive information and no
investigation pursuant to this Section 5.2 shall affect any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Parent and Merger Sub shall afford to the
Company and its financial advisors, legal counsel, accountants, consultants,
financing sources and other authorized representatives such information as may
reasonably be requested regarding or relating to the Financing and the ability
of Merger Sub to pay the Merger Consideration and to consummate the Merger and
the other transactions contemplated by this Agreement. Each of Company, Parent
and Merger Sub shall continue to abide by the terms of the letter agreements
between Parent
24
and the Company, dated June 17, 2000 (collectively, the "Confidentiality
Agreement") and each of Parent and Merger Sub hereby adopts and agrees to be
bound by all the terms and provisions of the Confidentiality Agreement.
Section 5.3 FILINGS; OTHER ACTION. Subject to the terms and
conditions herein provided, as promptly as practicable, the Company and Merger
Sub shall: (i) promptly make all filings and submissions under the HSR Act, each
as reasonably may be required to be made in connection with this Agreement and
the transactions contemplated hereby, provided that Parent and Company shall
each pay one-half of the filing fees, (ii) use all reasonable efforts to
cooperate with each other in (A) determining which filings are required to be
made prior to the Effective Time with, and which material consents, approvals,
permits or authorizations are required to be obtained prior to the Effective
Time from, Governmental Entities of the United States, the several states or the
District of Columbia and foreign jurisdictions in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and (B) timely making all such filings and timely seeking
all such consents, approvals, permits or authorizations, and (iii) use all
reasonable efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary or appropriate to consummate the
transactions contemplated by this Agreement as soon as practicable. In
connection with the foregoing, the Company will provide Parent and Merger Sub,
and Parent and Merger Sub will provide the Company, with copies of
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one
hand, and any Governmental Entity or members of their respective staffs, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby. Each of Parent, Merger Sub and the Company acknowledge that certain
actions may be necessary with respect to the foregoing in making notifications
and obtaining clearances, consents, approvals, waivers or similar third party
actions which are material to the consummation of the transactions contemplated
hereby, and each of Parent, Merger Sub and the Company agree to take such action
as is necessary to complete such notifications and obtain such clearances,
approvals, waivers or third party actions, except where such consequence, event
or occurrence would not have a Parent Material Adverse Effect or Company
Material Adverse Effect, as the case may be.
Section 5.4 PROXY STATEMENT. As promptly as practicable after the
execution of this Agreement, Parent, Merger Sub and the Company shall jointly
prepare and the Company shall file with the SEC the proxy statement of the
Company (the "Proxy Statement") relating to the special meeting of the Company's
stockholders (the "Company Stockholders Meeting") to be held to consider
approval and adoption of this Agreement and the Merger. Substantially
contemporaneously with the filing of the Proxy Statement with the SEC, copies of
the Proxy Statement shall be provided to the National Association of Securities
Dealers, Inc. ("NASD"). Parent, Merger Sub or the Company, as the case may be,
shall furnish all information concerning Parent, Merger Sub or the Company as
the other party may reasonably request in connection with such actions and the
preparation of the Proxy Statement and any other filings required to be made in
connection within this Agreement and the transactions contemplated hereby
(collectively,
25
the "Other Filings"). As promptly as practicable the Proxy Statement will be
mailed to the stockholders of the Company. The Company shall cause the Proxy
Statement and the Other Filings to be filed by it to comply as to form and
substance in all material respects with the applicable requirements of (i) the
Exchange Act, including Sections 14(a) and 14(d) thereof and the respective
regulations promulgated thereunder, (ii) the Securities Act of 1933, as amended
(the "Securities Act"), (iii) the rules and regulations of the NASD and (iv)
Delaware Corporate Law.
The Proxy Statement shall include the recommendation of the Board of
Directors of the Company to the stockholders of the Company that such
stockholders vote in favor of the adoption of this Agreement and the Merger;
provided, however, that subject to Section 5.10(b), the Board of Directors of
the Company may, at any time prior to the Effective Time, withdraw, modify or
change any such recommendation if the Board of Directors of the Company
determines in its good faith judgment that it is required to do so in order to
comply with its duties to the Company's shareholders under applicable Law. The
Proxy Statement will include a copy of the written opinion of Deutsche Banc
Alex. Xxxxx.
No amendment or supplement to the Proxy Statement will be made without
the approval of each of Parent, Merger Sub and the Company, which approval shall
not be unreasonably withheld or delayed, unless such amendment or supplement to
the Proxy Statement is required to be made by the Company under applicable Laws.
Each of Parent, Merger Sub and the Company will advise the other, promptly after
it receives notice thereof, or of any request by the SEC or the NASD for
amendment of the Proxy Statement and the Other Filings or comments thereon and
responses thereto or requests by the SEC for additional information.
The information supplied by the Company for inclusion in the Proxy
Statement shall not, at (i) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stockholders of the
Company, (ii) the time of the Company Stockholders Meeting, and (iii) the
Effective Time, contain any untrue statement of a material fact or fail to state
any material fact required to be stated in the Proxy Statement or necessary in
order to make the statements in the Proxy Statement not misleading. If at any
time prior to the Effective Time any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company that should be set forth in an amendment or
a supplement to the Proxy Statement, the Company shall promptly inform Parent
and Merger Sub. All documents that the Company is responsible for filing with
the SEC in connection with the transactions contemplated hereby will comply as
to form and substance in all material respects with the applicable requirements
Law, including Delaware Corporate Law, the Securities Act and the Exchange Act.
The information supplied by Parent and Merger Sub for inclusion in the
Proxy Statement shall not, at (i) the time the Proxy Statement (or any amendment
of or supplement to the Proxy Statement) are first mailed to the stockholders
the Company, (ii) the time of the Company Stockholders Meeting, and (iii) the
Effective Time, contain
26
any untrue statement of a material fact or fail to state any material fact
required to be stated in the Proxy Statement or necessary in order to make the
statements in the Proxy Statement not misleading. If, at any time prior to the
Effective Time, any event or circumstance relating to Parent or Merger Sub, or
their respective officers or directors, should be discovered by Parent or Merger
Sub that should be set forth in an amendment or a supplement to the Proxy
Statement, Parent and Merger Sub shall promptly inform the Company. All
documents that Parent and Merger Sub are responsible for filing in connection
with the transactions contemplated by this Agreement will comply as to form and
substance in all material aspects with the applicable requirements of Law,
including Delaware Corporate Law, the Securities Act and the Exchange Act.
The information supplied by any party for inclusion in another party's
Other Filing will be true and correct in all material respects.
Section 5.5 STOCKHOLDERS MEETING. The Company shall call and hold
the Company Stockholders Meeting as promptly as practicable for the purpose of
voting upon the adoption of this Agreement and Parent, Merger Sub and the
Company will cooperate with each other to cause the Company Stockholders Meeting
to be held as soon as practicable following the mailing of the Proxy Statement
to the stockholders of the Company. The Company shall use its commercially
reasonable, customary, good faith efforts (through its agents or otherwise) to
solicit from its stockholders proxies in favor of the adoption of this
Agreement, and shall take all other action necessary or advisable to secure the
Requisite Company Vote, except, subject to Section 5.10(b), to the extent that
the Board of Directors of the Company determines in good faith that it is
necessary to do otherwise in order to act in a manner consistent with its
obligations under applicable Law, after receipt of advice from outside legal
counsel (who may be the Company's regularly engaged independent legal counsel).
Section 5.6 PUBLIC ANNOUNCEMENTS. Parent, Merger Sub and the
Company shall issue a joint press release concerning the Merger promptly
following execution of this Agreement. Parent, Merger Sub and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any of the transactions
contemplated hereby (other than following a change, if any, of the Board of
Directors of the Company's recommendation of the Merger (in accordance with
Section 5.10(b)) and shall not issue any such press release or make any such
public statement prior to such consultation, except to the extent required by
applicable law or any listing agreement with NASDAQ, in which case the issuing
party shall use its reasonable best efforts to consult with the other parties
before issuing any such release or making any such public statement.
Section 5.7 STOCK EXCHANGE DE-LISTINGS. The parties shall use
their reasonable best efforts to cause the Surviving Corporation to cause the
Company Common Stock to be de-listed from NASDAQ and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
27
Section 5.8 EMPLOYEE BENEFITS.
(a) Parent and Merger Sub agree that the Company and the
Company Subsidiaries will honor, and, from and after the Effective Time, the
Surviving Corporation will honor, in accordance with their respective terms as
in effect on the date hereof, the employment, severance, change-of-control, stay
bonus and bonus agreements and arrangements to which the Company and the Company
Subsidiaries, as applicable, are a party and which are set forth on Section 3.18
of the Company Disclosure Letter, except that the agreement set forth on Section
5.8(a) of the Company Disclosure Letter shall be amended prior to the Effective
Time, as set forth on such Section 5.8(a) of the Company Disclosure Letter.
(b) Parent and Merger Sub agree that for a period of one
year following the Effective Time, the Surviving Corporation and the Company
Subsidiaries shall continue the (i) compensation (including bonus and incentive
awards) programs and plans and (ii) employee benefit and welfare plans,
programs, contracts, agreements and policies (including insurance and pension
plans but not including stock option or any other equity-based plan or program),
fringe benefits and vacation policies which are currently provided by the
Company and the Company Subsidiaries; provided that notwithstanding anything in
this Agreement to the contrary the Surviving Corporation and the Company
Subsidiaries shall not be required to maintain any individual plan or program so
long as the benefit plans and agreements maintained by the Surviving Corporation
and the Company Subsidiaries are, in the aggregate, not materially less
favorable than those provided by the Company and the Company Subsidiaries
immediately prior to the date of this Agreement; and, provided, further, that
nothing in this sentence shall be deemed to limit or otherwise affect the right
of the Surviving Corporation and the Company Subsidiaries to terminate
employment or change the place of work, responsibilities, status or designation
of any employee or group of employees as the Surviving Corporation and the
Company Subsidiaries may determine in the exercise of its business judgment and
in compliance with applicable laws.
(c) Prior to the Effective Time, the Company shall take
all necessary actions to terminate the Company Stock Fund as an investment
option under the Company's 401(k) Plan, in a manner intended to maintain such
plan's qualified status under Code section 401(a) and in accordance with the
applicable provisions of ERISA.
Section 5.9 COMPANY INDEMNIFICATION PROVISION.
(a) Merger Sub and Parent agree that all rights to
indemnification and exculpation from liabilities or acts or omissions occurring
at or prior to the Effective Time now existing in favor of the present or former
directors, officers, employees, fiduciaries and agents of the Company or any of
the Company Subsidiaries (collectively, the "Indemnified Parties") as provided
in the Company's Certificate of Incorporation or Bylaws or the Certificate or
Articles of Incorporation, Bylaws or similar organizational documents of any of
the Company Subsidiaries as in effect as of the date thereof or pursuant to the
terms of the indemnification agreements or arrangements entered into between the
Company or any Company Subsidiary and any of the Indemnified Parties
28
with respect to matters occurring at or prior to the Effective Time set forth in
Section 5.9 of the Company Disclosure Letter (specifically including, without
limitation, all transactions contemplated by this Agreement) shall survive the
Merger, shall be assumed and performed by Merger Sub, Parent and the Surviving
Corporation, and shall continue in full force and effect (without modification
or amendment, except as required by applicable law or except to make changes
permitted by law that would enlarge the Indemnified Parties' right or
indemnification), to the fullest extent and for the maximum term permitted by
law, and shall be enforceable by the Indemnified Party against the Company, the
Surviving Corporation and Merger Sub. At the Closing, Parent shall expressly and
directly assume by written instrument all such obligations.
(b) In addition to the rights provided in Section 5.9(a)
above, in the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including without
limitation, any action by or on behalf of any or all security holders of
Company, or by or in the right of Company, or any Company Subsidiary, or any
claim, action, suit, proceeding or investigation in which any person who is now,
or has been, at any time prior to the date hereof, or who becomes prior to the
Effective Time, an officer, employee or director of Company (the
"Indemnification Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he or she is or was an officer, employee or director of Company or
any of the Company Subsidiaries or any action or omission by such person in his
or her capacity as an officer or director, or (ii) this Agreement, the Merger or
the Transactions contemplated by this Agreement, whether in any case asserted or
arising before or after the Effective Time, the Company, the Surviving
Corporation and the Parent (collectively referred to as the "Indemnifying
Party") shall, from and after the Effective Time, indemnify and hold harmless,
as and to the full extent permitted by applicable law, each Indemnification
Party against any losses, claims, liabilities, expenses (including reasonable
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
in accordance herewith in connection with any such threatened or actual claim,
action, suit, proceeding or investigation. Any Indemnification Party proposing
to assert the right to be indemnified under this Section 5.9(b) shall, promptly
after receipt of notice of commencement of any action against such
Indemnification Party in respect of which a claim is to be made under this
Section 5.9(b) against the Indemnifying Party, notify the Indemnifying Party of
the commencement of such action, enclosing a copy of all papers served;
provided, however, that the failure to provide such notice shall not affect the
obligations of the Indemnifying Party except to the extent such failure to
notify materially prejudices the Indemnifying Party's ability to defend such
claim, action, suit, proceeding or investigation; and provided, further,
however, that no Indemnification Party shall be obligated to provide any
notification pursuant to this Section 5.9(b) prior to the Effective Time. If any
such action is brought against any of the Indemnification Parties, the
Indemnifying Party will be entitled to participate in and, to the extent that
they elect by delivering written notice to such Indemnification Parties promptly
after receiving notice of the commencement of the action from the
Indemnification Parties, to assume the defense of the action and after notice
from the Indemnifying Party to the Indemnification Parties of their election to
assume the defense, the Indemnifying Party will not be liable to the
Indemnification Parties for any legal or other expenses except as provided
below. If the Indemnifying
29
Party assumes the defense, the Indemnifying Party shall have the right to settle
such action without the consent of the Indemnification Parties; provided,
however, that the Indemnifying Party shall be required to obtain such consent
(which consent shall not be unreasonably withheld) if the settlement includes
any admission of wrongdoing on the part of the Indemnification Parties or any
decree or restriction of the Indemnification Parties; provided, further, that no
Indemnifying Party, in the defense of any such action shall, except with the
consent of the Indemnification Parties (which consent shall not be unreasonably
withheld), consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnification Parties of a release from all liability with
respect to such action. The Indemnification Parties will have the right to
employ their own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such Indemnification Parties
unless (i) the employment of counsel by the Indemnification Parties has been
authorized in writing by the Indemnifying Party, (ii) the Indemnification
Parties have reasonably concluded (based on written advice of counsel to the
Indemnification Parties) that there may be legal defenses available to them that
are different from or in addition to those available to the Indemnifying Party,
(iii) a conflict or potential conflict exists (based on written advice of
counsel to the Indemnification Party) between the Indemnification Parties and
the Indemnifying Party (in which case the Indemnifying Party will not have the
right to direct the defense of such action on behalf of the Indemnification
Parties, or (iv) the Indemnifying Party have not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the
Indemnifying Party and shall promptly be paid and advanced by each Indemnifying
Party as they become due and payable in advance of the final disposition of the
claim, action, suit, proceeding or investigation to the fullest extent and in
the manner permitted by law. Notwithstanding the foregoing, the Indemnifying
Party shall not be obligated to advance any expenses or costs prior to receipt
of an undertaking by or on behalf of the Indemnification Party to repay any
expenses advanced if it shall ultimately be determined that the Indemnification
Party is not entitled to be indemnified against such expense. Notwithstanding
anything to the contrary set forth in this Agreement, the Indemnifying Party (i)
shall not be liable for any settlement affected without its prior written
consent, and (ii) shall not have any obligation hereunder to any Indemnification
Party to the extent that a court or competent jurisdiction shall determine in a
final and non-appealable order that such indemnification is prohibited by
applicable law. In the event of a final and non-appealable determination by a
court that any payment of expenses is prohibited by applicable law, the
Indemnification Party shall promptly refund to the Indemnifying Party the amount
of all such expenses theretofore advanced pursuant hereto.
(c) Parent, Merger Sub and the Surviving Corporation
shall cause to be maintained in effect for not less than six years from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company (provided that Parent, Merger Sub and the
Surviving Corporation may substitute therefor policies of at least equivalent
coverage containing terms and conditions which are no less advantageous) with
respect to matters occurring prior to or at the Effective Time and this
Agreement and the matters contemplated herein, provided that in no event shall
Parent,
30
Merger Sub or the Surviving Corporation be required to expend to maintain or
procure insurance coverage pursuant to this Section 5.9 any amount per annum in
excess of 150% of the aggregate premiums paid in 1999 on an annualized basis for
such purpose. In the event the payment of such amount for any year is
insufficient to maintain such insurance or equivalent coverage cannot otherwise
be obtained, the Surviving Corporation shall purchase as much insurance as may
be purchased for the amount indicated.
(d) This Section 5.9 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified Parties, the
Indemnification Parties and their successors, assigns and heirs and shall be
binding on all successors and assigns of the Company, Parent, Merger Sub and the
Surviving Corporation. Each of the Indemnified Parties and the Indemnification
Parties shall be entitled to enforce the covenants contained in this Section 5.9
and the Company, Parent, Merger Sub and the Surviving Corporation acknowledge
and agree that each indemnified Party and Indemnification Party would suffer
irreparable harm and that no adequate remedy at law exists for a breach of such
covenants and such Indemnified Party or such Indemnification Party shall be
entitled to injunctive relief and specific performance in the event of any
breach of any provision in this Section 5.9.
(e) In the event that the Surviving Corporation or any of
its respective successors or assigns (i) consolidates with or mergers into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each of such case, the
successors and assigns of such Person shall assume the obligations set forth in
this Section 5.9, which obligations are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each Indemnification Person
covered hereby.
Section 5.10 NO SOLICITATION.
(a) The Company agrees that, prior to the Effective Time,
it shall not, and shall not authorize or permit any Company Subsidiaries or any
of its or the Company Subsidiaries' directors, officers, employees, investment
bankers, attorneys or other agents or representatives, directly or indirectly,
to invite, solicit, initiate or encourage any inquiries or the making of any
proposal or provide any confidential or non-public information about the Company
or the Company Subsidiaries with respect to any merger, acquisition, tender
offer, consolidation or other business combination involving the Company (a
"Takeover Proposal") or negotiate, explore or otherwise engage in discussions
with any person (other than Parent and Merger Sub or their directors, officers,
employees, agents and representatives) with respect to any Takeover Proposal or
enter into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided, however, that if the Board of
Directors of the Company determines in good faith, after consultation with and
based, among other things, upon advice of its outside counsel and financial
advisor, that it is necessary to do so in order to act in a manner consistent
with its obligations under applicable law, the Company may, in response to any
Superior Proposal (as defined below), which proposal was not solicited
31
by it and which did not, otherwise result from a breath of this Section 5.10,
and subject to providing prior written notice of its decision to take such
action to Parent and Merger Sub and compliance with the other requirements of
this Section 5.10, (i) furnish information with respect to the Company and the
Company Subsidiaries to any person making a Superior Proposal pursuant to a
customary confidentiality agreement no less favorable to the Company than the
Confidentiality Agreement (as determined in good faith by the Company based on
the advice of its outside counsel); and (ii) participate in discussions or
negotiations regarding such Superior Proposal; and provided further that nothing
contained in Section 5.10 shall prohibit the Company from, following advance
written notice to Parent and Merger Sub delivered promptly following its
decision to do so, (i) making and disclosing to the Company's stockholders a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any tender or exchange offer; (ii) subject to the
restrictions in Section 5.10(b), making any disclosure to the Company's
Stockholders which the Board of Directors of the Company determines in its good
faith, after consultation with and based, among other things, upon advice of its
outside legal counsel and financial advisor, that it is necessary to do so in
order to act in a manner consistent with its obligations under applicable law;
(iii) conducting "due diligence" inquiries (which shall be in writing to the
extent reasonably practicable) in response to any Takeover Proposal as the Board
of Directors of the Company determines in its good faith judgment, after
consultation with and based, among other things, upon the advice of its outside
legal counsel to be consistent with its obligations under applicable law.
(b) Except as expressly permitted by this Agreement, the
Board of Directors shall not (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent and Merger Sub, the approval
or recommendation by the Board of Directors of the Company of the Merger or this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal, or (iii) cause the Company to enter into any
Acquisition Agreement (as defined below). If the Board of Directors of the
Company, by a majority vote, determines in its good faith judgment after
consultation with and based, among other things, upon the advice of its outside
legal counsel, that it is required to do so in order to comply with its duties
to shareholders under applicable law, the Board of Directors of the Company may
withdraw its recommendation of the transactions contemplated hereby or approve
or recommend a Superior Proposal, but in each case only (i) after providing
written notice to Parent and Merger Sub (a "Notice of Superior Proposal")
advising Parent and Merger Sub 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
and (ii) if Parent and Merger Sub do not, within five (5) business days of
receipt by Parent and Merger Sub of the Notice of Superior Proposal, make a
binding, written offer that the Board of Directors of the Company by a majority
vote determines in its good faith judgment (after receipt of advice of Deutsche
Banc Alex. Xxxxx or another financial advisor of nationally recognized
reputation selected by the Board of Directors of the Company consistent with
such determination) to be at least as favorable, from a financial point of view,
to the Company's stockholders as such Superior Proposal.
32
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 5.10, the Company shall promptly
advise Parent and Merger Sub orally and in writing within one business day of
any request for information or any Takeover Proposal, the material terms and
conditions of such request or Takeover Proposal (and any amendments or proposed
amendments thereto) and the identity of the person making such request or
Takeover Proposal.
(d) For purposes of this Agreement:
(i) "Superior Proposal" means any proposal made
by a third party to acquire, directly or indirectly, including pursuant
to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, reorganization, liquidation, dissolution
or similar transaction, for consideration to the Company's stockholders
consisting of cash and/or securities, all or substantially all of the
shares of the Company's capital stock then outstanding or all or
substantially all the assets of the Company, on terms which the Board
of Directors of the Company determines in its good faith judgment to be
more favorable to the Company's stockholders than the Merger and for
which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company, is
reasonably capable of being obtained by such third party.
(ii) "Acquisition Agreement" means any letter of
intent, agreement in principle, acquisition agreement, merger agreement
or other similar agreement, contract or commitment related to any
Takeover Proposal.
Section 5.11 ADDITIONAL MATTERS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals in connection with the governmental requirements
and to effect all necessary registrations and filings. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of Parent,
Merger Sub and the Company shall take all such necessary action. Notwithstanding
the foregoing, nothing in this Agreement shall require, or be construed to
require, Parent, Merger Sub or the Company, in connection with the receipt of
any regulatory approval, to proffer to, or agree to (i) sell or hold separate
and agree to sell, divest or to discontinue to or limit, before or after the
Effective Time, any assets, businesses or interest in any assets or businesses
of Parent, Merger Sub, the Company or any of their respective affiliates (or to
the consent to any sale, or agreement to sell, or discontinuance or limitation
by Parent, Merger Sub or the Company, as the case may be, of any of its assets
or businesses) or (ii) agree to any conditions relating to, or changes or
restriction in, the operations of any such asset or business which, in either
case, could reasonably be expected to result in a Parent Material Adverse Effect
or a Company Material Adverse Effect or to materially and
33
adversely impact the economic or business benefits to such party of the
transactions contemplated by this Agreement.
Section 5.12 OFFER TO REPURCHASE CERTAIN SHARES. On or prior to
September 1, 2000, the Company shall offer to purchase from the Company
Principal, for cash, shares of Common Stock having a value of $2,000,000
(rounded up to the nearest whole number of shares) with the price determined
according to the average closing price for the prior ten (10) trading days.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated;
(b) no statute, rule, regulation, executive order,
decree, ruling or preliminary or permanent injunction shall have been enacted,
entered, promulgated or enforced by any federal or state court or Governmental
Entity which prohibits, restrains, enjoins or restricts the consummation of the
Merger;
(c) this Agreement and consummation of the Merger shall
have been duly approved and adopted by the holders of outstanding Common Stock
by the Requisite Company Vote; and
(d) no court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, order, injunction or decree (whether temporary, preliminary or permanent)
that is in effect and restrains, enjoins or otherwise prohibits consummation of
the Merger or the other transactions contemplated hereby or that, individually
or in the aggregate with all other such Laws, orders, injunctions or decrees,
could reasonably be expected to result in a Parent Material Adverse Effect or a
Company Material Adverse Effect, and no Governmental Entity shall have
instituted any proceeding or threatened to institute any proceeding seeking any
such Law, order, injunction or decree; provided, however, that the provisions of
this Section 6.1(d) shall not apply to any party that has directly or indirectly
solicited or encouraged any such Action.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction (or
34
waiver by the Company, in its discretion) at or prior to the Effective Time of
the following additional conditions:
(a) each of Parent and Merger Sub shall have performed in
all material respects its obligations under this Agreement required to be
performed by it at or prior to the Effective Time; the representations and
warranties of each of Parent and Merger Sub contained in this Agreement which
are qualified with respect to materiality shall be true and correct in all
respects, and such representations and warranties that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and at and as of the Effective Time as if made at and as of
such time except as contemplated by the Parent Disclosure Letter or this
Agreement; and the Company shall have received a certificate of the President,
an Executive Vice President, a Senior Vice President or the Chief Financial
Officer of Merger Sub as to the satisfaction of this condition; and
(b) each of Parent and Merger Sub shall have obtained the
consent, approval or waiver of each person whose consent, approval or waiver
shall be required in connection with the Merger and the transactions
contemplated by this Agreement, except for those which the failure to obtain
such consent, approval or waiver, individually or in the aggregate, could not
reasonably be expected to result in a Parent Material Adverse Effect.
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB TO
EFFECT THE MERGER. The obligations of Parent and Merger Sub to effect the Merger
shall be subject to the satisfaction (or waiver by the Parent and Merger Sub in
their discretion) at or prior to the Effective Time of the following additional
conditions:
(a) the Company shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Effective Time; and the representations and warranties of the
Company contained in this Agreement which are qualified with respect to
materiality shall be true and correct in all respects, and such representations
and warranties that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and at and as
of the Effective Time as if made at and as of such time, except as contemplated
by the Company Disclosure Letter or this Agreement; and Parent and Merger Sub
shall have received a Certificate of the Chief Executive Officer, the President,
an Executive Vice President, Senior Vice President or the Chief Financial
Officer of the Company as to the satisfaction of this condition;
(b) the aggregate number of Shares of the Company on the
Effective Time of the Merger, the holders of which have delivered notice of
their exercise (or intent to exercise) appraisal rights in accordance with the
provisions of Section 262 of Delaware Corporate Law, shall not exceed 5% of the
Shares outstanding as of the record date for the Company Stockholder Meeting;
(c) the Company Voting Agreement and the Proxy shall be
in full force and effect and the Company Principal shall have performed in all
material respects
35
all obligations required to be performed by it under the Company Voting
Agreement and the Proxy prior to the Closing Date; and
(d) Parent and Merger Sub shall have obtained the debt
financing necessary to consummate the Merger, to pay off all fees and expenses
in connection therewith, to refinance existing indebtedness of the Company and
Parent and to provide working capital for the Surviving Corporation pursuant to
the Debt Financing Commitments or other substantially equivalent financing
reasonably acceptable to Parent.
(e) the Company shall have obtained the consent, approval
or waiver of each person whose consent, approval or waiver shall be required in
connection with the Merger and the transactions contemplated by this Agreement,
except for those which the failure to obtain such consent, approval or waiver,
individually or in the aggregate, could not reasonably be expected to result in
a Company Material Adverse Effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement, as follows:
(a) By mutual written consent of Parent, Merger Sub and
the Company duly authorized by their respective boards of directors;
(b) By any of Parent, Merger Sub or the Company, if the
Effective Time shall not have occurred on or before the earlier of (i) November
30, 2000 or (ii) the sixtieth (60th) day after the Company Stockholders Meeting,
or such later date as may be agreed upon in writing by the parties hereto, by
either Parent, Merger Sub or the Company; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to the
party whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) By any of Parent, Merger Sub or the Company, if any
order, injunction or decree preventing the consummation of the Merger shall have
been entered by any court of competent jurisdiction or Governmental Entity and
shall have become final and non-appealable;
(d) By Parent or Merger Sub, if (i) the Board of
Directors of the Company withdraws, modifies or changes its approval or
recommendation of the Agreement in a manner adverse to Parent or Merger Sub or
shall have resolved to do so, (ii) the Board of Directors of the Company shall
have recommended to the stockholders of the Company a Takeover Proposal from a
person other than Merger Sub and/or Parent or shall have resolved to do so, or
(iii) a tender offer or exchange offer for any outstanding shares of capital
stock of the Company is commenced and the Board of
36
Directors of the Company fails to recommend against acceptance of such tender
offer or exchange offer by its stockholders (including by taking no position
with respect to the acceptance of such tender offer or exchange offer by its
stockholders) or (iv) the Company fails to promptly mail the Proxy Statement to
the stockholders after receiving SEC approval;
(e) By any of Parent, Merger Sub or the Company if this
Agreement shall fail to receive the Requisite Company Vote for adoption at the
Company Stockholders Meeting or any adjournment or postponement thereof;
(f) By any of Parent, Merger Sub or the Company if one or
more of the sources of Financing pursuant to the Financing Letters terminate or
purport to terminate such Financing Letters or otherwise give notice that they
do not intend to provide such Financing and Merger Sub and Parent are unable to
obtain replacement Financing within twenty-one (21) days thereafter from sources
and on terms and conditions reasonably acceptable to the Board of Directors of
the Company and to Parent and Merger Sub;
(g) By Parent or Merger Sub, upon a material breach of
any material representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the conditions set
forth in either of Section 6.3(a) or Section 6.3(e) would not be satisfied (a
"Terminating Company Breach"), provided, however, that if such Terminating
Company Breach is curable by the Company through the exercise of its reasonable
best efforts and for so long as the Company continues to exercise such
reasonable best efforts, Parent and Merger Sub may not terminate this Agreement
under this Section 7.1(g);
(h) By the Company, upon a material breach of any
material representation, warranty, covenant or agreement on the part of Parent
or Merger Sub set forth in this Agreement, or if any representation or warranty
of Parent or Merger Sub shall have become untrue, in either case such that the
conditions set forth in either of Section 6.2(a)or Section 6.2(b) would not be
satisfied (a "Terminating Parent Sub Breach"); provided, however, that, if such
Terminating Parent Sub Breach is curable by Parent or Merger Sub, as the case
may be, through its reasonable best efforts and for so long as Parent or Merger
Sub, as the case may be, continues to exercise such reasonable best efforts, the
Company may not terminate this Agreement under this Section 7.1(h); or
(i) By the Company, pursuant to Section 5.10(b) hereof,
if the Board of Directors of the Company, by a majority vote, determines in its
good faith judgment after consultation with and based, among other things, upon
the advice of its outside legal counsel, it is required to terminate in order to
comply with its duties to shareholders under applicable laws; provided, however,
that the Company may not terminate this Agreement pursuant to this Section
7.1(i) until the five business days notice to Parent and Merger Sub of the
Superior Proposal pursuant to Section 5.10(b) shall have elapsed; provided,
further, however, that such termination under this Section 7.1(i) shall not be
37
effective until the Company has made payment to Parent of the Termination Fee
pursuant to Section 7.5(a).
Section 7.2 EFFECT OF TERMINATION. Except as provided in Section
8.2, in the event of termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Parent, Merger Sub or the Company or any of their
respective Representatives, and all rights and obligations of each party hereto
shall cease, subject to the remedies of the parties set forth in Section 7.5(a)
and Section 7.5(c); provided, however, that nothing in this Agreement shall
relieve any party from liability for the breach of any of its representations
and warranties or any of its covenants or agreements set forth in this
Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided that, after the
approval of this Agreement by the stockholders of the Company, no amendment may
be made that would reduce the amount or change the type of consideration into
which each share of Common Stock shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
Section 7.4 WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained in this Agreement or in any document
delivered pursuant hereto, and (c) waive compliance with any agreement or
condition contained in this Agreement. Any such waiver of a condition, or any
determination that such a condition has been satisfied, will be effective only
if made in writing by the Company, Parent or Merger Sub, as the case may be,
and, unless otherwise specified in such writing, shall thereafter operate as a
waiver (or satisfaction) of such conditions for any and all purposes of this
Agreement. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
Section 7.5 TERMINATION FEE AND EXPENSES.
(a) The Company agrees that, if, (i) the Company shall
terminate this Agreement pursuant to Section 7.1(i), (ii) the Parent or Merger
Sub shall terminate this Agreement pursuant to Section 7.1(d), or (iii) (A)
Parent or Merger Sub shall terminate this Agreement pursuant to Section 7.1(e)
due to failure to obtain the Requisite Company Vote for adoption at the Company
Stockholders Meeting and (B) at the time of such failure, any person shall have
made a public announcement or otherwise communicated to the Company and its
Stockholders with respect to a Takeover Proposal with respect to the Company,
then in accordance with Section 7.5(b), after such termination, or in the case
of clause (iii), after the consummation of such Takeover Proposal, the Company
shall pay to Parent a termination fee in the amount of $7,200,000 (such fee, the
"Termination Fee").
38
(b) Any payment required to be made pursuant to Section
7.5(a) shall be made to Parent by the Company not later than two business days
after delivery to the Company by Parent of notice of demand for payment and
shall be made by wire transfer of immediately available funds to an account
designated by Parent.
(c) Except as set forth in this Section 7.5(c), all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid in accordance with the provisions of Section
8.5. For purposes of this Agreement, "Expenses" consist of all out-of-pocket
expenses (including all fees, commitment fees and expenses of counsel,
accountants, commercial and investment bankers, lenders, experts and consultants
to a party hereto and its affiliates) incurred by a party or on its behalf to
the extent directly related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Proxy Statement, the solicitation of stockholder approvals
and all other matters related to the closing of the transactions contemplated
hereby up to a maximum of $1,500,000. The Company agrees that it shall pay to
Merger Sub an amount equal to Parent's and Merger Sub's documented Expenses
directly related to this Agreement and the transactions contemplated hereby if
Parent and Merger Sub terminate this Agreement pursuant to Section 7.1(g)
provided that Company shall have no such obligation if the Company was entitled
to terminate this Agreement pursuant to Section 7.1(f) (unless the event giving
rise to the Company's right to terminate under Section 7.1(f) was caused by a
breach by the Company referred to in Section 7.1(g)) or Section 7.1(h). Parent
and Merger Sub agree that Parent and Merger Sub shall pay to the Company an
amount equal to the Company's documented Expenses directly related to this
Agreement and the transactions contemplated hereby if the Company terminates
this Agreement pursuant to Section 7.1(h), provided the Parent and Merger Sub
shall have no such obligation if Parent and Merger Sub were entitled to
terminate this Agreement pursuant to Section 7.1(g).
(d) The Company acknowledges that the agreements
contained in this Section 7.5 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent and
Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to pay promptly the Termination Fee, and, in order to obtain such payment,
Parent or Merger Sub commences a suit which results in a judgment against the
Company for the Termination Fee, the Company shall pay to Parent and Merger Sub
their Expenses in connection with such suit, together with interest on the
amount of the Termination Fee at the prime rate of Fleet National Bank in effect
on the date such payment was required to be made.
39
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 CERTAIN DEFINITIONS.
For purposes of this Agreement:
(a) The term "AFFILIATE," as applied to any person, means
any other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
(b) The term "BUSINESS DAY" means any day, other than
Saturday, Sunday or a federal holiday, and shall consist of the time period from
12:01 a.m. through 12:00 midnight Eastern time. In computing any time period
under this Agreement, the date of the event which begins the running of such
time period shall be included except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "INCLUDING" means, unless the context
clearly requires otherwise, including but not limited to the things or matters
named or listed after that term.
(d) The term "KNOWLEDGE," as applied to the Company,
Parent or Merger Sub, means the knowledge of the executive officers of the
Company, Parent or Merger Sub, as the case may be.
(e) The term "PERSON" shall include individuals,
corporations, limited and general partnerships, trusts, limited liability
companies, associations, joint ventures, Governmental Entities and other
entities and groups (which term shall include a "group" as such term is defined
in Section 13(d)(3) of the Exchange Act).
(f) The term "SUBSIDIARY" or "SUBSIDIARIES" means, with
respect to any person, any entity of which such person (either alone or through
or together with any other subsidiary), owns, directly or indirectly, stock or
other equity interests constituting more than 50% of the voting or economic
interest in such entity.
Section 8.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. No representations or warranties in this Agreement or any
certificate, instrument or other writing delivered pursuant to this Agreement
shall survive beyond the Effective Time. This Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms contemplate performance
after the Effective Time. Without limiting the generality of the foregoing,
Sections 5.8 and 5.9 shall specifically survive the Merger and the Effective
Time.
40
Section 8.3 NOTICES. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand or (c) the expiration of
five business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
(a) If to Parent and Merger Sub, to:
Wilmar Industries, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with copies to:
Parthenon Capital
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Drew Xxxxxx
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Esq.
If to the Company, to:
Xxxxxxx, Inc.
000 Xxxx Xxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Xxxxx & Xxxxxxx
Attn: Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Post Office Box 240
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
41
Section 8.4 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Time if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment by the Company, Parent and
Merger Sub or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the adoption of this Agreement by the
stockholders of the Company, there shall be no amendment that by law requires
further approval by the stockholders of the Company without the further approval
of such stockholders.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
Section 8.5 EXPENSES. Except as provided in Section 5.3 and
Section 7.5(c), all Expenses incurred in connection with this Agreement shall be
paid by the party incurring such Expenses.
Section 8.6 TRANSFER TAXES. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes") incurred
in connection with the transactions contemplated by this Agreement shall be paid
by either Parent and Merger Sub or the Surviving Corporation, and the Company
shall cooperate with Parent and Merger Sub in preparing, executing and filing
any returns with respect to such Transfer Taxes.
Section 8.7 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto, except that Parent
and Merger Sub may assign this Agreement: to their respective lending banks.
Section 8.8 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a)
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE. The parties irrevocably submit to the jurisdiction of the
federal courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated by this Agreement and by those
documents, and hereby waive, and agree not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of this
Agreement or of any such document, that it is not subject to this Agreement or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not
42
be appropriate or that this Agreement or any such document may not be enforced
in or by such courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
a federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 8.4 or in such other
manner as may be permitted by law, shall be valid and sufficient service
thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.8.
Section 8.9 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Section 8.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 8.11 SPECIFIC PERFORMANCE. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if
43
available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder.
Section 8.12 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including any exhibits and annexes to this Agreement), (i)
constitutes the entire agreement, and supersedes all prior agreements,
representations and warranties, and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and (ii) except
for the provisions of Article II and Sections 5.8 and 5.9, is not intended to
confer upon any person other than the parties any rights or remedies.
Notwithstanding the foregoing, the Confidentiality Agreement shall remain in
full force and effect.
44
IN WITNESS WHEREOF, each of Parent, PW Acquisition and the Company has
caused this Agreement to be executed on its behalf by its officers thereunder to
duly authorized, all as if the date first above written.
WILMAR INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
BW ACQUISITION, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
XXXXXXX INC.
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Executive Officer
45
