AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
XXXXXXX INDUSTRIES, INC.,
XXXXXXX ACQUISITION CORP.
and
XXXXXXXX INDUSTRIES, INC.
Dated as of October 30, 1998
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 7
ARTICLE II. THE MERGER 12
Section 2.1. The Merger 12
Section 2.2. Effective Date of the Merger 12
ARTICLE III. THE SURVIVING CORPORATION 12
Section 3.1. Certificate of Incorporation 12
Section 3.2. By-Laws 12
Section 3.3. Board of Directors; Officers 13
Section 3.4. Effects of Merger 13
ARTICLE IV. CONVERSION OF SHARES 13
Section 4.1. Exchange Ratio 13
Section 4.2. Exchange of Certificates 14
Section 4.3. Lost, Stolen or Destroyed Certificates 15
Section 4.4. Closing of the Company's Transfer Books 15
Section 4.5. Closing 15
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 16
Section 5.1. Corporate Organization 16
Section 5.2. Qualification to Do Business;
Authorization and Validity of Agreement 16
Section 5.3. No Conflict or Violation 16
Section 5.4. Consents and Approvals 17
Section 5.5. Capital Stock and Related Matters 17
Section 5.6. Subsidiaries and Equity Investments 17
Section 5.7. Financial Statements 18
Section 5.8. Absence of Certain Changes or Events 18
Section 5.9. Tax Matters 20
Section 5.10. Absence of Undisclosed Liabilities 20
Section 5.11. Owned Real Property 21
Section 5.12. Leases 23
Section 5.13. Assets of the Company 25
Section 5.14. Intellectual Property; Intangible Assets 25
Section 5.15. Licenses and Permits 26
Section 5.16. Compliance with Law 26
Section 5.17. Litigation 27
Section 5.18. Contracts 27
Section 5.19. Inventories 28
Section 5.20. Employee Plans 28
Section 5.21. Small Business Corporation 30
Section 5.22. Insurance 30
Section 5.23. Transactions with Directors, Officers and Affiliates 31
Section 5.24. Receivables 31
Section 5.25. Labor Matters 31
Section 5.26. Environmental Matters 32
Section 5.27. Products Liability 34
Section 5.28. Company Action 34
Section 5.29. MSOP 35
Section 5.30. Accuracy of Information 35
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PARENT. 35
Section 6.1. Corporate Organization 35
Section 6.2. Qualification to Do Business 35
Section 6.3. Authorization and Validity of Agreement 35
Section 6.4. No Conflict or Violation 36
Section 6.5. Consents and Approvals 36
Section 6.6. Confirmation of Representations and
Warranties of Merger Sub 36
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF MERGER SUB. 36
Section 7.1. Corporate Organization 37
Section 7.2. Qualification to Do Business 37
Section 7.3. Authorization and Validity of Agreement 37
Section 7.4. No Conflict or Violation 37
Section 7.5. Consents and Approvals 37
Section 7.6. Capitalization of Merger Sub 37
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY REGARDING THE ESOP 38
Section 8.1. ESOP Trustee 38
Section 8.2. Legal Counsel; Independent Financial Advisor 38
Section 8.3. Opinion of Financial Advisor 38
Section 8.4. ESOP Loans 38
ARTICLE IX. COVENANTS OF THE COMPANY. 38
Section 9.1. Conduct of Business Before the Closing Date 38
Section 9.2. Consents and Approvals 41
Section 9.3. Negotiations 41
Section 9.4. Best Efforts 42
Section 9.5. Notice of Breach 42
Section 9.6. ESOP Voting Procedures 42
Section 9.7. Small Business Corporation 42
Section 9.8. Directors 42
ARTICLE X. COVENANTS OF THE PARENT AND MERGER SUB. 43
Section 10.1. Actions Before Effective Date 43
Section 10.2. Consents and Approvals 43
Section 10.3. Repayment of ESOP Advance; Termination of the ESOP 44
Section 10.4. Benefits to Company Employees 44
Section 10.5. Voting of Company Common Stock 45
ARTICLE XI. ADDITIONAL COVENANTS OF THE PARTIES. 45
Section 11.1. Assistance in Consummation of the Merger 45
Section 11.2. Proxy Statement 46
Section 11.3. Company Meeting 46
Section 11.4. Transfer Taxes 46
Section 11.5. Indemnification; Directors' and Officers' Insurance 46
Section 11.6. Access to Properties and Records; Confidentiality 48
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ARTICLE XII. MUTUAL CONDITIONS 49
Section 12.1. Stockholder Approval 49
Section 12.2. HSR Act 49
ARTICLE XIII. CONDITIONS PRECEDENT TO PERFORMANCE BY THE COMPANY. 49
Section 13.1. Representations and Warranties of Parent and Merger Sub 49
Section 13.2. Performance of the Obligations of Parent and Merger Sub 49
Section 13.3. No Violation of Orders 49
Section 13.4. Opinion of Counsel 50
Section 13.5. Legal Matters 50
ARTICLE XIV. CONDITIONS PRECEDENT TO PERFORMANCE BY
PARENT AND MERGER SUB. 50
Section 14.1. Representations and Warranties of the Company 50
Section 14.2. Performance of the Obligations of the Company 50
Section 14.3. Company Payments 50
Section 14.4. No Violation of Orders 51
Section 14.5. Opinion of Counsel 51
Section 14.6. Legal Matters 51
ARTICLE XV. TERMINATION. 51
Section 15.1. Conditions of Termination 51
Section 15.2. Effect of Termination 52
ARTICLE XVI. SURVIVAL. 52
Section 16.1. Survival of Representations and Warranties 52
ARTICLE XVII. MISCELLANEOUS. 52
Section 17.1. Successors and Assigns 52
Section 17.2. Governing Law, Jurisdiction 52
Section 17.3. Expenses 52
Section 17.4. Broker's and Finder's Fees 53
Section 17.5. Severability 53
Section 17.6. Notices 53
Section 17.7. Amendments; Waivers 54
Section 17.8. Public Announcements 54
Section 17.9. Entire Agreement 54
Section 17.10. Parties in Interest 54
Section 17.11. Scheduled Disclosures 55
Section 17.12. Section and Paragraph Headings 55
Section 17.13. Counterparts 55
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INDEX TO SCHEDULES
5.2 Qualifications
5.3 Conflicts or Violations
5.4 Consents, Waivers, Authorizations and Approvals
5.5 Share Ownership
5.6 Equity Investments
5.8 Material Changes or Events
5.9 Tax Matter Exceptions
5.10 Undisclosed Liabilities
5.11 Owned Real Property
5.12 Leases
5.14 Intellectual Property and Intangible Assets
5.15 Licenses, Permits and Governmental Approvals
5.17 Litigation
5.18 Contracts
5.20(a) Employee Plans
5.20(d) Pension Plans
5.20(g) Post-Retirement Benefits
5.20(l) Performance of Agreements
5.22 Insurance
5.23 Transactions with Directors, Officers and Affiliates
5.24 Receivables
5.25(a) Employment Agreements or Contracts
5.25(b) Exceptions to Compliance with Employment Laws
5.26 Environmental Matters
5.27 Products Liability
10.4 Severance Policy
14.3 Company Payments
INDEX TO EXHIBITS
A Form of Opinion of Parent's General Counsel
B Form of Opinion of Counsel to the Company
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement"), dated as of October 30, 1998, by and among Xxxxxxx
Industries, Inc., a Delaware corporation ("Parent"), Xxxxxxx
Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Xxxxxxxx Industries, Inc.,
a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, on the date hereof, Merger Sub is acquiring 2,041
shares of Company Common Stock (as defined herein) constituting
[58.16]% of the Company Common Stock outstanding on the date of this
Agreement and, in connection with such purchase, Xxxxxxxx is
electing one designee of Parent to the Board of Directors (as
defined herein) and each committee of the Board of Directors;
WHEREAS, Parent and the Company desire to effect a
business combination by means of the merger of Merger Sub with and
into the Company;
WHEREAS, the Boards of Directors of Parent, Merger Sub and
the Company have approved the merger of Merger Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, the price paid by Merger Sub for each share of
Company Common Stock purchased by Merger Sub on the date hereof is
the same as the price for each share of Company Common Stock to be
paid in the Merger;
WHEREAS, Parent, Merger Sub and the Company are parties to
an Agreement and Plan of Merger, dated as of August 7, 1998 (the
"Original Merger Agreement");
WHEREAS, Parent, Merger Sub and the Company have agreed to
amend and restate the Original Merger Agreement as set forth herein;
WHEREAS, Parent has afforded the Company, the ESOP (as
defined herein), and the representatives of the Company and the ESOP
access to Parent's properties, books, contracts, commitments, files
and records to the extent requested by such Persons (as defined
herein) for the purpose of permitting the Company, the ESOP and the
financial advisor to the ESOP to evaluate the consideration to be
received by the Company's stockholders, including the ESOP
Participants (as defined herein); and
WHEREAS, the Company has afforded and has agreed herein to
continue to afford Parent, Merger Sub and their representatives
access to the Company's properties, books, Contracts (as defined
herein), commitments and files and records.
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements hereinafter contained, the
parties hereby agree as follows:
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ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have
the following meanings:
"Agreement" -- See Preamble hereto;
"Affiliates" shall have the meaning set forth in Rule 12b-
2 under the Securities Exchange Act of 1934, as amended;
"Board of Directors" -- See Section 9.8;
"Business Day" shall mean a day other than a Saturday,
Sunday or other day on which banks in the States of New York, North
Carolina or Tennessee are not required or authorized to close;
"Certificate of Merger" -- See Section 2.2;
"Certificates" -- See Section 4.2(b);
"Closing" -- See Section 4.5;
"Closing Date" -- See Section 4.5;
"Code" shall mean the Internal Revenue Code of 1986, as
amended;
"Company" -- See Preamble hereto;
"Company Common Stock" -- See Section 4.1;
"Company Meeting" -- See Section 11.2;
"Contracts" shall mean, collectively, the Leases, Purchase
Orders, Sales Orders and Other Contracts, including, without
limitation, those described in Section 5.18 hereto;
"Controlled Group" -- See Section 5.20(a);
"December 31, 1997 Balance Sheet" shall mean the audited
balance sheet of the Company as of December 31, 1997 audited by
Xxxxxx Xxxxxxxx LLP;
"DGCL" -- See Section 3.4;
"Dissenting Shares" -- See Section 4.1(d);
"Dissenting Stockholder" -- See Section 4.1(d);
"Effective Date" -- See Section 2.2;
"Environmental Claim" -- See Section 5.26(g);
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"Environmental Laws" shall mean any federal, state, or
local statute, regulation, ordinance, order, decree, or other
requirement of law relating to protection of the environment or to
the identification, transportation, handling, discharge, emission,
treatment, storage, or disposal of any pollutant, contaminant,
hazardous or soiled waste, or any hazardous or toxic substance or
material. Without limiting the generality of the foregoing,
Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601 et seq.; the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. 1251 et seq.; the Clean Air Act, 42 U.S.C.
7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. 261 et
seq.; the Safe Drinking Xxxxx Xxx, 00 X.X.X. 00000(x) et seq.; the
Occupational Safety and Health Act, 29 U.S.C. 651 et seq.; and
the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et
seq.; each as amended, together with the regulations promulgated
thereunder, permits issued thereunder, and analogous state and local
statutes, regulations and ordinances;
"Equipment and Machinery" shall mean all the equipment,
machinery, furniture, fixtures and improvements, supplies and
vehicles owned, leased or used by the Company;
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
"ESOP" shall mean the Employee Stock Ownership Plan of
Xxxxxxxx Industries, Inc., originally effective January 1, 1976 and
as amended through and following the date of this Agreement;
"ESOP Advance" -- See Section 10.3;
"ESOP Lender" shall mean First Union National Bank of
North Carolina;
"ESOP Loan Agreements" shall mean (i) the Loan Agreement
dated as of June 14, 1990 and as amended by the First Amendment
thereto, dated July 10, 1996, and the Pledge Agreement, Guaranty
Agreement and other ancillary documents related thereto and (ii) the
Loan Agreement dated May 30, 1997, and the Pledge Agreement,
Guaranty Agreement and other ancillary documents related thereto;
"ESOP Loans" shall mean those outstanding loans to the
ESOP Trust from the ESOP Lender pursuant to the ESOP Loan
Agreements;
"ESOP Participants" shall mean those persons having an
account balance under the ESOP;
"ESOP Trust" shall mean the trust established by the ESOP
Trust Agreement;
"ESOP Trust Agreement" shall mean the Employee Stock
Ownership Trust of Xxxxxxxx Industries, Inc., dated December 30,
1994 and as amended through and following the date of this
Agreement;
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"ESOP Trustee" shall mean First Commercial Trust Company
(Little Rock, Arkansas), the trustee of the ESOP Trust;
"Excluded Shares" -- See Section 4.1(a);
"Financial Statements" -- See Section 5.7;
"Fixed Asset Workpapers" -- See Section 5.13;
"GAAP" shall mean generally accepted accounting principles
in the United States;
"Governmental Entity" shall mean any federal, state or
foreign governmental or public body, agency or authority;
"Hazardous Substance" -- See Section 5.26(d);
"HSR Act" -- See Section 6.5;
"Indemnified Liabilities" -- See Section 11.5;
"Indemnified Parties" -- See Section 11.5;
"Independent Directors" -- See Section 9.8;
"Intangible Assets" shall mean all intangible personal
property rights, including, without limitation, all rights on the
part of the Company to proceeds of any insurance policies and all
claims on the part of the Company for recoupment, reimbursement and
coverage under any insurance policies and all goodwill of the
Company, including, without limitation, those items listed in
Schedule 5.14 hereto;
"Intellectual Property" shall mean all of the following
owned by, issued to or licensed to the Company: (i) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof; (ii) all trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith; (iii) all
copyrightable works (including, without limitation, all software
developed by the Company), all copyrights, and all applications,
registrations and renewals in connection therewith; (iv) all mask
works and all applications, registrations and renewals in connection
therewith; (v) all trade secrets and confidential business
information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (vi) all computer
software (including object code, source code, data and related
documentation); (vii) all Internet Websites, including domain name
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registrations and content and software included therein; (viii) all
other proprietary rights; (ix) all rights to recover for past
infringements of any of the foregoing; and (x) all copies and
tangible embodiments thereof (in whatever form or medium);
including, without limitation, those items listed in Schedule 5.14
hereto;
"Leased Real Property" -- See Section 5.12;
"Leases" -- See Section 5.12;
"Licenses and Permits" -- See Section 5.15;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other), conditional sale agreement,
claim, charge, limitation or restriction;
"Loan Suspense Account" shall mean the "Loan Suspense
Account" as defined in the ESOP;
"Merger" -- See Recitals hereto;
"Merger Sub" -- See Preamble hereto;
"Merger Sub-Owned Shares" -- See Section 5.5;
"MSOP" shall mean the Management Stock Ownership Plan of
Xxxxxxxx Industries, Inc., in effect for the period January 1, 1989
through October 26, 1998;
"MSOP Administration Committee" shall mean the
"Administration Committee" as defined in the MSOP;
"MSOP Participants" shall mean those persons having an
account balance under the MSOP;
"MSOP Trust" shall mean the trust established by the MSOP
Trust Agreement;
"MSOP Trust Agreement" shall mean the Management Stock
Ownership Trust of Xxxxxxxx Industries, Inc., in effect for the
period January 1, 1989 through October 26, 1998;
"Multiemployer Plans" -- See Section 5.20(e);
"NLRB" -- See Section 5.25(b);
"Occurrence" -- See Section 5.27(b);
"Original Merger Agreement" -- See Recitals hereto;
"Other Contracts" shall mean all Equipment and Machinery
leases, and all indentures, loan agreements, security agreements,
partnership or joint venture agreements, license agreements,
maintenance contracts, service contracts, employment, commission and
consulting agreements, suretyship contracts, letters of credit,
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reimbursement agreements, distribution agreements, contracts or
commitments limiting or restraining the Company from engaging or
competing in any lines of business or with any Person, documents
granting the power of attorney with respect to the affairs of the
Company, agreements not made in the ordinary course of business of
the Company, options to purchase any assets or property rights of
the Company, working capital maintenance or other form of guaranty
agreements, and all other agreements to which the Company is a
party, but excluding Leases, Purchase Orders, Sales Orders and
Plans;
"Owned Real Property" -- See Section 5.11;
"Parent" -- See Preamble hereto;
"Parties" shall mean Parent, Merger Sub and the Company;
"Pension Plan" -- See Section 5.20(d);
"Per Share Amount" -- See Section 4.1(b);
"Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Entity;
"Plans" -- See Section 5.20(a);
"Post-Retirement Benefits" -- See Section 5.20(g);
"Product Liability Lawsuits" -- See Section 5.27(a);
"Products" -- See Section 5.27(a);
"Proxy Statement" -- See Section 11.2;
"Purchase Orders" shall mean all the Company's outstanding
purchase orders, contracts or other commitments to suppliers of
goods and services for materials, supplies or other items used in
its businesses;
"Retrofits" -- See Section 5.27(a);
"Sales Orders" shall mean all the Company's sales orders,
contracts or other commitments to purchasers of goods and services
of its businesses;
"Securities Act" shall mean the Securities Act of 1933, as
amended;
"Subsidiary" means, with respect to the Company, Parent or
Merger Sub, as the case may be, any entity, whether incorporated or
unincorporated, of which at least a majority of the securities or
ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or
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controlled by such party or by one or more of its respective Subsidiaries
or by such party and any one or more of its respective Subsidiaries;
"Surviving Corporation" -- See Section 2.1;
"Tax Return" shall mean any report, return, information
return, filing, claim for refund or other information, including any
schedules or attachments thereto, and any amendments to any of the
foregoing required to be supplied to a taxing authority in
connection with Taxes;
"Taxes" shall mean all federal, state, local or foreign
taxes, including, without limitation, income, gross income, gross
receipts, production, excise, employment, sales, use, transfer, ad
valorem, profits, license, capital stock, franchise, severance,
stamp, withholding, Social Security, employment, unemployment,
disability, worker's compensation, payroll, utility, windfall
profit, custom duties, personal property, real property,
registration, alternative or add-on minimum, estimated and other
taxes, governmental fees or like charges of any kind whatsoever,
including any interest, penalties or additions thereto, whether
disputed or not; and "Tax" shall mean any one of them;
"Welfare Plan" -- See Section 5.20(c).
ARTICLE II.
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions
hereof, on the Effective Date (as defined in Section 2.2), Merger Sub shall
be merged with and into the Company and the separate existence of
Merger Sub shall thereupon cease, and the Company, as the surviving
corporation in the Merger (the "Surviving Corporation"), shall by
virtue of the Merger continue its corporate existence under the laws
of the State of Delaware.
Section 2.2. Effective Date of the Merger. The Merger shall
become effective at the date and time (the "Effective Date") when a
properly executed Certificate of Merger (the "Certificate of
Merger") is duly filed with the Secretary of State of the State of
Delaware. The Parties shall cause the Certificate of Merger to be
executed and filed as aforesaid on the Closing Date upon the
satisfaction or waiver of the conditions contained in Articles XII,
XIII and XIV hereto.
ARTICLE III.
THE SURVIVING CORPORATION
Section 3.1. Certificate of Incorporation. The Certificate
of Incorporation of the Company shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Date,
and thereafter may be amended as provided therein or by law.
Section 3.2. By-Laws. The By-Laws of the Company as in effect
on the Effective Date shall be the By-Laws of the Surviving Corporation,
and thereafter may be amended as provided therein or by law.
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Section 3.3. Board of Directors; Officers. The directors of
Merger Sub immediately prior to the Effective Date shall be the
directors of the Surviving Corporation and the officers of Merger
Sub immediately prior to the Effective Date shall be the officers of
the Surviving Corporation, in each case until their respective
successors are duly elected and qualified.
Section 3.4. Effects of Merger. The Merger shall have the effects
set forth in Section 259 of the Delaware General Corporation Law (the
"DGCL").
ARTICLE IV.
CONVERSION OF SHARES
Section 4.1. Exchange Ratio. On the Effective Date, by virtue of
the Merger and without any action on the part of any holder of any
common stock, $.10 par value, of the Company ("Company Common
Stock"):
(a) All shares of Company Common Stock issued and
outstanding immediately prior to the Effective Date which are held
by the Company, and any shares of Company Common Stock issued and
outstanding immediately prior to the Effective Date owned by Parent,
Merger Sub or any other Subsidiary of Parent (other than Xxxxxxx
Streamline Co.), shall cease to be outstanding, shall be canceled
and retired without payment of any consideration therefor and shall
cease to exist ("Excluded Shares").
(b) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Date (other than
Excluded Shares and any Dissenting Shares (as defined in Section
4.1(d)) shall be canceled and extinguished and be converted into the
right to receive an amount per share (the "Per Share Amount")
determined by dividing (A) $39,636,000 less 41.84% of the amount of
expenses incurred by the Company for all services rendered, and
expenses advanced, in connection with the Merger by the Company's
and the ESOP's and MSOP's accountants, attorneys and financial
advisors prior to the Closing Date to the extent that such expenses
shall exceed $800,000 by (B) the total number of shares of Company
Common Stock issued and outstanding immediately prior to the
Effective Date, other than Excluded Shares, in cash payable to the
holder thereof, without interest.
(c) Each share of capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Date shall be
converted into and become one fully paid and nonassessable share of
common stock, $.01 par value, of the Surviving Corporation.
(d) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company Common Stock
held by a Person (a "Dissenting Stockholder") who duly demands
appraisal of his shares of Company Common Stock pursuant to the DGCL
and complies with all the provisions of the DGCL concerning the
right of holders of Company Common Stock to demand appraisal of
their shares in connection with the Merger ("Dissenting Shares")
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shall not be converted as described in Section 4.1(b) but shall
become the right to receive such cash consideration as may be
determined to be due to such Dissenting Stockholder as provided in
the DGCL. If, however, such Dissenting Stockholder withdraws his
demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the DGCL, each of his
shares shall be deemed to be converted as of the Effective Date into
the right to receive the Per Share Amount without interest. The
Company shall give Parent (i) prompt notice of any demands for
appraisal of shares of Company Common Stock received by the Company
and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Parent, make
any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
Section 4.2. Exchange of Certificates.
(a) On or prior to the Effective Date, Parent shall have
on deposit for the benefit of holders of Company Common Stock the
aggregate consideration to which such holders shall be entitled at
the Effective Date pursuant to Section 4.1(b).
(b) Each holder of a certificate or certificates
("Certificates") representing any shares of Company Common Stock
canceled upon the Merger pursuant to Section 4.1(b) may thereafter
surrender such Certificates to Parent, as agent for such holder, to
effect the surrender of such Certificates on such holder's behalf
for a period ending six months after the Effective Date. Prior to
the date hereof, Parent has provided the Company for distribution to
holders of record of shares of Company Common Stock on the record
date for the Company Meeting and will provide the Company for
distribution to the holders of record of shares of Company Common
Stock on the Effective Date who were not also holders of record on
the record date of the Company Meeting the appropriate materials to
facilitate such surrender. Upon surrender of a Certificate not
later than four (4) Business Days prior to the Effective Date,
Parent shall on the Effective Date to pay the holder of such
Certificate in exchange therefor cash in an amount equal to the Per
Share Amount multiplied by the number of shares of Company Common
Stock represented by such Certificate. Upon surrender of a
Certificate later than four (4) Business Days prior to the Effective
Date, Parent will, after the Effective Date, promptly pay the holder
of such Certificate in exchange therefor cash in an amount equal to
the Per Share Amount multiplied by the number of shares of Company
Common Stock represented by such Certificate. No interest shall
accrue or be paid on any cash payable upon the surrender of
Certificates which immediately before the Effective Date represented
outstanding shares of Company Common Stock. Until so surrendered,
each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Excluded Shares)
shall represent solely the right to receive the aggregate Per Share
Amount relating thereto.
(c) If payment of cash in respect of canceled shares of
Company Common Stock is to be made to a Person other than the Person
in whose name a surrendered Certificate is registered, it shall be a
condition to such payment that the Certificate or Certificates so
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surrendered shall be properly endorsed or be otherwise in proper
form for transfer and that the Person requesting such exchange shall
pay to Parent any transfer or other Taxes required by reason of such
payment in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of
Parent that such Tax has been paid or is not applicable.
(d) Until surrendered for exchange pursuant to Section
4.2(b), Certificates representing shares of Company Common Stock
shall represent solely the right to receive payment of the aggregate
Per Share Amount relating thereto, without any interest thereon. If
any Certificates representing shares of Company Common Stock
entitled to payment pursuant to Section 4.1(b) shall not have been
surrendered for such payment prior to such date on which any payment
in respect thereof would otherwise escheat to or become the property
of any governmental agency or other Governmental Entity, such shares
of Company Common Stock shall, to the extent permitted by applicable
law, be deemed to be canceled and no money or other property will be
due to the holder thereof. Notwithstanding the foregoing, no Party
hereto shall be liable to a holder of shares of Company Common Stock
for any amount properly delivered to a public official pursuant to
any applicable escheat laws.
(e) The Per Share Amount paid in the Merger to the holder
of shares of Company Common Stock shall be net in cash, subject to
reduction only for any applicable federal back-up withholding taxes
or, as set forth in Section 4.2(c), Taxes payable by such holder.
Section 4.3. Lost, Stolen or Destroyed Certificates.
In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made
against it with respect to such Certificate, Parent will issue in
exchange for such lost, stolen or destroyed Certificate cash in an
amount equal to the Per Share Amount multiplied by the number of
Shares represented by such Certificate.
Section 4.4. Closing of the Company's Transfer Books. At the
Effective Date, the stock transfer books of the Company
shall be closed and no transfer of shares of Company Common Stock
shall be made thereafter. In the event that, after the Effective
Date, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for cash in an amount equal to the
Per Share Amount multiplied by the number of Shares represented by
such Certificate as provided in this Article IV.
Section 4.5. Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place (i) at the offices of
Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 9:00 A.M. local time on the day which is the second
Business Day after the day on which the last of the conditions set
forth in Articles XII, XIII and XIV is fulfilled or waived or (ii)
at such other time and place as Parent and the Company shall agree
in writing (the "Closing Date").
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
Section 5.1. Corporate Organization. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and
authority to own or lease its properties and assets and to conduct
its business as now conducted. Copies of the Certificate of
Incorporation and By-Laws of the Company, with all amendments
thereto to the date hereof, have been furnished to Parent or its
representatives, and such copies are accurate and complete.
Section 5.2. Qualification to Do Business; Authorization
and Validity of Agreement. The Company is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in
which the character of the properties and assets owned or leased by it or
the nature of the business conducted by it makes such qualification
necessary. Schedule 5.2 sets forth all jurisdictions in which the
Company is qualified to do business. The Company has all requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery by
the Company of this Agreement and the performance of the Company's
obligations hereunder have been duly authorized by all necessary
corporate action by the Board of Directors of the Company, and
(except for the approval of the holders of the Company Common Stock
as contemplated by Section 12.1) no other corporate proceedings on
the part of the Company are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by
the Company and constitutes the Company's valid and binding
obligation, enforceable against the Company in accordance with its
terms.
Section 5.3. No Conflict or Violation. Except as set forth on
Schedule 5.3, and assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in Section 5.4
are duly and timely obtained or made and the approval of the Merger
and this Agreement by the holders of Company Common Stock has been
obtained, the execution, delivery and performance by the Company of
this Agreement do not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not (i)
violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of the Company, (ii) violate any provision
of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, (iii) violate or result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument
to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, (iv) result in the
creation or imposition of any Lien upon any of the assets,
properties or rights of the Company, or (v) result in the
cancellation, modification, revocation or suspension of any of the
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Licenses and Permits, other than, in the case of (iii), (iv) and (v)
above, any such conflicts, violations, defaults, rights or Liens
that, individually or in the aggregate, would not have a material
adverse effect on the Company or its business as now conducted,
materially impair the ability of the Company to perform its
obligations thereunder or have a material adverse effect on the
ability of the Company to consummate the transactions contemplated
hereby.
Section 5.4. Consents and Approvals. Schedule 5.4 sets forth a
true and complete list of each consent, waiver, authorization or
approval of any Governmental Entity, or of any other Person, and
each declaration to or filing or registration with any such
Governmental Entity, that is required in connection with the
execution and delivery of this Agreement by the Company or the
performance by the Company of its obligations hereunder, except
where the failure to obtain any such consent, waiver, authorization
or approval or to make such declaration of filing would not have a
material adverse effect on the Company or its business as now
conducted or have a material adverse effect on the ability of the
Company to consummate the transactions contemplated hereby.
Section 5.5. Capital Stock and Related Matters. As
of the date hereof, the authorized capital stock of the Company
consists of 12,000 shares of Company Common Stock, of which 10,970
shares are issued (7,461 shares of Company Common Stock are held as
treasury stock and 3,509 shares of Company Common Stock are
outstanding). Schedule 5.5 sets forth the names of the beneficial
and record owners of the Company Common Stock and the number of
shares held by each such owner. The shares of Company Common Stock
being purchased by Merger Sub on the date hereof (the "Merger Sub-
Owned Shares") constitute a majority of the issued and outstanding
shares of Company Common Stock. The Company Common Stock has been
duly authorized and validly issued and is fully paid and
nonassessable. Except as set forth above or on Schedule 5.5, no
shares of Company Common Stock are outstanding; the Company does not
have outstanding any securities convertible into or exchangeable for
any shares of capital stock, any rights to subscribe for or to
purchase or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any other character relating to the
issuance of, any capital stock, or any stock or securities
convertible into or exchangeable for any capital stock; and the
Company is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire, or to register under
the Securities Act, any shares of capital stock. The Company does
not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter.
Section 5.6. Subsidiaries and Equity Investments.
The Company has no Subsidiaries. Except as set forth on Schedule
5.6, the Company does not directly or indirectly own any interest in
any other corporation, partnership, joint venture or other business
association or entity.
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Section 5.7. Financial Statements. The Company has heretofore
furnished to Parent (a) copies of the audited balance sheets of the
Company as of December 31, 1996 and 1997 audited by Xxxxxx Xxxxxxxx
LLP, together with the related audited statements of operations and
cash flows for the fiscal years then ended and the notes thereto,
accompanied by the reports thereon of such public accountants, and
(b) copies of the balance sheet of the Company as of June 26, 1998,
together with the related unaudited statements of operations and
cash flows for the period then ended (all the financial statements
referred to in clauses (a) and (b) above being hereinafter
collectively referred to as the "Financial Statements"). The
Financial Statements, including the notes thereto, (i) were prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, (ii) present fairly the financial position,
results of operations and cash flows of the Company as of such dates
and for the periods then ended (subject, in the case of the
unaudited interim Financial Statements, to typical accrual practices
consistent with past practice and to normal year-end audit
adjustments consistent with prior periods), (iii) are complete,
correct and in accordance with the books of account and records of
the Company, (iv) can be legitimately reconciled with the financial
statements and the financial records maintained and the accounting
methods applied by the Company for federal income tax purposes and
(v) reflect accurately in all material respects all costs and
expenses of the Company.
Section 5.8. Absence of Certain Changes or Events.
(a) Except as set forth on Schedule 5.8, since December
31, 1997, there has not been:
(i) any material adverse change in the business of
the Company, or any event that has had a material adverse
effect on the foregoing, except for any material adverse effect
resulting from general economic conditions including, but not
limited to, reductions in product margins;
(ii) any material loss, damage, destruction or other
casualty to the assets or properties of the Company;
(iii) any change in any method of accounting or
accounting practice of the Company; or
(iv) any loss of the employment, services or
benefits of any key employee of the Company.
(b) Since December 31, 1997, the Company has operated in
the ordinary course of its businesses consistent with past practice
and, except as set forth on Schedule 5.8 hereto, has not:
(i) incurred any material obligation or liability
(whether absolute, accrued, contingent or otherwise) except in
the ordinary course of business consistent with past practice;
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(ii) failed to discharge or satisfy any Lien or pay
or satisfy any obligation or liability (whether absolute,
accrued, contingent or otherwise), other than liabilities being
contested in good faith and for which adequate reserves have
been provided and Liens arising in the ordinary course of
business that do not, individually or in the aggregate,
interfere with the use, operation, enjoyment or marketability
of any of its assets, properties or rights;
(iii) mortgaged, pledged or subjected to any Lien
any of its assets, properties or rights, except for mechanics'
Liens and Liens for Taxes not yet due and payable and Liens
arising in the ordinary course of business that do not,
individually or in the aggregate, interfere with the use,
operation, enjoyment or marketability of any of its assets,
properties or rights;
(iv) sold or transferred any of its assets or
canceled any debts or claims or waived any rights, except in
the ordinary course of business consistent with past practice;
(v) disposed of any patents, trademarks or
copyrights or any patent, trademark or copyright applications;
(vi) defaulted on any material obligation;
(vii) entered into any transaction material to its
business, except in the ordinary course of business consistent
with past practice;
(viii) written down the value of any inventory or
written off as uncollectible any of its accounts receivable or
any portion thereof not reflected in the December 31, 1997
Balance Sheet;
(ix) granted any increase in the compensation or
benefits of its employees other than increases in accordance
with past practice or entered into any employment or severance
agreement or arrangement with any of them;
(x) made any capital expenditure in excess of
$25,000, or additions to property, plant and equipment used in
its operations other than ordinary repairs and maintenance;
(xi) laid off any of its employees;
(xii) incurred any obligation or liability for the
payment of severance benefits;
(xiii) declared, paid, or set aside for payment any
dividend or other distribution in respect of shares of its
capital stock or other securities, or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of its
capital stock or other securities, or agreed to do so; or
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(xiv) entered into any agreement or made any
commitment to do any of the foregoing.
Section 5.9. Tax Matters. Except as disclosed on Schedule 5.9,
(i) the Company has filed when due all Tax Returns required by applicable
law to be filed and the Company has paid all Taxes required to be paid in
respect of the periods covered by such Tax Returns; (ii) the
information contained in such Tax Returns is true, complete and
accurate; (iii) Taxes of the Company for periods ending on or before
the Closing Date (whether or not shown on any Tax Return), if
required to have been paid, have been paid (except for Taxes which
are being contested in good faith); (iv) there is no action, suit,
proceeding, investigation, audit or claim now pending against, or
with respect to, the Company in respect of any Tax or assessment,
nor, to the knowledge of the Company, is there any claim for
additional Tax or assessment asserted by any Tax authority; (v) any
liability of the Company for Taxes that are not yet due and payable,
or which are being contested in good faith, have been provided for
in the financial statements of the Company in accordance with GAAP;
(vi) to the knowledge of the Company, since January 1, 1997, no
claim has been made by any Tax authority in a jurisdiction where the
Company does not currently file a Tax Return that either it is or
may be subject to Tax by such jurisdiction, nor to the knowledge of
the Company, is any such assertion threatened; (vii) there is no
outstanding request for any extension of time within which to pay
any Taxes or file any Tax Returns; (viii) there has been no waiver
or extension of any applicable statute of limitations for the
assessment or collection of any Taxes of the Company; (ix) none of
the assets, properties or rights of the Company are "tax-exempt use
property" within the meaning of Section 168(h) of the Code; (x) none
of the assets, properties or rights of the Company include any lease
made pursuant to former Section 168(f)(8) of the Internal Revenue
Code of 1954; (xi) there is no Lien affecting any of the assets,
properties or rights of the Company that arose in connection with
any failure or alleged failure to pay any Tax; (xii) the Company has
not filed any agreement or consent under Section 341(f) of the Code;
(xiii) the Company is not a party to any agreement, whether written
or unwritten, providing for the payment of Taxes, payment for Tax
losses, entitlements to refunds or similar Tax matters; (xiv) no
ruling with respect to Taxes (other than a request for determination
of the status of a qualified pension plan) has been requested by or
on behalf of the Company; (xv) the Company has not been a United
States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code; and (xvi) the Company has
withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.
Section 5.10. Absence of Undisclosed Liabilities.
Except as set forth on Schedule 5.10, to its knowledge, the Company
has no indebtedness or liability, absolute or contingent, which is
not shown or provided for on the December 31, 1997 Balance Sheet
other than liabilities as shall have been incurred or accrued in the
ordinary course of business since December 31, 1997. Except as
shown in the December 31, 1997 Balance Sheet or on Schedule 5.10,
-20-
the Company is not directly or indirectly liable upon or with
respect to (by discount, repurchase agreements or otherwise), or
obliged in any other way to provide funds in respect of, or to
guarantee or assume, any debt, obligation or dividend of any Person,
except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items
for collection.
Section 5.11. Owned Real Property.
(a) Schedule 5.11 sets forth a complete and accurate
description of all real property owned by the Company (the "Owned
Real Property"), including the recorded metes and bounds or other
recorded description of each land parcel.
(b) The Company has good and marketable title in fee
simple to the Owned Real Property and the Owned Real Property is not
subject to any Liens (other than the Lien of current property Taxes
and assessments not in default); and none of such real properties is
subject to any easements, rights of way, licenses, grants, building
or use restrictions, exceptions, reservations, limitations or other
impediments that materially and adversely affect the value thereof
or that materially interfere with or impair the present and
continued use thereof in the usual and normal conduct of the
Company's businesses. Except as set forth on Schedule 5.11, none of
the Owned Real Property is subject to any lease, license or other
agreement granting to any Person or entity any right to the use,
occupancy or enjoyment of such property or any portion thereof.
(c) All improvements on the Owned Real Property and the
operations therein conducted conform to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and
administrative regulations, Permits and other regulations
(including, without limitation, the Americans with Disabilities
Act), except for possible nonconforming uses or violations that do
not and will not materially interfere with the present use,
operation or maintenance thereof by the Company as now used,
operated or maintained or access thereto, and that do not and will
not materially affect the value thereof, and the Company has not
received any notice to the contrary. To the knowledge of the
Company, all buildings, structures, improvements and fixtures owned,
leased or used by the Company conform to all applicable codes and
rules adopted by national, state and local associations and boards
of insurance underwriters and the Company has not received any
notice to the contrary.
(d) The buildings, driveways and all other structures and
improvements upon the Owned Real Property are all within the
boundary lines of such property or have the benefit of valid,
perpetual and non-terminable easements and there are no
encroachments thereon that would materially affect the use thereof.
To the knowledge of the Company, there are no outstanding
requirements or recommendations by any insurance company that has
issued a policy covering the Owned Real Property, or by any board of
fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any such
property.
-21-
(e) The Company has not received any notice from any
utility company or municipality of any fact or condition which could
result in the discontinuation of presently available or otherwise
necessary sewer, water, electric, gas, telephone or other utilities
or services for any of the Owned Real Property.
(f) There are no actions, suits, proceedings or
governmental investigations pending or, to the knowledge of the
Company, threatened against the Owned Real Property. The Company
does not have any knowledge of, and the Company has not received any
notice of, any pending or contemplated (i) rezoning or condemnation
proceeding affecting the Owned Real Property; (ii) special
assessment against the Owned Real Property; or (iii) litigation
against the Company with respect to the Owned Real Property, the use
thereof, or agreements affecting the same.
(g) To the knowledge of the Company, each parcel of real
property comprising any part of the Owned Real Property, including
without limitation all buildings and improvements thereon, and the
present use, operation or condition thereof: (i) is assessed as one
or more separate tax lots and no part of such property is part of a
tax lot which includes other property which is not a part of the
Owned Real Property; (ii) is not located in an area designated as a
flood zone; and (iii) is not subject to any purchase option, right
of first refusal or first offer or other similar right.
(h) All brokerage commissions and other compensation and
fees payable by the Company by reason of the Company's acquisition
of the Owned Real Property have been paid in full.
(i) Except for defects and deferred maintenance items
which do not have a material adverse effect on the use of the Owned
Real Property for the purposes for which they are currently being
used in connection with the business of the Company, (x) the
buildings, structures, improvements and fixtures at the Owned Real
Properties are all in good operating condition and repair and are
fully usable for their intended purposes in connection with the
business of the Company (y) the plumbing, electrical, heating, air
conditioning, elevator, ventilating and all other mechanical or
structural systems in such buildings or improvements located at the
Owned Real Property are in good working order and condition, and the
roof, basement and foundation walls of such buildings and
improvements are in good condition and free of leaks and other
defects and (z) there are no physical defects or deferred
maintenance items at the Owned Real Property that interfere with or
impede the Company's use of the Owned Real Property in the ordinary
course of its business.
(j) To the Company's knowledge, each parcel of the Owned
Real Property is occupied and used by the Company pursuant to and in
conformity with a validly issued final certificate of occupancy
which currently remains in effect. Except as set forth on Schedule
5.11, there is currently no construction or development activity at
or affecting the Owned Real Property and, except as set forth on
Schedule 5.11, there has been no such activity during 1998.
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(k) Except as set forth on Schedule 5.11, each parcel of
the Owned Real Property is used and occupied by the Company solely
in the pursuit of its business and no portion thereof is leased or
licensed to, or used or occupied by, any Person other than the
Company.
(l) True and complete copies of all existing policies of
title insurance for all parcels of the Owned Real Property for which
such policies exist, together with all surveys referred to in such
title insurance policies or otherwise in the Company's possession,
have been delivered to Parent and are identified on Schedule 5.11
hereto.
(m) To the knowledge of the Company, access from public
streets and provision for parking and loading/unloading at each
parcel of the Owned Real Property conforms to all applicable legal
requirements and is adequate for the conduct of the business of the
Company in the normal course. To the knowledge of the Company,
there is no pending or threatened governmental action to modify such
access from public streets into the Owned Real Property.
Section 5.12. Leases.
(a) Schedule 5.12 sets forth a list of all leases,
licenses, permits, subleases and occupancy agreements, together with
all amendments and supplements thereto, with respect to all
properties in which the Company has a leasehold interest, whether as
lessor or lessee (each, a "Lease" and collectively, the "Leases";
the property covered by Leases under which the Company is a lessee
is referred to herein as the "Leased Real Property"). The Company
has furnished true, correct and complete copies of all Leases to
Parent or its representatives. No option has been exercised under
any of such Leases, except options whose exercise has been evidenced
by a written document, a true, complete and accurate copy of which
has been delivered to Parent or its representatives with the
corresponding Lease. Except as set forth on Schedule 5.12, the
transactions contemplated by this Agreement do not require the
consent or approval of the other party to the Leases, nor will such
transactions violate any Lease or cause the Company to be in default
under any Lease.
(b) Each Lease is in full force and effect and no Lease
has been modified or amended except pursuant to an amendment
referred to on Schedule 5.12. Neither the Company nor any other
party to a Lease has given to the other party written notice of or
has made a claim with respect to any breach or default. The Company
is not in default under any Lease and, to the knowledge of the
Company, no other party to a Lease is in default.
(c) Except as set forth on Schedule 5.12, none of the
Leased Real Property is subject to any sublease, license or other
agreement granting to any Person or entity any right to the use,
occupancy or enjoyment of such property or any portion thereof. The
Company has not received any notice from any utility company or
municipality of any fact or condition which could result in the
discontinuation of presently available or otherwise necessary sewer,
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water, electric, gas, telephone or other utilities or services for
any of the Leased Real Property. The Leased Real Property, all
improvements thereon and thereto, and the operations therein
conducted conform to all applicable health, fire, insurance,
environmental, safety, zoning and building laws, ordinances and
administrative regulations, Permits and other regulations
(including, without limitation, the Americans with Disabilities Act)
except for possible nonconforming uses or violations that do not and
will not materially interfere with the present use, operation or
maintenance thereof by the Company as now used, operated or
maintained or access thereto, and that do not and will not
materially affect the value thereof, and the Company has not
received any notice to the contrary.
(d) Except for defects which do not have a material
adverse effect on the use of the Leased Real Property for the
purposes for which it is currently being used in connection with the
business of the Company, (x) the plumbing, electrical, heating, air
conditioning, elevator, ventilating and all other mechanical or
structural systems for which the Company is responsible under the
Leases in the buildings or improvements are in good working order
and condition, and the roof, basement and foundation walls of such
buildings and improvements for which the Company is responsible
under the Leases are in good condition and free of leaks and other
defects, (y) all such mechanical and structural systems and such
roofs, basement and foundation walls for which others are
responsible under said Leases are in good working order and
condition and free of leaks and other defects and (z) there are no
other physical defects or deferred maintenance items at any Leased
Real Property that interfere with or impede the Company's use of
such properties in the ordinary course of its business or that the
Company is obligated under any of the Leases to repair or otherwise
correct.
(e) There are no guaranties (from the Company or from
other Persons) in favor of the lessors of any of the Leased Real
Property.
(f) The Company has not sold, assigned, transferred,
pledged or encumbered all or any part of its leasehold interests in
the Leased Real Property.
(g) To the knowledge of the Company, access from public
streets and provision for parking and loading/unloading at any
Leased Real Property conforms to all applicable legal requirements
and is adequate for the conduct of the business of the Company in
the normal course.
(h) Except as set forth on Schedule 5.12, to the
knowledge of the Company, there is no pending or threatened: (i)
condemnation of any part of the Leased Real Property by any
Governmental Entity; (ii) special assessment against any part of the
Leased Real Property; or (iii) litigation against the Company or any
lessor for breach of any restrictive covenant affecting any part of
the Leased Real Property.
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Section 5.13. Assets of the Company.
(a) The assets, properties and rights of the Company (i)
acquired as of December 31, 1997 are set forth in the book
depreciation workpapers as of December 31, 1997 and (ii) acquired
since December 31, 1997 and on or prior to June 26, 1998 are listed
on the capital expense rollforward ((i) and (ii) being referred to
collectively as the "Fixed Asset Workpapers"), furnished to Parent
constitute all of the assets and rights which are used in the
operation of the businesses of the Company immediately prior to
Closing and which are necessary or required for the conduct of such
businesses as currently conducted. There are no material assets,
properties, rights or interests of any kind or nature that the
Company has been using, holding or operating in its businesses prior
to the Closing that will not be used, held or owned by the Company
immediately following the Closing.
(b) The Company has good and marketable title, free and
clear of any Liens, to, or a valid leasehold interest under
enforceable leases in, all of the assets, properties and rights of
the Company reflected in the Company's Financial Statements, except
(i) Liens for current Taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings; (ii) such
secured indebtedness as is disclosed in the Company's Financial
Statements; (iii) Liens and imperfections of title which do not
individually or in the aggregate materially detract from the value,
or impair the use, of the properties as currently used; (iv)
inchoate mechanics and materialmen's Liens for construction in
progress; (v) Liens of workmen, repairmen, warehousemen and carriers
arising in the ordinary course of business which are not, either
individual or in the aggregate, material in amount; and (vi) in the
case of leased property, Liens arising as a result of actions or
inactions of the lessor or owner of such properties unrelated to any
default by the Company.
(c) A complete and correct list and brief description of
each item of Equipment and Machinery having an original purchase
cost or aggregate lease cost exceeding $25,000 is included in the
Fixed Asset Workpapers, other than fixed assets acquired subsequent
to June 26, 1998. The Equipment and Machinery is in good operating
condition and repair (normal wear and tear excepted).
Section 5.14. Intellectual Property; Intangible Assets.
(a) Schedule 5.14 sets forth a complete and correct listing
of all applications, registrations and patents included in the
Intellectual Property. The Company owns, or has a valid license or
otherwise has the right to use, in all jurisdictions in which it
carries on business, all Intellectual Property without violating or
conflicting with the rights of others. Except as set forth on
Schedule 5.14, all Intellectual Property is owned by the Company,
free and clear of all Liens, except (i) such secured indebtedness as
is disclosed in the Company's Financial Statements and (ii) in the
case of licensed Intellectual Property, Liens arising as a result of
actions or inactions of the licensee or owner of such Intellectual
Properties unrelated to any default by the Company. There has not
-25-
been communicated to the Company the threat of any claim that the
holder of such Intellectual Property is in violation or infringement
of any service xxxx, patent, trademark, trade name, trademark or
trade name registration, copyright or copyright registration of any
other Person. To the Company's knowledge, the consummation of the
transactions contemplated by this Agreement will not prohibit the
Company from using any of the Intellectual Property in a manner
substantially similar to its current use of such Intellectual
Property in its businesses.
(b) Schedule 5.14 sets forth a true and complete list of
all of the Intangible Assets and a summary description of each such
item. There is no restriction affecting the use of any of the
Intangible Assets, and no license has been granted with respect
thereto. To the knowledge of the Company, each of the Intangible
Assets is valid and in good standing, is not currently being
challenged, is not involved in any pending or threatened
administrative or judicial proceeding, and does not conflict with
any rights of any other Person. The Company's rights in and to the
Intangible Assets are sufficient and adequate in all material
respects to permit the conduct of the businesses of the Company as
now conducted and none of the products or operations of the
businesses of the Company involves any infringement of any
proprietary right of any other Person.
Section 5.15. Licenses and Permits. Schedule 5.15 sets forth a
true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to the Company by any
Governmental Entity (the "Licenses and Permits"), and all pending
applications therefor. To the knowledge of the Company, each
License and Permit has been duly obtained, is valid and in full
force and effect, and is not subject to any pending or threatened
administrative or judicial proceeding to revoke, cancel, suspend or
declare such License and Permit invalid in any respect. The
Licenses and Permits are sufficient and adequate in all material
respects to permit the continued lawful conduct of the businesses of
the Company in the manner now conducted and, to the knowledge of the
Company, none of the operations of the Company are being conducted
in a manner that violates any of the terms or conditions under which
any License and Permit was granted. To the knowledge of the
Company, the consummation of the transactions contemplated by this
Agreement will not result in the termination or suspension of any
License or Permit.
Section 5.16. Compliance with Law. The operations of the
businesses of the Company have been conducted in accordance with all
applicable laws, regulations, orders and other requirements of all
courts and other governmental or regulatory authorities having
jurisdiction over the Company and its assets, properties and
operations, except for possible violations which have not had and
will not have a material adverse effect on the Company or its
business as now conducted. The Company has not received notice of
any violation of any such law, regulation, order or other legal
requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or
local court or governmental or regulatory authority or arbitrator,
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domestic or foreign, applicable to the Company or any of its assets,
properties or operations except for possible defaults which have not
had and will not have a material adverse effect on the Company or
its business as now conducted. This Section 5.16 does not apply to
laws, regulations, order and other requirements relating to employee
plans (which are covered by Section 5.20 hereof), labor matters
(which are covered by Section 5.25 hereof) and environmental matters
(which are covered by Section 5.26 hereof).
Section 5.17. Litigation. Except as set forth on Schedule 5.17,
there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the knowledge of the Company,
threatened, before any national, state or local court or
governmental or regulatory authority, domestic or foreign, or before
any arbitrator of any nature, brought by or against the Company or,
to the knowledge of the Company, any of its officers, directors,
employees, agents or Affiliates involving, affecting or relating to
the Company, the assets, properties or rights of the Company or the
transactions contemplated by this Agreement, nor is any basis known
to the Company for any such action, suit, proceeding or
investigation. Schedule 5.17 sets forth a list and a summary
description of all such pending actions, suits, proceedings,
disputes or investigations. Neither the Company nor its assets,
properties or rights are subject to any order, writ, judgment,
award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or
foreign, that affects or might affect the businesses, assets,
properties or rights of the Company, or that would or might
materially interfere with the transactions contemplated by this
Agreement.
Section 5.18. Contracts.
(a) Except for employment contracts deemed to have been
created by conduct, oral statements, written rules or policies or
other publications, none of which were published or stated intending
to create an employment contract nor, to the knowledge of the
Company, has been asserted as the basis for the claimed existence of
an employment contract, Schedule 5.18 sets forth a complete and
correct list and, if such contract is not in writing, a summary
description of all Contracts (as in effect on the date hereof). To
the extent that the items listed in Schedules 5.4, 5.8, 5.10, 5.11,
5.12, 5.14 and 5.15 may be considered Contracts, such items need not
be included on the list set forth on Schedule 5.18.
(b) Each Contract is valid, binding and enforceable
against the Company in accordance with its terms and is in full
force and effect on the date hereof. The Company is not in default
or delinquent in performance, status or any other respect (claimed
or actual) in connection with, any Contract, and no event has
occurred which, with due notice or lapse of time or both, would
constitute such a default, except in each such case possible
defaults as to which the Company has no knowledge and which would
not have a material adverse effect on the Company or its business as
now conducted. To the knowledge of the Company, no other party to
any Contract is in default in respect thereof, and no event has
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occurred which, with due notice or lapse of time or both, would
constitute such a default, except for possible defaults which would
not have a material adverse effect on the Company or its business as
now conducted. The Company has delivered to Parent or its
representatives true and complete originals or copies of all the
Contracts.
Section 5.19. Inventories. The inventories of the Company
(including tooling, spare parts and supplies) reflected on the
December 31, 1997 Balance Sheet, or acquired by the Company after
the date thereof and prior to the Closing Date, are carried at not
more than the lower of cost or market, and the Company has no reason
to believe that such inventories include any obsolete inventory or
surplus inventory for which adequate reserves have not been
established on the Financial Statements. As used herein, "obsolete
inventory" is inventory which, at December 31, 1997, was not usable
or salable in the lawful and ordinary course of business of the
Company as now conducted because of legal restrictions, failure to
meet specifications, loss of market, damage, physical deterioration
or for any other cause, in each case net of reserves provided
therefor on the December 31, 1997 Balance Sheet; and "surplus
inventory" is inventory that, at December 31, 1997, exceeded known
or anticipated requirements in the reasonable business judgment of
the Company.
Section 5.20. Employee Plans.
(a) Schedule 5.20(a) sets forth all pension, savings,
retirement, health, insurance, severance and other employee benefit
or fringe benefit plans maintained or sponsored by the Company and
any trade or business (whether or not incorporated) under common
control with the Company within the meaning of Sections 414(b), (c),
(m) or (o) of the Code (the "Controlled Group"), or with respect to
which the Company has any responsibility or liability (collectively
referred to herein as the "Plans"). Notwithstanding the foregoing,
"Plans" shall not include employment related contracts deemed to
have been created by conduct, oral statements, written rules or
policies or other publications, none of which were published or
stated intending to create an employment related contract nor, to
the knowledge of the Company, has been asserted as the basis for the
claimed existence of an employment related contract. With respect
to the Plans, the Company and any member of the Controlled Group
have delivered to Parent or its representatives current copies of:
(i) the Plan documents, and, where applicable, related trust
agreements, and any related agreements which are in writing; (ii)
summary Plan descriptions; (iii) the most recent Internal Revenue
Service determination letter relating to each Plan for which a
letter of determination was obtained; (iv) to the extent required to
be filed, the most recent Annual Report (Form 5500 Series and
accompanying schedules of each Plan and applicable financial
statements) as filed with the Internal Revenue Service; and (v)
audited financial statements, if any.
(b) In all material respects, each Plan conforms to, and
its administration is in substantial compliance with, all applicable
requirements of law, including, without limitation, ERISA and the
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Code and all of the Plans are in full force and effect as written,
and all premiums, contributions and other payments required to be
made by the Company or any member of the Controlled Group under the
terms of any Plan have been made or accrued.
(c) Each Plan maintained by the Company or any member of
the Controlled Group that is intended to be qualified under Section
401(a) of the Code and each trust maintained pursuant thereto has
been determined to be exempt from Federal taxation by the Internal
Revenue Service and has a favorable determination letter from the
Internal Revenue Service with respect to each such Plan, and, to the
knowledge of the Company, nothing has occurred since the date of
such letter which could adversely impact such qualification and tax
exemption. No Plan maintained by the Company or any member of the
Controlled Group that is an employee welfare benefit plan as defined
in Section 3(1) of ERISA (the "Welfare Plan") is funded through a
voluntary employees' beneficiary association as defined in Section
501(c)(9) of the Code.
(d) Except as set forth in Schedule 5.20(d) neither the
Company nor any member of the Controlled Group has maintained,
contributed to or incurred any liability with respect to any Plan
subject to Title IV of ERISA or Section 412 of the Code (a "Pension
Plan") within the six-year period ending on the date of this
Agreement. There is no "amount of unfunded benefit liabilities," as
defined in Section 4001(a)(18) of ERISA, in any of the Pension
Plans. The "benefit liabilities", as defined in Section 4001(a)(16)
of ERISA, of each of the Pension Plans do not exceed the fair market
value of the assets of such Pension Plan. Neither the Company nor
any member of the Controlled Group has incurred any material
liability under Section 4062 of ERISA to the Pension Benefit
Guaranty Corporation or to a trustee appointed under Section 4042 of
ERISA which remains unsatisfied. Neither the Company nor any member
of the Controlled Group has engaged in any transaction described in
Section 4069 of ERISA.
(e) There are no multiemployer plans (as defined in
Subsection 3(37) of ERISA) ("Multiemployer Plans") to which the
Company or any other member of the Controlled Group is, or has been
within the six-year period ending on the date of this Agreement,
required to make a contribution or other payment. Neither the
Company nor any member of the Controlled Group has incurred any
withdrawal liability on account of a complete or partial withdrawal
from any Multiemployer Plan, nor has any of them incurred any
liability due to the termination or reorganization of such a
Multiemployer Plan, in either case which remains unsatisfied.
(f) There has been no non-exempt prohibited transaction
(within the meaning of Section 4975 of the Code or Part 4 of
Subtitle B of Title I of ERISA) with respect to any Plan or penalty
incurred with respect to any Plan under Section 502(i) of ERISA.
(g) Except as set forth on Schedule 5.20(g), the Company
does not maintain any Plan providing post-retirement benefits other
than Plans qualified under Section 401(a) of the Code
("Post-Retirement Benefits"). The Company is not liable for
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Post-Retirement Benefits under any plan not maintained by the
Company. The Company has complied in all material respects with the
requirements of Section 4980B of the Code and Sections 601 et seq.
of ERISA relating to continuation coverage for group health plans.
(h) There has been no material violation of ERISA or the
Code with respect to the filing of applicable reports, documents and
notices regarding the Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the
Plans.
(i) There are no pending actions, claims or lawsuits
which have been asserted, instituted or, to the knowledge of the
Company, threatened, against the Plans, the assets of any of the
trusts under such Plans or the Plan sponsor or the Plan
administrator, or, to the knowledge of the Company, against any
fiduciary of the Plans with respect to the operation of such Plans
(other than routine benefit claims).
(j) The Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of
ERISA and the Code (including rules and regulations thereunder) and
other applicable federal and state laws and regulations.
(k) There has been no mass layoff or plant closing as
defined by the Worker Adjustment and Retraining Notification Act or
any similar state or local "plant closing" law with respect to the
employees of the Company which resulted in any liability of the
Company which remains unsatisfied.
(l) To the knowledge of the Company, the execution of,
and performance of the transactions contemplated in, this Agreement
will not, either alone or upon the occurrence of events occurring
subsequent to the date hereof and up to and including the Closing
Date, result in (i) except as set forth on Schedule 5.20(l), any
payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee
or (ii) the Company's failing to be able to deduct for Federal
income tax purposes any items on account of Section 280G of the
Code.
Section 5.21. Small Business Corporation. To the knowledge
of the Company, the Company qualifies as a "small business
corporation" within the meaning of Section 1361(b) of the Code, but
without regard to paragraph (1)(C) thereof.
Section 5.22. Insurance. Schedule 5.22 lists the fidelity bonds
and the aggregate coverage amount and type and generally applicable
deductibles of all policies of title, liability, fire, casualty,
business interruption, workers' compensation and other forms of
insurance insuring the Company and its assets, properties and
operations. The Company has furnished a true, complete and accurate
copy of all such policies and bonds to Parent or its
representatives. Except as set forth on Schedule 5.22, all such
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policies and bonds are in full force and effect. The Company shall
maintain the coverage under all policies and bonds listed on
Schedule 5.22 in full force and effect through the Closing Date. To
the knowledge of the Company, the Company is not in default under
any provisions of any such policy of insurance nor has the Company
received notice of cancellation of any such insurance. There is no
claim by the Company pending under any of such policies or bonds as
to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. The insurance maintained by
the Company in connection with its business is adequate in
accordance with industry standards and the requirements of any
applicable Leases.
Section 5.23. Transactions with Directors, Officers and
Affiliates. Except as set forth on Schedule
5.23, the Company is not a party to any agreement or arrangement
with any of the directors, officers or stockholders of the Company
or any Affiliate or family member of any of the foregoing under
which they: (i) lease any real or personal property (either to or
from such Person), (ii) license technology (either to or from such
Person), (iii) are obligated to purchase any tangible or intangible
asset from or sell such asset to such Person, (iv) purchase products
or services from such Person, (v) pay or receive commissions,
rebates or other payments or (vi) provide or receive any other
material benefit. The Company does not employ as an employee or
engage as a consultant any family member of any of the directors,
officers or stockholders of the Company. Except as set forth on
Schedule 5.23, to the knowledge of the Company, during the past
three years none of the directors, officers or stockholders of the
Company, or any family member of any of such Persons, has been a
director or officer of, or has had any direct or indirect interest
in, any Person which during such period has been a supplier,
customer or sales agent of the Company or has competed with or been
engaged in any business of the kind being conducted by the Company.
No Affiliate of the Company owns or has any rights in or to any of
the assets, properties or rights used by the Company in the ordinary
course of its businesses.
Section 5.24. Receivables. Except as set forth on Schedule 5.24,
all notes and accounts receivable payable to or for the benefit of
the Company reflected on the December 31, 1997 Balance Sheet, or
acquired by the Company after the date thereof and before the
Closing Date, have been collected or are (or will be) current and
collectible in amounts not less than the aggregate amount thereof
(net of reserves established in accordance with prior practice)
carried (or to be carried) on the books of the Company, and are not
subject to any counterclaims or set-offs.
Section 5.25. Labor Matters.
(a) Except as set forth on Schedule 5.25(a): (i) the
Company is not a party to any outstanding employment agreements or
contracts with officers or employees of the Company that are not
terminable at will, or that provide for the payment of any bonus or
commission; (ii) the Company is not a party to any agreement, policy
or practice that requires it to pay termination or severance pay to
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salaried, non-exempt or hourly employees of the Company (other than
as required by law); (iii) the Company is not a party to any
collective bargaining agreement or other labor union contract
applicable to employees of the Company nor does the Company know of
any activities and proceedings of any labor union to organize any
such employees; and (iv) the Company is not a party to any
consulting agreements.
(b) Except as set forth on Schedule 5.25(b): (i) to the
knowledge of the Company, the Company is in compliance with all
applicable laws relating to employment and employment practices,
wages, hours, and terms and conditions of employment; (ii) to the
knowledge of the Company, there is no unfair labor practice charge
or complaint pending before the National Labor Relations Board
("NLRB") relating to the Company; (iii) to the knowledge of the
Company, there is no labor strike, material slowdown or material
work stoppage or lockout pending or threatened against or affecting
the Company, and the Company has not experienced any strike,
material slowdown or material work stoppage, lockout or other
collective labor action by or with respect to employees of the
Company since 1995; (iv) to the knowledge of the Company, there is
no representation claim or petition pending before the NLRB or any
similar foreign agency and no question concerning representation
exists relating to the employees of the Company; (v) to the
knowledge of the Company, there are no charges with respect to or
relating to the Company pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices; and
(vi) the Company has received no notice from any national, state,
local or foreign agency responsible for the enforcement of labor or
employment laws of an intention to conduct an investigation of the
Company and no such investigation is in progress.
(c) The Company has heretofore delivered to Parent or its
representative a list dated as of August 5, 1998 containing the
name, position, starting employment date, current annual salary and
bonus and commissions in 1997 of each current employee of the
Company.
Section 5.26. Environmental Matters. Except as set forth on
Schedule 5.26:
(a) The operations of the Company are, and have been, in
compliance with all applicable Environmental Laws and permits issued
thereunder.
(b) The Company does not reasonably expect that material
expenditures are or will be necessary for the Company to maintain
full compliance with Environmental Laws currently in effect or
proposed or anticipated to be adopted.
(c) The Company has obtained, or has made timely and
complete application for or for renewal of, all permits required
under Environmental Laws for the operation of the Company's
business, except where the failure to do so would not have a
material adverse effect on the Company or its business as now
conducted.
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(d) No substance identified or regulated pursuant to any
Environmental Law, including, without limitation, any hazardous
substance, hazardous waste, toxic substance, pollutant, contaminant
or petroleum or any fraction thereof ("Hazardous Substance"), has
come to be located on, at, beneath, or near any real property
currently or, to the knowledge of the Company, formerly owned,
operated, leased, or used by the Company, except where the presence
of such Hazardous Substance would not have a material adverse effect
on the Company or its business as now conducted.
(e) To the knowledge of the Company, no real property
currently or formerly owned, operated, leased, or used by the
Company contains or formerly contained any underground or
aboveground storage tank, surface impoundment, landfill, land
disposal area, polychlorinated biphenyls, asbestos or urea
formaldehyde insulation.
(f) The Company has not disposed of, transported, or
arranged for the disposal or transportation of any Hazardous
Substance at or to any facility at which, to the knowledge of the
Company, there has been a release or threatened release of a
Hazardous Substance.
(g) The Company has not received notice of, nor is there
pending or, to the knowledge of the Company, threatened against the
Company, any claim, investigation, order, decree or lawsuit pursuant
to any Environmental Law arising out of the operation of the
Company's business ("Environmental Claim").
(h) To the knowledge of the Company, no other party with
whom the Company has contracted for environmental matters is or has
been the subject of any claim, action or proceeding arising out of
the violation or alleged violation of any Environmental Law or the
disposal, arrangement for the disposal, release or threatened
release of any Hazardous Substance generated by the Company.
(i) The Company has not, by agreement or otherwise,
assumed any liability of or duty to indemnify any other party for
any claim, damage or loss arising out of the use, treatment, storage
or disposal of any Hazardous Substance.
(j) To the knowledge of the Company, no Hazardous
Substance has migrated from any real property currently or formerly
owned, operated, leased or used by the Company to any other real
property, nor, to the knowledge of the Company, has any Hazardous
Substance migrated from any other real property onto any real
property owned, operated, leased or used by the Company.
(k) In connection with the operation of its businesses,
the Company has not committed any act or omission which could
reasonably be expected to give rise to liability under any
Environmental Law, except for any such act or omission which would
not have a material adverse effect on the Company or its business as
now conducted.
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(l) There is no condition in existence on, at, beneath or
near any real property owned, leased or used by the Company which
could give rise to any claim against, liability of, or loss by,
Parent pursuant to Environmental Laws, except for conditions which
would not have a material adverse effect on the Company or its
business as now conducted.
(m) The Company has provided Parent or its
representatives with copies of all (i) permits held by the Company
pursuant to Environmental Law, (ii) notices, demands, claims or
actions against the Company pursuant to Environmental Law, and (iii)
reports, data or other documentation of which it has knowledge
related to all investigations, audits or assessments of
environmental conditions at property owned, leased or used by the
Company and the Company's compliance with Environmental Law.
Section 5.27. Products Liability.
(a) Except as set forth on Schedule 5.27, to the knowledge of the
Company, (i) there is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature before any court or governmental or
other regulatory or administrative agency, commission or authority,
domestic or foreign, against or involving any products manufactured,
produced, distributed or sold by or on behalf of the Company
(including any parts or components) (collectively, "Products"), or
class of claims or lawsuits involving the same or similar Product
which is pending or threatened, resulting from an alleged defect in
design, manufacture, materials or workmanship of any Product, or any
alleged failure to warn, or from any breach of implied warranties or
representations (collectively, "Product Liability Lawsuits"); (ii)
there has not been any Occurrence (as hereinafter defined); and
(iii) there has not been, within the past 12 months, nor is there
under consideration or investigation by the Company, any Product
rework or retrofit (collectively, "Retrofits") conducted by or on
behalf of the Company.
(b) For purposes of this Section 5.27, the term
"Occurrence" shall mean any accident, happening or event which takes
place at any time which is caused or allegedly caused by any alleged
hazard or alleged defect in manufacture, design, materials or
workmanship including, without limitation, any alleged failure to
warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or
event otherwise involving any Product that can reasonably be
expected to result in a claim or loss.
Section 5.28. Company Action. The Board of Directors of the Company
(at a meeting duly called and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and
fair and in the best interests of the Company and its stockholders,
(b) approved the Merger in accordance with the provisions of Section
251 of the DGCL, (c) recommended the approval of this Agreement and
the Merger by the holders of the Company Common Stock and directed
that the Merger be submitted for consideration by the Company's
stockholders at the Company Meeting, (d) taken all necessary steps
-34-
to render Section 203 of the DGCL inapplicable to the Merger and the
transactions contemplated by this Agreement, and (e) adopted a
resolution having the effect of causing the Company not to be
subject, to the extent permitted by applicable law, to any state
takeover law that may purport to be applicable to the Merger and the
transactions contemplated by this Agreement.
Section 5.29. MSOP Prior to the date of this Agreement, the Company
has terminated the MSOP and has distributed all shares of Company Common
Stock held in the MSOP Trust accounts to the MSOP Participants entitled
thereto. The Company has received from each MSOP Participant a
release, copies of which have been delivered to Parent, releasing
the Company and the MSOP Administrative Committee from any liability
to such MSOP Participant with respect to the MSOP.
Section 5.30. Accuracy of Information. None of the
representations, warranties or statements of the Company contained
in this Agreement, or in the exhibits hereto, contains any untrue
statement of a material fact.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARENT.
Parent hereby represents and warrants to the Company as
follows:
Section 6.1. Corporate Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, and has all requisite corporate power and
authority to own its properties and assets and to conduct its
businesses as now conducted. Copies of the Certificate of
Incorporation and By-Laws of the Parent, with all amendments
thereto, have been furnished to the Company or its representatives,
and such copies are accurate and complete. Each Parent Subsidiary
is duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation except where
the failure to be so organized, existing and in good standing would
not have a material adverse effect on the business of Parent and its
Subsidiaries considered as one enterprise.
Section 6.2. Qualification to Do Business. Parent is duly
qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary. Each Parent
Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in every jurisdiction in which the character
of the properties owned or leased by it or the nature of the
business conducted by it makes such qualification necessary except
where the failure to be so qualified and in good standing would not
have a material adverse effect on the business of Parent and its
Subsidiaries considered as one enterprise.
Section 6.3. Authorization and Validity of Agreement. Parent has
all requisite corporate power and authority to enter
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into this Agreement and to carry out its obligations hereunder. The
execution and delivery by Parent of this Agreement and the
performance of Parent's obligations hereunder have been duly
authorized by all necessary corporate action by the Board of
Directors of Parent, and no other corporate proceedings on the part
of Parent are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by Parent and
constitutes Parent's valid and binding obligation, enforceable
against Parent in accordance with its terms.
Section 6.4. No Conflict or Violation. The execution, delivery
and performance by Parent of this Agreement does not and will not
(i) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Parent, (ii) violate any provision of
law, or any order, judgment or decree of any court or other
governmental or regulatory authority, (iii) violate or result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument
to which Parent is a party or by which it is bound or to which any
of its properties or assets is subject, (iv) result in the creation
or imposition of any Lien upon any of the assets, properties or
rights of Parent, or (v) result in the cancellation, modification,
revocation or suspension of any license or permit material to the
business of the Parent, other than, in case of (iii), (iv) and (v)
above, any such conflicts, violations, defaults, rights or Liens
that, individually or in the aggregate, would not have a material
adverse effect on the business of Parent and its Subsidiaries
considered as one enterprise, materially impair the ability of
Parent to perform its obligations thereunder or prevent the
consummation of any of the transactions contemplated hereby.
Section 6.5. Consents and Approvals. The execution, delivery and
performance of this Agreement by Parent does not require the consent
or approval of, or filing with, any Governmental Entity or any other
Person, except for (i) the filing of a pre-merger notification
report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended (the "HSR Act") and (ii) such consents, approvals
and filings, of which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on
the business of Parent and its Subsidiaries considered as one
enterprise or have a material adverse effect on the ability of
Parent to consummate the transactions contemplated hereby.
Section 6.6. Confirmation of Representations and
Warranties of Merger Sub. Parent represents and warrants that each of the
representations and warranties of Merger Sub contained in Article VII hereof
are true and correct in all material respects.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF MERGER SUB.
Merger Sub hereby represents and warrants to the Company
as follows:
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Section 7.1. Corporate Organization. Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and
authority to own its properties and assets and to conduct its
businesses as now conducted. Copies of the Certificate of
Incorporation and By-Laws of Merger Sub, with all amendments
thereto, have been furnished to the Company or its representatives,
and such copies are accurate and complete.
Section 7.2. Qualification to Do Business. Merger Sub is
duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary.
Section 7.3. Authorization and Validity of Agreement. Merger Sub has
all requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery by
Merger Sub of this Agreement and the performance by Major Sub of its
obligations hereunder have been duly authorized by all necessary corporate
action by the Board of Directors of Merger Sub, and no other
corporate proceedings on the part of Merger Sub are necessary to
authorize such execution, delivery and performance. This Agreement
has been duly executed by Merger Sub and constitutes Merger Sub's
valid and binding obligation, enforceable against Merger Sub in
accordance with its terms.
Section 7.4. No Conflict or Violation. The execution, delivery
and performance by Merger Sub of this Agreement does not and will
not violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Merger Sub and does not and will not
violate any provision of law, or any order, judgment or decree of
any court or other governmental or regulatory authority, nor violate
nor will result in a breach of or constitute (with due notice or
lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which Merger Sub is a party or by which
it is bound or to which any of its properties or assets is subject.
Section 7.5. Consents and Approvals. The execution, delivery and
performance of this Agreement by Merger Sub does not require the
consent or approval of, or filing with, any Governmental Entity or
any other Person, except for (i) the filing of a pre-merger
notification report under the HSR Act and (ii) such consents,
approvals and filings, of which the failure to obtain or make would
not, individually or in the aggregate, have a material adverse
effect on the ability of Merger Sub to consummate the transactions
contemplated hereby.
Section 7.6. Capitalization of Merger Sub. The authorized
stock of Merger Sub consists of 100 shares of common stock, par
value $.01 per share, all of which are validly issued and
outstanding. All of the issued and outstanding stock of Merger Sub
is, and at the Effective Date will be, owned by Parent, and there
are (i) no other shares of stock or voting securities of Merger Sub,
(ii) no securities of Merger Sub convertible into or exchangeable
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for shares of stock or voting securities of Merger Sub and (iii) no
options or other rights to acquire from Merger Sub, and no
obligations of Merger Sub to issue or deliver, any stock, voting
securities or securities convertible into or exchangeable for stock
or voting securities of Merger Sub. Merger Sub has not conducted
any business prior to August 7, 1998 and has no, and prior to the
Effective Date will have no, assets, liabilities or obligations of
any nature other than those incident to its formation and pursuant
to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY REGARDING THE ESOP
The Company represents and warrants to Parent and Merger
Sub as follows:
Section 8.1. ESOP Trustee. The ESOP Trustee has been properly
appointed as trustee of the ESOP Trust. The Company has delivered
to the ESOP Trustee complete, current and accurate copies of the
ESOP plan document and the ESOP Trust Agreement. The ESOP Trustee
is independent of the Company.
Section 8.2. Legal Counsel; Independent Financial
Advisor. The ESOP Trustee, at the expense of the
Company, has retained independent legal counsel knowledgeable in
matters regarding ERISA and Code fiduciary responsibilities and has
retained an independent financial advisor to advise the ESOP Trustee
regarding the transactions contemplated by this Agreement.
Section 8.3. Opinion of Financial Advisor. The ESOP has
received the final opinion of Xxxxxx/Hunter Incorporated, financial
advisor to the ESOP Trustee, to the effect that (i) the
consideration to be received by the ESOP Trust in the transaction
contemplated by the Original Merger Agreement is not less than
"adequate consideration," as defined in Section 3(18)(B) of ERISA
and Department of Labor Proposed Regulation Section 2510.3-18(b) and
(ii) the transaction contemplated by the Original Merger Agreement
is fair to the ESOP from a financial point of view.
Section 8.4. ESOP Loans. The ESOP Trust has no outstanding
indebtedness other than the ESOP Loans and the ESOP Advance.
ARTICLE IX.
COVENANTS OF THE COMPANY.
The Company hereby covenants as follows:
Section 9.1. Conduct of Business Before the Closing Date.
(a) Without the prior written consent of Parent, between
the date hereof and the Closing Date, the Company shall not, except
as required or expressly contemplated by this Agreement or as
required by applicable laws or regulations or orders of a
Governmental Entity:
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(i) make any material change in the conduct of the
businesses of the Company or enter into any transaction other
than in the ordinary course of business consistent with past
practices;
(ii) make any change in its Certificate of
Incorporation or By-Laws; issue any additional shares of
capital stock or equity securities or grant any option, warrant
or right to acquire any capital stock or equity securities or
issue any security convertible into or exchangeable for capital
stock or alter in any way its outstanding securities or make
any change in outstanding shares of capital stock or other
ownership interests or the capitalization of the Company,
whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares,
stock dividend or otherwise;
(iii) make any sale, assignment, transfer,
abandonment or other conveyance of the assets, properties or
rights of the Company or any part thereof, except transactions
pursuant to existing Contracts set forth in the Schedules
hereto and dispositions of inventory or of worn-out or obsolete
equipment for fair or reasonable value in the ordinary course
of business consistent with past practice;
(iv) subject any of the assets, properties or rights
of the Company, or any part thereof, to any Lien or suffer such
to exist other than such Liens as may arise in the ordinary
course of business consistent with past practice by operation
of law and that will not, individually or in the aggregate,
have a material adverse effect on the Company;
(v) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any shares of the capital stock of the
Company or declare, set aside or pay any dividends or other
distribution in respect of such shares;
(vi) acquire any assets, raw materials or
properties, or enter into any other transaction, other than in
the ordinary course of business consistent with past practice;
(vii) enter into any new (or amend any existing)
employee benefit plan, program or arrangement or any new (or
amend any existing) employment, severance or consulting
agreement, grant any general increase in the compensation of
officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment)
or grant any increase in the compensation payable or to become
payable to any employee, except in accordance with pre-existing
contractual provisions or consistent with past practice;
provided that, other than with respect to ESOP and MSOP
contributions approved at the April 7, 1998 meeting of the
Company's Board of Directors (in the amount of $1,593,000 with
respect to the ESOP and $50,000 with respect to the MSOP), the
immediately preceding exception shall not apply to the ESOP,
the ESOP Trust Agreement, the MSOP or the MSOP Trust Agreement;
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and further provided that this Section 9.1(a)(vii) shall not
apply to any payment subject to the provisions of Section 14.3.
(viii) make or commit to make any capital
expenditure in excess of $100,000 except with respect to prior
commitments and except in the ordinary course of business
consistent with past practice;
(ix) pay, lend or advance any amount to, or sell,
transfer or lease any properties or assets to, or enter into
any agreement or arrangement with, any of its Affiliates;
(x) fail to keep in full force and effect insurance
comparable in amount and scope to coverage currently
maintained;
(xi) take any other action that would cause any of
the representations and warranties made by the Company in this
Agreement not to remain true and correct;
(xii) make any change in any method of accounting or
accounting principle, method, estimate or practice except for
any such change required by reason of a concurrent change in
GAAP, or write down the value of any inventory or write off as
uncollectible any accounts receivable except in the ordinary
course of business consistent with past practice;
(xiii) make, change or revoke any election or method
of accounting with respect to Taxes affecting or relating to
the Company;
(xiv) enter into any closing or other agreement or
settlement with respect to Taxes affecting or relating to the
Company;
(xv) settle, release or forgive any claim or
litigation or waive any right thereto;
(xvi) except in the ordinary course of business
consistent with past practice and except for any Contract
subject to the provisions of Section 14.3, make, enter into,
modify, amend in any material respect or terminate any
Contract, bid or expenditure, where such Contract, bid or
expenditure is for (A) a Contract entailing payments in excess
of $50,000 or (B) a Contract having a term in excess of six
months;
(xvii) cause or allow the ESOP Trust to incur any
indebtedness other than the ESOP Loans and the ESOP Advance,
including for this purpose causing or allowing the ESOP Trust
to draw any additional funds pursuant to the ESOP Loan
Agreement; or
(xviii) commit to do any of the foregoing.
(b) From and after the date hereof and until the Closing
Date, the Company shall:
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(i) continue to maintain, in all material respects,
the assets, properties, rights and operations of the Company in
accordance with present practice in a condition suitable for
their current use;
(ii) file, when due or required, all Tax Returns and
other reports required to be filed and pay when due all Taxes
lawfully levied or assessed against it, unless the validity
thereof is contested in good faith and by appropriate
proceedings diligently conducted;
(iii) continue to conduct the businesses of the
Company in the ordinary course consistent with past practice;
(iv) keep its books of account, files and records in
the ordinary course and in accordance with existing practice;
and
(v) use commercially reasonable efforts to preserve
intact the operations, organization and reputation of the
Company, keep available the services of the Company's present
officers and key employees and preserve the goodwill and
business relationships of the suppliers and customers of the
Company.
Section 9.2. Consents and Approvals. The Company shall (a) use
commercially reasonable efforts to obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Entities,
and of all other Persons, required in connection with the execution,
delivery and performance by the Company of this Agreement, and (b)
diligently assist and cooperate with Parent and Merger Sub in
preparing and filing all documents required to be submitted by
Parent and Merger Sub to any Governmental Entities, in connection
with such transactions and in obtaining any governmental consents,
waivers, authorizations or approvals which may be required to be
obtained by Parent and Merger Sub in connection with such
transactions (which assistance and cooperation shall include,
without limitation, timely furnishing to Parent and Merger Sub all
information concerning the Company that counsel to Parent reasonably
determines is required to be included in such documents or could
reasonably be expected to be helpful in obtaining any such required
consent, waiver, authorization or approval).
Section 9.3. Negotiations. From and after the date hereof and
until the earlier to occur of the Closing Date or the termination of
this Agreement pursuant to Article XV hereof, the Company shall not,
and shall not permit or cause any of the officers and directors of
the Company, or any Persons acting on behalf of the Company to,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any Person or
group (other than Parent or its representatives) concerning any
merger, sale of substantial assets, purchase or sale of shares of
capital stock or similar transaction involving the Company or any
other transaction inconsistent with the transactions contemplated
hereby. The Company shall promptly communicate to Parent any
inquiries or communications concerning any such transaction which
the Company may receive or of which the Company may become aware.
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Section 9.4. Best Efforts. Upon the terms and subject to the
conditions of this Agreement, the Company shall use its best efforts
to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most
expeditious manner reasonably practicable the transactions
contemplated hereby.
Section 9.5. Notice of Breach. Through the Closing Date, the Company
shall promptly give written notice with particularity upon having
knowledge of any matter that may constitute a breach of any
representation, warranty, agreement or covenant contained in this
Agreement.
Section 9.6. ESOP Voting Procedures. The Company shall ensure
that the procedures used by the ESOP Trustee to solicit voting
instructions from ESOP Participants in connection with approving the
Merger comply with the requirements of ERISA and the guidelines
established by the Department of Labor for participant pass-through
votes, including but not limited to the requirements that (i) the
voting instructions of individual ESOP Participants not be disclosed
to the Company or any officer, director or employee thereof, (ii)
ESOP Participants receive full and accurate information regarding
the Merger, including a copy of the Proxy Statement, (iii) any
misinformation regarding the Merger which to the knowledge of the
Company is disseminated to the ESOP Participants is promptly
corrected and (iv) the ESOP Participants not be subject to undue
influence.
Section 9.7. Small Business Corporation. The Company shall take
no action which could cause it to cease to qualify as a "small
business corporation" within the meaning of Section 1361(b) of the
Code, but without regard to paragraph (1)(C) thereof.
Section 9.8. Directors. From and after the date hereof, Parent
shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company (the "Board
of Directors") as will give Parent representation on the Board of
Directors equal to at least that number of directors which equals
the product of the total number of directors on the Board of
Directors (giving effect to the directors appointed or elected
pursuant to this sentence and including current directors serving as
officers of the Company) multiplied by the percentage that the
aggregate number of shares of Company Common Stock beneficially
owned by Parent or any Affiliate of Parent bears to the number of
shares of Company Common Stock outstanding. At such time, the
Company will also cause each committee of the Board of Directors to
include persons designated by Parent constituting the same
percentage of each such committee or board as Parent's designees are
of the Board of Directors. The Company shall, upon request by
Parent, promptly increase the size of the Board of Directors or
exercise its best efforts to secure the resignations of such number
of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors in accordance with the terms of
this Section 9.8 and shall cause Parent's designees to be so
elected; provided, however, that, in the event that Parent's
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designees are appointed or elected to the Board of Directors, until
the Effective Date the Board of Directors shall have at least one
director who is a director of the Company on the date hereof and who
is neither an officer of the Company nor a designee, stockholder or
Affiliate of Parent (one or more of such directors, the "Independent
Directors"); provided, further, that an Independent Director may be
removed from the Board of Directors only by the affirmative vote of
a majority of the Independent Directors; and provided, further, that
if no Independent Directors remain, the other directors shall
designate one Person to fill one of the vacancies who shall not be
either an officer of the Company or a designee, stockholder or
Affiliate of Parent, and such Person shall be deemed to be an
Independent Director for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, prior to
the Effective Date, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate
this Agreement on behalf of the Company, (ii) exercise or waive any
of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Parent's obligations hereunder or (iv) take any
other action by the Company in connection with this Agreement
required to be taken by the Board of Directors.
ARTICLE X.
COVENANTS OF THE PARENT AND MERGER SUB.
Section 10.1. Actions Before Effective Date. Neither Parent
nor Merger Sub shall take any action which shall cause it to be in
breach of any of its representations, warranties, covenants or
agreements contained in this Agreement. Each of Parent and Merger
Sub shall use commercially reasonable efforts to perform and satisfy
all conditions to Closing to be performed or satisfied by it under
this Agreement as soon as possible, but in no event later than the
Closing Date.
Section 10.2. Consents and Approvals. Each of Parent and Merger
Sub shall use commercially reasonable efforts to obtain all consents
and approvals of third parties required to be obtained by it to
effect the transactions contemplated by this Agreement.
Notwithstanding anything in this Agreement to the contrary, in
connection with any filing or submission or other action required to
be made or taken by any party to this Agreement to effect the Merger
and the transactions contemplated hereby, the Company shall not
without the prior written consent of Parent commit to any
divestiture transaction and Parent shall not be required to divest
or hold separate or otherwise take or commence to take any action
that, in the reasonable discretion of Parent, limits in any material
respect its freedom of action with respect to, or its ability to
retain, the Company or any material portion of the assets of the
Company.
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Section 10.3. Repayment of ESOP Advance; Termination of
the ESOP.
(a) As soon as practicable following
the Closing, the ESOP Trust shall repay to the Surviving Corporation
from the amount received by the ESOP Trust pursuant to Section
4.1(b) the $950,000 advance made by the Company to the ESOP Trust in
July 1998 (the "ESOP Advance").
(b) No later than sixty days following the Closing, the
Surviving Corporation shall terminate the ESOP. As soon as
practicable following such termination, the Surviving Corporation
shall cause the ESOP Trust to prepay the ESOP Loans in full from the
amount received by the ESOP Trust pursuant to Section 4.1(b),
including any accrued interest, prepayment penalties and other fees
and payments required to be paid to the ESOP Lender in connection
therewith. The Surviving Corporation shall cause any assets
remaining in the Loan Suspense Account after such prepayment to be
allocated to the ESOP accounts of those Persons who were ESOP
Participants on the Closing Date, based on the relative ESOP account
balances of such ESOP Participants as of the Closing Date. The
Surviving Corporation's obligation to cause those actions described
in this Section 10.3 is subject to (i) the requirements of ERISA and
the Code, (ii) obtaining any necessary consents from the ESOP Lender
and (iii) the agreement of the ESOP Trustee, to the extent
necessary. If one or more of such actions cannot occur because of
the limitations described in the preceding sentence, the Surviving
Corporation shall cause to be taken such actions which may be taken
which as closely as possible accomplish the purpose and intent of
this Section 10.3. Promptly following the termination of the ESOP,
the Surviving Corporation shall submit the ESOP to the appropriate
District Director of the Internal Revenue Service, seeking a
determination letter to the effect that the termination of the ESOP
does not adversely effect its tax qualification and tax exemption
under Sections 401(a) and 501(a) of the Code, respectively. Within
sixty days following its receipt of such determination letter, the
Surviving Corporation shall provide distribution election forms to
the ESOP Participants, and promptly thereafter distribute the assets
of the ESOP, or take other appropriate actions, in accordance with
such elections.
Section 10.4. Benefits to Company Employees. Parent shall
or shall cause the Surviving Corporation to take the following
action with respect to each Company employee (other than any Person
listed on Schedule 14.3) employed in Greensboro, North Carolina or
as President of the Line Set Division or as President of the Mill
Division on the Closing Date: offer a comparable position at their
current employment location at a comparable base rate of pay. For
any employee who accepts such employment and who is subsequently
terminated, the Surviving Corporation agrees to pay to such employee
severance benefits at least equal to the severance benefits that the
employee would have received under the existing severance policy of
the Company attached hereto as Schedule 10.4. Nothing in this
Section 10.4 shall be construed as creating any employment contract
between any employee of the Company and Parent or the Surviving
Corporation or to diminish or restrict in any way Parent's or the
Surviving Corporation's right to terminate without the payment of
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severance benefits any employee for poor job performance, unexcused
absences or other good cause. Parent will recognize the time of
service of the Company's employees with respect to the granting of
and eligibility for Parent benefits.
Section 10.5. Voting of Company Common Stock. Parent and
Merger Sub agree as follows:
(a) Prior to the Effective Date, and except as
contemplated hereby or except with the prior written consent of the
Company, Merger Sub will not (i) sell, transfer, pledge, encumber,
assign or otherwise dispose of, enforce or permit the execution of
the provisions of any redemption agreement with the Company or enter
into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Merger
Sub-Owned Shares, or any shares of Company Common Stock acquired by
Merger Sub after the date hereof, or any interest in any of the
foregoing, (ii) grant any proxies or powers of attorney, deposit of
shares into a voting trust or enter into a voting agreement with
respect to any shares of Company Common Stock or (iii) consent or
otherwise agree to any amendment, waiver or other modification of
the Certificate of Incorporation or By-Laws of the Company;
(b) Without the prior written consent of the Company,
Merger Sub will not take any action to impede, interfere with, delay
or postpone the Company Meeting;
(c) At the Company Meeting or at any other meeting of the
holders of shares of Company Common Stock prior to the Effective
Date, however called, or in connection with any solicitation of
written consents of the holders of shares of Company Common Stock,
Merger Sub shall vote (or cause to be voted) or act by written
consent with respect to the Merger Sub-Owned Shares (i) in favor of
adoption and approval of this Agreement and the Merger and the
approval of the terms hereof and each of the other actions
contemplated by this Agreement; (ii) against any action or agreement
that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of Parent, Merger Sub
or the Company contained in this Agreement; and (iii) against any
action, agreement or transaction (other than this Agreement or the
transactions contemplated hereby) that is intended, or could
reasonably be expected, to impede, interfere or be inconsistent
with, delay, postpone, discourage or materially adversely affect the
Merger or this Agreement. Merger Sub shall not enter into any
agreement or understanding with any person or entity to vote or give
instructions in any manner inconsistent with clauses (i), (ii) or
(iii) of the preceding sentence.
ARTICLE XI.
ADDITIONAL COVENANTS OF THE PARTIES.
Section 11.1. Assistance in Consummation of the Merger. Each of
Parent, Merger Sub and the Company shall provide all
reasonable assistance to, and shall cooperate with, each other to
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bring about the consummation of the Merger as soon as possible in
accordance with the terms and conditions of this Agreement. Parent
shall cause Merger Sub to perform all of its obligations in
connection with this Agreement. Parent, as the sole stockholder of
Merger Sub, shall approve, and hereby approves, this Agreement and
the Merger.
Section 11.2. Proxy Statement. As promptly as practicable after the
execution of this Agreement, the Company shall prepare and mail to
holders of Company Common Stock a proxy statement (the "Proxy
Statement") in connection with the meeting of the holders of Company
Common Stock to consider the adoption of this Agreement pursuant to
Section 251 of the DGCL (the "Company Meeting"). The Company and
Parent each agrees, as to itself and, in the case of Parent, its
Subsidiaries, that to their respective knowledge, none of the
information supplied or to be supplied by it or, in the case of
Parent, its Subsidiaries for inclusion in the Proxy Statement will,
at the date of mailing to stockholders and at the time of the
Company Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 11.3. Company Meeting. As promptly as practicable after
mailing of the Proxy Statement, the Company will take, in accordance with
its Certificate of Incorporation and By-Laws, all action necessary to
convene the Company Meeting to consider and vote upon the approval
of this Agreement, the Merger and the transactions contemplated
hereby and the Company's board of directors will recommend such
approval by the holders of Company Common Stock, will not withdraw
or modify such recommendation and shall use all commercially
reasonably efforts to solicit such approval.
Section 11.4. Transfer Taxes. Parent and the Company shall cooperate
in the preparation, execution and filing of all returns, applications or
other documents regarding any real property transfer, stamp,
recording, documentary or other taxes (including, without
limitation, any New York State Real Estate Transfer Tax) and any
other fees and similar taxes which become payable in connection with
the Merger.
Section 11.5. Indemnification; Directors' and Officers'
Insurance.
(a) From and after the Effective Date, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless each Person who is now,
or has been at any time prior to the date hereof, an officer or director of
the Company or an employee or director of the Company who acts as a
fiduciary under the MSOP, ESOP or any other qualified benefit plan
of the Company (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees), liabilities, fines, penalties or judgments or amounts that
are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising
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in whole or in part out of the fact that such person is or was a
director, officer or such employee of the Company whether pertaining
to any matter of fact existing or occurring at or prior to the
Effective Date ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the full extent
permitted under applicable law (and Parent and the Surviving
Corporation will pay expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the full
extent permitted by law). Without limiting the foregoing, in the
event any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Parties (whether arising before or
after the Effective Date), (i) the Indemnified Parties may retain
counsel (which shall be reasonably acceptable to Parent) and Parent
and the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; and (ii) Parent and the Surviving
Corporation will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that neither Parent
nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section 11.5, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify
Parent and the Surviving Corporation, but the failure so to notify
shall not relieve a party from any liability that it may have under
this Section 11.5, except to the extent such failure materially
prejudices such party. The Indemnified Parties as a group my retain
only one law firm to represent them with respect to each such matter
in each applicable jurisdiction unless there is, under applicable
standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
Parent and Merger Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in
defense of any action or suit, existing in favor of the Indemnified
Parties (including in the Certificate of Incorporation or Bylaws of
the Company) with respect to matters occurring through the Effective
Date, shall survive the Merger and shall continue in full force and
effect for a period of six years from the Effective Date; provided,
however, that all rights to indemnification in respect of any
Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
Parent shall cause the provisions providing for the exculpation of
directors and officers liability and indemnification contained in
the Certificate of Incorporation of the Surviving Corporation to be
substantively the same as the provisions providing for the
exculpation of directors and officers liabilities and
indemnification contained in the Certificate of Incorporation of the
Company in effect immediately prior to the Effective Date. The
rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under the
Certificate of Incorporation or Bylaws of the Company, under the
DGCL or otherwise. The provisions of this Section 11.5 shall
survive the consummation of the Merger and expressly are intended to
benefit each of the Indemnified Parties.
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(b) For a period of six years after the Effective Date,
Parent shall cause to be maintained in effect the current policies
of directors' and officers' liability insurance maintained by the
Company (provided that Parent my substitute therefor policies of at
least the same coverage and amounts containing terms and conditions
that are no less advantageous in any material respect to the
Indemnified Parties) with respect to matters arising before the
Effective Date; provided, however, that Parent shall not be required
to pay an annual premium for such insurance in excess of (i) 250% of
the last annual premium paid by the Company prior to the date
hereof, for each of the first three annual premiums, and (ii) 200%
of the last annual premium paid by the Company prior to the date
hereof, thereafter; provided, further, that in the event such
maximum amounts are applicable, Parent shall purchase as much
coverage as possible for such amount.
(c) Parent shall reimburse an Indemnified Party for
reasonable legal expenses actually incurred by such Indemnified
Party in enforcing the provisions of this Section 11.5 if such
Indemnified Party is ultimately determined to be the prevailing
party in a final adjudication by a court from which there is no
further right of appeal (or any such right of appeal has expired).
Section 11.6. Access to Properties and Records;
Confidentiality.
(a) The Company shall afford to Parent, and to the accountants,
counsel and representatives of Parent, full access during normal business
hours through the period prior to the Closing Date (or the earlier
termination of this Agreement pursuant to Article XV) to all
properties, books, Contracts, commitments and files and records
(including, but not limited to, Tax Returns and correspondence with
accountants) of the Company and, during such period, shall furnish
promptly to Parent all other information concerning the Company and
its properties and personnel as Parent may reasonably request,
provided that no investigation or receipt of information pursuant to
this Section 11.6 shall qualify any representation or warranty of
the Company or the conditions or the obligations of Parent and
Merger Sub. The Company also shall afford to Parent full access to
all assets and operations of the Company throughout the period prior
to the Closing Date.
(b) Parent shall cause its officers, employees and other
representatives to hold in confidence all confidential information
obtained under (a) above, other than any information (i) that is or
becomes publicly known to Parent or such Persons otherwise than in
violation of this Agreement, (ii) known to the party to whom
disclosed prior to such disclosure, or disclosed to such party by a
third party not under an obligation of confidentiality to the Party
to this Agreement disclosing the same, (iii) developed by the party
to whom disclosed independently of the information so disclosed, or
(iv) required to be disclosed by law. Parent shall not (and shall
insure that such other Persons do not), without the prior written
consent of the Company use such information other than in connection
with this Agreement and the Merger or disclose such information to
others. To the extent that any such confidential information
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relates to the customers of the Company, such information shall not
be disclosed, directly or indirectly, to any employee of Parent who
is directly, or indirectly, involved in selling to or setting prices
for the sale to customers in competing transactions.
(c) If this Agreement is terminated, Parent shall, and
each shall cause its representatives to, promptly return or cause to
be destroyed all copies of confidential information furnished to it
and its representatives and all notes and summaries of the
confidential information.
ARTICLE XII.
MUTUAL CONDITIONS
The respective obligation of each Party to effect the
Merger is subject to the satisfaction or waiver at or prior to the
Closing Date of each of the following conditions:
Section 12.1. Stockholder Approval. The Merger and the
transactions contemplated hereby shall have been duly approved by
holders of the Company Common Stock, in accordance with applicable
law and the Company's Certificate of Incorporation and By-Laws,
constituting a majority of the outstanding shares of Company Common
Stock.
Section 12.2. HSR Act. Any applicable waiting period under the HSR
Act shall have expired or been terminated.
ARTICLE XIII.
CONDITIONS PRECEDENT TO PERFORMANCE BY THE COMPANY.
The obligations of the Company to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing Date, of the following
conditions, any one or more of which may be waived by the Company in
its sole discretion:
Section 13.1. Representations and Warranties of Parent and Merger
Sub. All representations and warranties made by Parent and Merger Sub in
this Agreement shall have been true and correct when made, and the Company
shall have received a certificate to that effect dated the Closing Date and
signed by any Vice President of Parent and Merger Sub.
Section 13.2. Performance of the Obligations of Parent
and Merger Sub. Parent and Merger Sub shall have performed all obligations
required under this Agreement to be performed by Parent and Merger Sub on or
before the Closing Date, and the Company shall have received a certificate to
that effect dated the Closing Date and signed by any Vice President of Parent
and Merger Sub.
Section 13.3. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or other governmental
or regulatory authority, domestic or foreign, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any
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Governmental Entity that declares this Agreement invalid or
unenforceable in any respect or which prevents the consummation of
the transactions contemplated hereby shall be in effect; and no
action or proceeding before any court or regulatory authority,
domestic or foreign, shall have been instituted or threatened by any
Governmental Entity, which seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or
which challenges the validity or enforceability of this Agreement,
and which in any such case has a reasonable likelihood of success in
the opinion of counsel to the Company.
Section 13.4. Opinion of Counsel. The Company shall have received
an opinion, dated as of the Closing Date, from Parent's general
counsel, covering the matters set forth on Exhibit A, subject to
customary qualifications, limitations and qualifications for
opinions given in transactions of the kind contemplated hereby.
Section 13.5. Legal Matters. All certificates, instruments, opinions
and other documents required to be executed or delivered by or on behalf
of Parent and Merger Sub under the provisions of this Agreement, and
all other actions and proceedings required to be taken by or on
behalf of Parent and Merger Sub in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and
substance to counsel to Company.
ARTICLE XIV.
CONDITIONS PRECEDENT TO PERFORMANCE BY PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing Date, of the following
conditions, any one or more of which may be waived by Parent and
Merger Sub in their sole discretion:
Section 14.1. Representations and Warranties of the
Company. All representations and warranties made by
the Company in this Agreement shall have been true and correct when
made, and Parent shall have received a certificate to that effect
dated the Closing Date and signed by any Vice President of the
Company.
Section 14.2. Performance of the Obligations of the
Company. The Company shall have performed all
obligations required under this Agreement to be performed by it on
or before the Closing Date, and Parent shall have received a
certificate to that effect dated the Closing Date and signed by any
Vice President of the Company.
Section 14.3. Company Payments. The Company shall have (i) paid
any and all payments required to be made by the Company to its and
the ESOP's and MSOP's accountants, attorneys and financial advisors
for all services rendered, and expenses advanced, in connection with
the Merger and (ii) received a release from each of the executives
and present and former employees of the Company listed on Schedule
14.3 of all claims against the Company (such release to be in form
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and substance reasonably acceptable to Parent) prior to the payment
to any such Person of any and all payments required to be made by
the Company to such Person by reason, or as a result of, the Merger,
in the amounts set forth next to such Person's name on Schedule
14.3.
Section 14.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or
regulatory authority, domestic or foreign, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any
Governmental Entity, which declares this Agreement invalid in any
respect or prevents the consummation of the transactions
contemplated hereby, or which materially and adversely affects the
assets, properties, operations, prospects, net income or financial
condition of the Company shall be in effect; and no action or
proceeding before any court or governmental or regulatory authority,
domestic or foreign, shall have been instituted or threatened by any
Governmental Entity which seeks to prevent or delay the consummation
of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement, and
which in either such case has a reasonable likelihood of success in
the opinion of counsel to Parent.
Section 14.5. Opinion of Counsel. Parent shall have received an
opinion, dated as of the Closing Date, from Xxxx, Xxxxxxxx &
Xxxxxxxx L.L.P., covering the matters set forth on Exhibit B,
subject to customary qualifications, limitations and qualifications
for opinions given in transactions of the kind contemplated hereby.
Section 14.6. Legal Matters. All certificates, instruments, opinions
and other documents required to be executed or delivered by or on behalf
of the Company under the provisions of this Agreement, and all other
actions and proceedings required to be taken by or on behalf of the
Company in furtherance of the transactions contemplated hereby,
shall be reasonably satisfactory in form and substance to counsel to
Parent.
ARTICLE XV.
TERMINATION.
Section 15.1. Conditions of Termination. Notwithstanding
anything to the contrary contained herein, this Agreement may be
terminated at any time before the Closing:
(a) By mutual consent of the board of directors of the
Company and the board of directors of Parent;
(b) By the Company or Parent if: (i) there shall be a
final, non-appealable order of a federal or state court in effect
preventing consummation of the transactions contemplated hereby; or
(ii) there shall be any final action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the transactions contemplated hereby by any
Governmental Entity which would make consummation of the
transactions contemplated hereby illegal; or
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(c) By the Company or Parent if the Closing shall not
have been consummated by December 23, 1998.
Section 15.2. Effect of Termination. In the event of the
termination of this Agreement as provided in Section 15.1 hereof,
this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Company, Parent or Merger
Sub, or their respective officers, directors, stockholders,
partners, option holders or other Persons under their control,
except to the extent that such termination results from the willful
breach by a party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement, and provided
that the provisions of Articles XV, XVI and XVII hereof shall remain
in full force and effect and survive any termination of this
Agreement.
ARTICLE XVI.
SURVIVAL.
Section 16.1. Survival of Representations and Warranties. No
representations or warranties contained in this Agreement shall survive the
Effective Date. The covenants made by the parties in this Agreement with
respect to action to be taken or omitted after the Closing Date shall survive
the Closing and the consummation of the transactions contemplated by this
Agreement.
ARTICLE XVII.
MISCELLANEOUS.
Section 17.1. Successors and Assigns. Except as otherwise provided
in this Agreement, no party hereto shall assign this Agreement or
any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted
assignment without such prior written consent shall be void and of
no force and effect. This Agreement shall inure to the benefit of
and shall be binding upon the successors and permitted assigns of
the parties hereto.
Section 17.2. Governing Law, Jurisdiction. This Agreement
shall be construed, performed and enforced in accordance with, and
governed by, the laws of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof. The parties
hereto irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this
Agreement, and consent to the jurisdiction of, the courts of the
State of Delaware or the United States of America for the District
of Delaware.
Section 17.3. Expenses. All the fees, expenses and costs incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such fees, expenses and costs.
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Section 17.4. Broker's and Finder's Fees. Parent represents
and warrants that it has dealt with no broker or finder in
connection with any of the transactions contemplated by this
Agreement. The Company represents and warrants that neither the
Company nor the ESOP Trustee has dealt with any broker or finder in
connection with any of the transactions contemplated by this
Agreement.
Section 17.5. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or
administrative body to be null, void or unenforceable, said
provision shall survive to the extent it is not so declared, and all
of the other provisions of this Agreement shall remain in full force
and effect so long as, and only so long as, the economic or legal
substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party hereto or to the
stockholders of the Company or Parent. Upon a determination that
any provision is invalid, illegal or incapable of being enforced and
does not adversely affect the substance of these transactions in a
material way, the Parties will 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 the
transactions contemplated by this Agreement are consummated to the
extent possible.
Section 17.6. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given (i) on the date of service if served personally on
the party to whom notice is to be given; (ii) on the day of
transmission if sent via facsimile transmission to the facsimile
number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission; (iii) on the day
after delivery to Federal Express or similar overnight courier or
the Express Mail service maintained by the United States Postal
Service; or (iv) on the fifth day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered
or certified, postage prepaid and properly addressed, to the party
as follows:
If to the Company:
Xxxxxxxx Industries, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Copy to:
Xxxx, Xxxxxxxx & Xxxxxxxx, L.L.P.
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
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If to Parent or Merger Sub:
Xxxxxxx Industries
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may change its address for the purpose of this
Section by giving the other party written notice of its new address
in the manner set forth above.
Section 17.7. Amendments; Waivers. This Agreement may be amended
or modified, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. Any waiver by any party of
any condition, or of the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, in any one
or more instances, shall not be deemed to be nor construed as a
further or continuing waiver of any such condition, or of the breach
of any other provision, term, covenant, representation or warranty
of this Agreement.
Section 17.8. Public Announcements. No party shall issue any press
release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the
other party; provided, however, that any party may make any public
disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing party will use its
reasonable efforts to advise the other party prior to making the
disclosure).
Section 17.9. Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the
transactions contemplated hereby and supersedes and replaces all
prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All Exhibits and
Schedules hereto and any documents and instruments delivered
pursuant to any provision hereof are expressly made a part of this
Agreement as fully as though completely set forth herein.
Section 17.10. Parties in Interest. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than parties hereto and their
respective successors and permitted assigns; provided, however, that
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the members of the Board of Directors at the time of the execution
of this Agreement shall have the right to enforce the provisions of
Sections 9.8 and 10.5 of this Agreement. Nothing in this Agreement
is intended to relieve or discharge the obligations or liability of
any third Persons to the Company or Parent. Except as set forth in
this Section 17.10 and except as set forth in Section 11.5, no
provision of this Agreement shall give any third parties any right
of subrogation or action over or against the Company or Parent.
Section 17.11. Scheduled Disclosures. Unless otherwise provided in
this Agreement, disclosure of any matter, fact or circumstance in a
Schedule to this Agreement shall not be deemed to be disclosure
thereof for purposes of any other Schedule hereto.
Section 17.12. Section and Paragraph Headings. The
section and paragraph headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of
this Agreement.
Section 17.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which shall constitute the same instrument
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
XXXXXXX INDUSTRIES, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Vice President, General Counsel and
Secretary
XXXXXXX ACQUISITION CORP.
By:/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President
XXXXXXXX INDUSTRIES, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer and
Chairman of the Board
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Exhibit A
[Form of Opinion of Parent's General Counsel]
[Capitalized terms used but not defined herein shall
have the meaning set forth in the Agreement and Plan of Merger]
1. Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate
power and authority to own its properties and assets and to
conduct its businesses as now conducted. Each of Parent and
Merger Sub is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which
the character of the properties owned or leased by it or the
nature of the business conducted by it makes such qualification
necessary and wherein the failure to be so qualified and in good
standing would not have a material adverse effect on Parent and
its subsidiaries considered as one enterprise.
2. Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into the Agreement and
Plan of Merger and to carry out its obligations thereunder. The
execution and delivery by Parent and Merger Sub of the Agreement
and Plan of Merger and the performance of the obligations of
Parent and Merger Sub thereunder have been duly authorized by all
necessary corporate action by the Board of Directors of Parent
and Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize such execution,
delivery and performance. The Agreement and Plan of Merger has
been duly executed by Parent and Merger Sub and constitutes the
valid and binding obligation of Parent and Merger Sub,
enforceable against them in accordance with its terms.
3. The execution, delivery and performance by Parent
and Merger Sub of the Agreement and Plan of Merger do not and
will not (i) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of Parent or Merger Sub,
(ii) to the knowledge of such counsel, violate any provision of
law, or any order, judgment or decree of any court or other
governmental or regulatory authority, (iii) violate or result in
a breach of or constitute (with due notice or lapse of time or
both) a default under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement
or instrument known to such counsel to which Parent or Merger Sub
is a party or by which it is bound or to which any of its
properties or assets is subject, (iv) result in the creation or
imposition of any Lien upon any of the assets, properties or
rights of Parent or Merger Sub, or (v) result in the
cancellation, modification, revocation or suspension of any
license or permit material to the business of the Parent, other
than, in case of (iii), (iv) and (v) above, any such conflicts,
violations, defaults, rights or Liens that, individually or in
the aggregate, would not have a material adverse effect on the
business of Parent and its Subsidiaries considered as one
enterprise, materially impair the ability of Parent to perform
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its obligations thereunder or prevent the consummation of any of
the transactions contemplated by the Agreement and Plan of
Merger.
4. The execution and delivery of the Agreement and
Plan of Merger by Parent and Merger Sub and the performance by
Parent and Merger Sub of their obligations thereunder do not
require any consents, waivers, authorizations or approvals of any
Governmental Entity, or of any other Person, or declarations to
or filings or registrations with any such Governmental Entity,
except such consents, waivers, authorizations, approvals,
filings, declarations, filings or registrations (i) as have been
duly obtained or made, as applicable, and are in full force and
effect or (ii) of which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect
on the ability of Parent or Merger Sub to consummate the
transactions contemplated by Agreement and Plan of Merger.
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Exhibit B
[Form of Opinion to Counsel to the Company]
[Capitalized terms used but not defined herein shall
have the meaning set forth in the Agreement and Plan of Merger]
1. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority
to own its properties and assets and to conduct its business as
now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in those
jurisdictions listed on Schedule 5.2 to the Agreement and Plan of
Merger, which are the only jurisdictions in which the character
of the properties owned or leased by the Company or the nature of
the business conducted by the Company makes such qualification
necessary and wherein the failure to be so qualified and in good
standing would not have a material adverse effect on the Company.
2. The Company has all requisite corporate power and
authority to enter into the Agreement and Plan of Merger and to
carry out its obligations thereunder. The execution and delivery
of the Agreement and Plan of Merger and the performance of the
Company's obligations thereunder have been duly authorized by all
necessary corporate action by the Board of Directors of the
Company, and no other corporate proceedings on the part of the
Company are necessary to authorize such execution, delivery and
performance. The Agreement and Plan of Merger has been duly
executed by the Company and constitutes the Company's valid and
binding obligation, enforceable against the Company in accordance
with its terms.
3. The consummation by the Company of the Merger and
the other transactions contemplated by the Agreement and Plan of
Merger will not (i) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of the Company, (ii) to
the knowledge of such counsel, violate any provision of law, or
any order, judgment or decree of any court or other governmental
or regulatory authority, (iii) violate or result in a breach of
or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or
instrument to which the Company is a party or by which it is
bound or to which any of its properties or assets is subject,
(iv) result in the creation or imposition of any Lien upon any of
the assets, properties or rights of the Company, or (v) result in
the cancellation, modification, revocation or suspension of any
of the Licenses and Permits, other than, in the case of (iii),
(iv) and (v) above, any such conflicts, violations, defaults,
rights or Liens that, individually or in the aggregate, would not
have a material adverse effect on the Company or its business as
now conducted, materially impair the ability of the Company to
perform its obligations thereunder or have a material adverse
effect on the ability of the Company to consummate the
transactions contemplated by the Agreement and Plan of Merger.
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4. The execution and delivery of the Agreement and
Plan of Merger by the Company and the performance by the Company
of its obligations thereunder do not require any consents,
waivers, authorizations or approvals of any Governmental Entity,
or, to the knowledge of such counsel, of any other Person, or
declarations to or filings or registrations with any such
Governmental Entity, except such consents, waivers,
authorizations, approvals, filings, declarations, filings or
registrations (i) as have been duly obtained or made, as
applicable, and are in full force and effect or (ii) of which the
failure to obtain or make would not have a material adverse
effect on the Company or its business as now conducted or have a
material adverse effect on the ability of the Company to
consummate the transactions contemplated by the Agreement and
Plan of Merger.
5. The authorized capital stock of the Company
consists of 12,000 shares of Company Common Stock, of which
10,970 shares are issued (7,461 shares of Company Common Stock
are held as treasury stock and 3,509 shares of Company Common
Stock are outstanding). To the knowledge of such counsel: (i)
except as set forth above or on Schedule 5.5 to the Agreement and
Plan of Merger, no shares of Company Common Stock are
outstanding; (ii) the Company does not have outstanding any
securities convertible into or exchangeable for any shares of
capital stock, any rights to subscribe for or to purchase or any
options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments
or claims of any other character relating to the issuance of, any
capital stock, or any stock or securities convertible into or
exchangeable for any capital stock; and the Company is not
subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire, or to register under the
Securities Act, any shares of capital stock; and (iii) the
Company does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right
to vote) with the stockholders of the Company on any matter. The
outstanding shares of Company Common Stock have been duly
authorized and validly issued and are fully paid and
nonassessable.
6. Except as set forth on Schedule 5.17 to the
Agreement and Plan of Merger, to the knowledge of such counsel,
there are no claims, actions, suits, proceedings, labor disputes
or investigations pending or threatened, before any national,
state or local court or governmental or regulatory authority,
domestic or foreign, or before any arbitrator of any nature,
brought by or against the Company or any of its officers,
directors, employees, agents or Affiliates involving, affecting
or relating to the Company, the assets, properties or rights of
the Company or the transactions contemplated by the Agreement and
Plan of Merger.
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