AGREEMENT AND PLAN OF MERGER
(XXXXX-BRIDGE MINORITY INTEREST)
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of the 1st
day of October, 1996, is by and among Spinnaker Industries, Inc., a Delaware
corporation ("Purchaser"), BB Merger Corp., a Delaware corporation and wholly
owned subsidiary of Purchaser ("Acquisition"), Xxxxx-Bridge Industries, Inc., a
Delaware corporation (the "Company"), and those stockholders of the Company
listed on EXHIBIT A hereto (the "Stockholders," and each of them individually,
along with their respective assigns, a "Stockholder").
W I T N E S S E T H:
WHEREAS, Purchaser desires to merge the Company with and into Acquisition
in order to facilitate the offering and sale (the "Offering") of $100 million
aggregate principal amount of Purchaser's Senior Secured Notes due 2006; and
WHEREAS, the Stockholders collectively own 194,321 shares (the "Shares") of
the common stock, $0.10 par value, of the Company (the "BBI Stock"), and options
for an additional 71,065 shares of BBI stock (the "Option Shares," and together
with the Shares, the "Merger Shares") which will be exercised immediately prior
to such merger transaction; and
WHEREAS, Purchaser owns the remainder of the outstanding shares of BBI
Stock; and
WHEREAS, the Company and the Stockholders desire to enter into such merger
transaction;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. THE MERGER; CLOSING
1.1 MERGER. In accordance with the provisions of the Delaware General
Corporation Law (the "DGCL") at the Effective Date (as defined herein) the
Company shall be merged (the "Merger") into Acquisition, and Acquisition shall
be the surviving corporation (the "Surviving Corporation") and as such shall
continue to be governed by the laws of the State of Delaware. It is intended
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code and shall have the following attributes:
(a) CONTINUING OF CORPORATE EXISTENCE. Except as may otherwise be
set forth herein, the corporate existence and identity of Acquisition, with
all its purposes, powers, franchises, privileges, rights and immunities,
shall continue unaffected and unimpaired by the Merger, and the corporate
existence and identity of the Company, with all its purposes, powers,
franchises, privileges, rights and immunities, at the Effective Date shall
be merged with and into that of Acquisition, and the Surviving Corporation
shall be vested fully therewith and the separate corporate existence and
identity of the Company shall thereafter cease except to the extent
continued by statute.
(b) EFFECTIVE DATE. The Merger shall become effective upon the date
of issuance of a certificate of merger (the "Effective Date") by the
Secretary of State of the State of Delaware subsequent to the filing on the
Closing Date (as defined herein) of a certificate of merger with the
Secretary of State of the State of Delaware pursuant to the DGCL.
(c) CORPORATE GOVERNMENT. The Certificate of Incorporation of
Acquisition as in effect on the Effective Date shall continue in full force
and effect and shall be the Certificate of Incorporation of the Surviving
Corporation. The Bylaws of Acquisition as in effect as of the Effective
Date shall continue in full force and effect and shall be the Bylaws of the
Surviving Corporation. The members of the Board of Directors and the
officers of the Surviving Corporation shall be the persons holding such
offices in the Company as of the Effective Date.
(d) RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The
Surviving Corporation shall have the following rights and obligations: (i)
the Surviving Corporation shall have all the rights, privileges, immunities
and powers and shall be subject to all the duties and liabilities of a
corporation organized under the laws of the State of Delaware; (ii) the
Surviving Corporation shall possess all of the rights, privileges,
immunities and franchises, of either a public or private nature, of the
Company and Acquisition and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions to shares, and all
other choses in action, and every other interest of or belonging or due to
the Company and Acquisition shall be taken and deemed to be transferred or
invested in the Surviving Corporation, without any further act or deed; and
(iii) at the Effective Date, the Surviving Corporation shall thenceforth be
responsible and liable for all liabilities and obligations of the Company
and Acquisition and any claim existing or action or proceeding pending by
or against Acquisition or the Company may be prosecuted as if the Merger
had not occurred, or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the property of
the Company or Acquisition shall be impaired by the Merger.
1.2 TIME OF CLOSING. A closing (the "Closing") for the Merger shall be
held at 9:00 a.m., Dallas, Texas time, on the date on which the Offering is
consummated (the "Closing Date"), at the law offices of Xxxxxx & Xxxxxxx, L.L.P.
located at 000 X. Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, or at such other place or
places and/or time as may be agreed upon by the parties.
Agreement and Plan of Merger
November 6, 1996
Page 2
1.3 PUT OPTION AGREEMENTS. The parties hereto agree that, effective at
the time of the Closing, all of those certain Put Option Agreements, each of
which is dated on or about September 19, 1994, among Purchaser, the Company and
the Stockholders, or attorneys-in-fact for the Stockholders, are hereby
terminated effective at the time the last required action is taken at the
Closing.
1.4 CLOSING PROCEDURE. At the Closing, Acquisition and the Company will
cause to be prepared, executed and delivered a Certificate of Merger to be filed
with the Secretary of State of Delaware, and all other appropriate and customary
documents as another party or its counsel may reasonably request for the purpose
of consummating the transactions contemplated by this Agreement. Prior to the
Closing, any documents required to be filed to effect the Merger shall be
approved by Purchaser's counsel and in a form appropriate for filing. All
actions taken at the Closing shall be deemed to have been taken simultaneously
at the time the last of any such actions is taken or completed.
2. CONVERSION OF MERGER SHARES; MERGER CONSIDERATION
2.1. CONVERSION OF MERGER SHARES. The manner and basis of converting the
shares of BBI Stock on the Effective Date shall be as follows:
(a) At the Effective Date, each Merger Share outstanding immediately
prior to the Effective Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the Closing Price (as defined herein), the Contingent Price (as
defined herein) and the Adjustment Shares (as defined herein). The
"Closing Price" shall be equal to (i) $8.25 in cash plus (ii) 0.04714
shares (the "Closing Shares") of the common stock, no par value, of
Purchaser ("Purchaser Stock"), payable on the Effective Date in accordance
with Section 2.3 hereof; provided, however, that the Closing Price payable
for each Share owned by Xxxxx Corporation shall be $9.90 in cash. The
"Contingent Price" shall be determined as follows: (i) the Fair Market
Value (as defined herein) shall be multiplied by a fraction, the numerator
of which shall be equal to the aggregate number of Merger Shares held by
the Stockholders on the Closing Date, and the denominator of which shall be
the number of shares of BBI Stock outstanding on that date; (ii) the
difference between the product obtained in subpart (i) and the aggregate
amount of the cash portion of the Closing Price paid for the Merger Shares
shall be divided by the Purchaser Stock Value (as defined herein); (iii)
the aggregate number of Closing Shares issued by Purchaser shall then be
subtracted from the number of shares of Purchaser Stock resulting from the
calculations in subpart (ii); and (iv) the number of shares of Purchaser
Stock remaining after performing the calculation in subpart (iii) shall
then be divided by the number of Merger Shares held by the Stockholders as
of the Closing Date; provided, that for purposes of this calculation, Xxxxx
Corporation shall be deemed to have received the same Closing Price per
Share as the rest of the Stockholders. An example of the calculation of the
Contingent Price is set forth on EXHIBIT B hereto.
Agreement and Plan of Merger
November 6, 1996
Page 3
(1) As used herein, the term "Fair Market Value" shall mean 75%
of the fair market value of all of the outstanding capital stock of
Acquisition, which shall be calculated in accordance with this
paragraph 2.1(a)(1) as of the date a Contingent Price Notice (as
defined herein) is delivered to the Purchaser. The FMV Representative
(as defined herein) elected pursuant to such Contingent Price Notice
and the Purchaser shall use their reasonable best efforts to come to
an agreement as to the Fair Market Value prior to the date (the
"Beginning Date") that is 20 days after the date of delivery of the
first effective Contingent Price Notice. If the FMV Representative
and Purchaser are unable to agree on the Fair Market Value prior to
the Beginning Date, then, within 20 days of the Beginning Date, they
shall mutually agree on and appoint an "Independent Investment Bank,"
which shall be an investment bank. The agreed upon Independent
Investment Bank shall determine the Fair Market Value within 30 days
of its appointment. If the FMV Representative and the Purchaser are
unable to agree on an Independent Investment Bank within the 20-day
period following the Beginning Date, then they shall each select an
Independent Investment Bank within 35 days of the Beginning Date, and
the Independent Investment Banks so selected shall select an
Independent Investment Bank no later than 60 days after the Beginning
Date, and such third-party Independent Investment Bank shall determine
the Fair Market Value within 30 days of its appointment; provided,
that in the event one of the parties fails to choose an Independent
Investment Bank within 35 days of the Beginning Date, then the
Independent Investment Bank chosen by the other party shall determine
the Fair Market Value. Purchaser, Acquisition and the Appointed
Representatives agree to instruct the Independent Investment Bank to
be guided by the factors and assumptions set forth on EXHIBIT C hereto
in determining the Fair Market Value and to provide the Independent
Investment Bank with such information as it may request in order to
determine the Fair Market Value. All costs of determining the Fair
Market Value hereunder shall be borne equally by Purchaser and the
Appointed Representatives, who shall apportion their half of the costs
among the Stockholders on a pro rata basis.
(2) PAYMENT OF CONTINGENT PRICE. Within 10 business days of the
determination of the Fair Market Value, Purchaser shall deliver to the
appropriate Appointed Representatives (as defined herein) stock
certificates representing the number of shares of Purchaser Stock (the
"Contingent Shares," and together with the Closing Shares and the
Adjustment Shares, the "Payment Shares") that, in each case, is equal
to the Contingent Price and the Adjustment Shares payable for the
Shares held by each Stockholder represented by such Appointed
Representative. Subject to the conditions of this Agreement,
Purchaser, at its option, may deliver to the appropriate Appointed
Representatives, in lieu of the Contingent Shares and the Payment
Shares, cash or certified or cashier's checks, in an amount equal to
the product obtained by multiplying the number of Contingent Shares
that would, but for Purchaser's election to deliver cash, have been
deliverable to such Appointed Representative by the Purchaser Stock
Value.
Agreement and Plan of Merger
November 6, 1996
Page 4
(3) CONTINGENT PRICE NOTICE. The "Contingent Price Notice"
means a written notice delivered to the Purchaser by one or more
Appointed Representatives who have been granted the authority by this
Agreement to act on behalf of Stockholders owning rights to receive no
less than 51% of the Contingent Shares in the aggregate stating that,
in accordance with the authority granted to them hereunder, such
Appointed Representatives are requesting payment to such Stockholders
of the Contingent Price in accordance with this Section 2.1. Upon
receipt of an effective Contingent Price Notice, Purchaser shall
immediately, and no less than three days of the date of its receipt of
the Contingent Price Notice, inform the remaining Appointed
Representatives that a valid Contingent Price Notice has been
tendered. A Contingent Price Notice may be delivered to Purchaser at
any time during the period beginning after September 30, 1998, and
ending at 5:00 p.m., Dallas, Texas time, on September 30, 2000;
provided, that if a valid Contingent Price Notice has not been
delivered prior to 5:00 p.m., Dallas, Texas time on September 30,
2000, then one shall be deemed to have been delivered to Purchaser as
of that date.
(4) FMV REPRESENTATIVE. On the fifth business day after the
date the Contingent Price Notice is delivered, the Appointed
Representatives shall hold a meeting at 9:00 a.m., Troy, Ohio time, at
the offices of Acquisition, which may be attended in person or by
telephone or other similar device, for the purpose of choosing a
person to act on behalf of the Stockholders with regard to the
determination of the Fair Market Value (the "FMV Representative").
The FMV Representative shall be elected by a vote of the Appointed
Representatives, with each such Appointed Representative having one
vote for each Share held by the Stockholders he or it represents as of
the Closing, and the FMV Representative being chosen by a majority of
such votes.
(5) PURCHASER STOCK VALUE. As used herein, the term "Purchaser
Stock Value" shall mean the average over the 30 days immediately
preceding the date on which the Contingent Price Notice is delivered
of: (A) the last reported sales price of the Purchaser Stock on the
New York Stock Exchange, or (B) (if Purchaser Stock Value cannot be
determined pursuant to the preceding (A)) the last reported sales
price of the Purchaser Stock on such other national security exchange
as the Purchaser Stock is then listed or admitted to unlisted trading
privileges, or (C) (if Purchaser Stock Value cannot be determined
pursuant to the preceding (A) or (B)) the average of the last "ask"
quotation and the last "bid" quotation as reported in the Nasdaq
National Market System (the "NMS"), or (D) (if Purchaser Stock Value
cannot be determined pursuant to the preceding (A), (B) or (C), the
average of the last "ask" quotation and the last "bid" quotation in
the over-the-counter market as reported by the Nasdaq Stock Market,
Inc.
(6) APPOINTED REPRESENTATIVES. Each of the Stockholders, except
for X.X. Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxxxxxx Xxxxxx,
Xxxxxx X. Xxxxx,
Agreement and Plan of Merger
November 6, 1996
Page 5
III and Xxxxxx Xxxxxxxxxx (collectively the "Management Group"),
Xxxxx Corporation and Xxxxxxx X. Xxx, hereby irrevocably and
severally constitutes and appoints Xxxxx X. Xxxxxxx, Xx. (the
"Stockholders Representative") his agent and attorney-in-fact, with
full power of substitution and resubstitution in his name, place
and stead, and for his use and benefit, to take or cause to be
taken or performed any and all actions, deeds and things concerning
the Contingent Shares owned by such Stockholder and the
consummation of the transactions contemplated by this Agreement as
the Stockholders Representative, in his sole discretion, deems
necessary. Each of the Stockholders in the Management Group hereby
irrevocably and severally constitutes and appoints X. X. Xxxxxxxxxx
(the "Management Representative") his agent and attorney-in-fact,
with full power of substitution and resubstitution in his name,
place and stead, and for his use and benefit, to take or cause to
be taken or performed any and all actions, deeds and things
concerning the Contingent Shares owned by such Stockholder and the
consummation of the transactions contemplated by this Agreement as
the Management Representative, in his sole discretion, deems
necessary. Xxxxx Corporation hereby irrevocably and severally
constitutes and appoints Xxxxxx X. Xxxxx (the "Xxxxx
Representative") its agent and attorney-in-fact, with full power of
substitution and resubstitution in his name, place and xxxxx, and
for its use and benefit, to take or cause to be taken or performed
any and all actions, deeds and things concerning the Contingent
Shares owned by such Stockholder and the consummation of the
transactions contemplated by this Agreement as the Xxxxx
Representative, in his sole discretion, deems necessary. Xxxxxxx X.
Xxx ("Ray's Representative," and together with the Stockholders
Representative, the Xxxxx Representative and the Management
Representative, the "Appointed Representatives") shall act on his
own behalf for purposes of this Agreement. The powers of each
Appointed Representative shall include, without limitation, the
power to (A) act on behalf of the Stockholders who appointed him
for purposes of executing and delivering the Contingent Price
Notice and the power to elect the FMV Representative, (B) withhold
expenses, including without limitation expenses of legal counsel,
incurred by such Appointed Representative in performing its duties
hereunder, from proceeds due such Stockholders pursuant to
Purchaser's payment of the Contingent Price, (C) receive the
Contingent Price on behalf of such Stockholders, (D) amend, modify
or waive any provisions of this Agreement, (E) retain legal counsel
in connection with any and all matters described herein or
contemplated hereby (which counsel may, but need not be, counsel
for Purchaser), (F) take delivery and, if necessary, maintain
custody of certificates evidencing the Contingent Shares owned by
such Stockholders, and (G) make, execute, acknowledge and deliver
all other contracts, orders, receipts, notices, requests,
instructions and other documents required, in the sole discretion
of the such Appointed Representative, in connection with any of the
foregoing.
The power of attorney granted herein is a special power coupled with
an interest and is irrevocable, and may be exercised by any person who
is at the time of exercise an Appointed Representative. Each of the
Stockholders agrees to be bound by any
Agreement and Plan of Merger
November 6, 1996
Page 6
decisions, actions or deeds taken or made by their respective
Appointed Representative with regarding to their authority granted
herein, and further agrees to indemnify and hold harmless any
person acting as their respective Appointed Representative with
regard to any liability or obligation such person may incur as a
result of the performance of his obligations hereunder, except to
the extent that any such liability or obligation is found by a
court of competent jurisdiction in a judgment that has become
final, in that it is no longer subject to appeal or review, to have
resulted from such person's gross negligence or willful misconduct.
(7) ADJUSTMENT SHARES. As used herein, the term "Adjustment
Shares" shall be that number of additional shares of Purchaser Stock
as is necessary to compensate each Stockholder for brokerage
commissions that may be incurred by such Stockholder in selling the
Payment Shares. For purposes of computing the number of Adjustment
Shares, each Stockholders' brokerage costs shall be deemed to be $0.10
per Payment Share and the number of Adjustment Shares that shall be
necessary to compensate each Stockholder for such costs shall be
determined based on the Purchaser Stock Value of the Purchaser Stock
by dividing (A) the product obtained by multiplying the number of
Payment Shares by $0.10 by (B) the Purchaser Stock Value.
(b) Each share of BBI Stock held in the treasury of the Company shall
automatically be canceled and extinguished without any conversion thereof
and no payment will be made with respect thereto.
(c) Each share of BBI Stock owned by Purchaser shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into an aggregate number of shares of Purchaser Stock having a
fair market value equal to the sum of the Closing Price and the Contingent
Price, to be issued (and valued) when and as the Closing Price and the
Contingent Price are paid. Such shares of Purchaser Stock may be held by
Purchaser as treasury stock or canceled in the sole discretion of
Purchaser.
(d) Each share of common stock, $0.01 par value, of Acquisition which
shall be outstanding immediately prior to the Effective Date shall at the
Effective Date, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into one share of newly issued stock of
the Surviving Corporation.
2.2 FRACTIONAL SHARES. No scrip or fractional shares of Purchaser Stock
shall be issued in the Merger. Any fractional share of Purchaser Stock to which
a Stockholder would otherwise be entitled shall be converted into the right to
receive from Purchaser a full share of Purchaser Stock in lieu of such
fractional share.
Agreement and Plan of Merger
November 6, 1996
Page 7
2.3 EXCHANGE AGENT.
(a) Purchaser shall authorize Xxxxx Xxxxxx Shareholder Services to
serve as exchange agent hereunder (the "Exchange Agent"). Promptly after
the Effective Date, Purchaser shall deposit or shall cause to be deposited
in trust with the Exchange Agent certificates representing the number of
whole Closing Shares to which the Stockholders are entitled pursuant to
this Article 2, together with cash sufficient to pay the Closing Price
(such cash amounts and certificates being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions received from Purchaser, deliver the number of Closing Shares
and pay the amounts of cash provided for in this Article 2 out of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement, or as otherwise agreed to by
Purchaser, Acquisition and BBI prior to the Effective Date.
(b) Within 15 days after the Effective Date, the Exchange Agent shall
mail and otherwise make available to each Stockholder who, as of the
Effective Date, was a holder of an outstanding certificate or certificates
which immediately prior to the Effective Date represented shares of BBI
Stock (the "Certificates"), a form of letter of transmittal and
instructions for use in effecting the surrender of the Certificates for
payment therefor and conversion thereof, which letter of transmittal shall
comply with all applicable rules of the Nasdaq National Market System.
Delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and the form of letter of transmittal shall so reflect. Upon
surrender to the Exchange Agent of a Certificate, together with such letter
of transmittal duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor one or more certificates as
requested by the holder (properly issued, executed and countersigned, as
appropriate) representing that number of whole Closing Shares to which such
Stockholder shall have become entitled pursuant to the provisions of this
Article 2 along with the cash portion of the Closing Price to which such
Stockholder is entitled. No interest will be paid or accrued on the cash
payable upon surrender of the Certificates. Purchaser shall pay any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Purchaser Stock; provided, however, that such
certificate is issued in the name of the person in whose name the
Certificate surrendered in exchange therefor is registered; provided
further, however, that Purchaser shall not pay any income taxes incurred by
the Stockholders nor shall Purchaser pay any transfer or other tax if
payment of any such tax by Purchaser otherwise would cause the Merger to
fail to qualify as a tax-free reorganization under the Code. If any
portion of the consideration to be received pursuant to this Article 2 upon
exchange of a Certificate is to be issued or paid to a person other than
the person in whose name the Certificate surrendered in exchange therefor
is registered, it shall be a condition of such issuance and payment that
the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such exchange shall
pay in advance any transfer or other taxes required by reason of the
issuance of a certificate representing Closing Shares to such other person,
or establish to the satisfaction of the Exchange Agent that such tax has
been paid or that no such tax is applicable. From the
Agreement and Plan of Merger
November 6, 1996
Page 8
Effective Date until surrender in accordance with the provisions of this
Section 2.3, each Certificate (other than Certificates representing
treasury shares of BBI and Certificates representing Dissenting Shares)
shall represent for all purposes only the right to receive the
consideration provided in Sections 2.1 and 2.2. No dividends that are
otherwise payable on Closing Shares will be paid to persons entitled to
receive Closing Shares until such persons surrender their Certificates.
After such surrender, there shall be paid to the person in whose name
Closing Shares shall be issued any dividends on such Closing Shares that
shall have a record date on or after the Effective Date and prior to such
surrender. If the payment date for any such dividend is after the date of
such surrender, such payment shall be made on such payment date. In no
event shall the persons entitled to receive such dividends be entitled to
receive interest on such dividends.
(c) In the case of any lost, mislaid, stolen or destroyed
Certificates, the holder thereof may be required, as a condition precedent
to the delivery to such holder of the consideration described in this
Article 2, to deliver to Purchaser a bond in such reasonable sum as
Purchaser may direct as indemnity against any claim that may be made
against the Exchange Agent, Purchaser or the Surviving Corporation with
respect to the Certificate alleged to have been lost, mislaid, stolen or
destroyed.
(d) After the Effective Date, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of BBI
Stock that were outstanding immediately prior to the Effective Date. If,
after the Effective Date, Certificates are presented to the Surviving
Corporation for transfer, they shall be canceled and exchanged for the
consideration described in this Article 2.
(e) Any portion of the Exchange Fund that remains unclaimed by the
Stockholders for six months after the Effective Date shall be returned to
Purchaser, upon demand, and any holder of BBI Stock who has not theretofore
complied with Section 2.3(b) shall thereafter look only to Purchaser for
issuance of the number of shares of Purchaser Stock and other consideration
to which such holder has become entitled pursuant to this Article 2;
provided, however, that neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares of BBI Stock for any amount required
to be paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
2.4 ADJUSTMENTS.
(a) If, between the date of this Agreement and the Effective Date,
(i) the outstanding shares of BBI Stock shall have been changed into a
different number of shares or a different class by reason of any
classification, recapitalization, split-up, combination, exchange of
shares, or readjustment or a stock dividend thereon shall be declared with
a record date within such period or (ii) BBI shall have issued additional
shares of BBI Stock (other than upon the exercise of employee stock options
granted prior to the date hereof) or options or warrants to purchase the
same, or securities convertible into the same, the Closing Price and the
Contingent Price to be delivered pursuant to the Merger shall be adjusted
so
Agreement and Plan of Merger
November 6, 1996
Page 9
that the Stockholders will receive the same consideration for their
Shares as they would have received immediately prior to such transaction.
(b) If, between the first date used for determining the Purchaser
Stock Value in accordance with this Agreement and the date a Stockholder
receives the Contingent Price for his Merger Shares, Purchaser shall (i)
pay a dividend in or make a distribution of shares of Purchaser Stock, (ii)
subdivide its outstanding shares of Purchaser Stock, (iii) combine its
outstanding shares of Purchaser Stock into a smaller number of shares of
Purchaser Stock, or (iv) issue any shares of its capital stock in a
reclassification of its Purchaser Stock (including any such
reclassification in connection with a consolidation or merger in which
Purchaser is the continuing corporation), the number of Payment Shares to
be delivered hereunder immediately prior thereto shall be adjusted so that
such Stockholder shall be entitled to receive the kind and number of shares
or other securities of Purchaser which such Stockholders would have owned
or would have been entitled to receive after the happening of any of the
events described above, had the Closing Price or the Contingent Price, as
applicable, been paid immediately prior to the happening of such event or
any record date with respect thereto.
(c) Any adjustment made pursuant to this Section 2.4 shall become
effective immediately after the effective date of the event necessitating
such adjustment retroactive to the record date, if any, for such event.
2.5 REGISTRATION RIGHTS. Purchaser hereby grants to the Stockholders the
registration rights set forth in Section 3 hereof, which apply to any shares of
Purchaser Stock delivered by Purchaser pursuant to Section 2.1 hereof.
3. REGISTRATION RIGHTS
3.1 DEMAND REGISTRATION RIGHTS. At any time that written demand is made
by the Stockholders who hold at least 20% in the aggregate of the Contingent
Shares, Purchaser (i) will promptly give written notice of the proposed
registration to all of the holders of Payment Shares, and (ii) will use its
reasonable best efforts to file a registration statement under the Securities
Act of 1933, as amended (the "Act") within 30 days of such request and to
effect, as promptly as possible, the registration under the Act of the Payment
Shares to be registered by the Stockholders, subject to the other provisions of
this Agreement, for disposition in an underwritten public offering managed by an
underwriting firm selected by Purchaser. Each person desiring to include his or
her Payment Shares in such a registration must so notify Purchaser in writing
within 30 days of the giving of notice of registration by Purchaser. If a
managing underwriter is participating in such a registration and advises the
Stockholders in writing that marketing factors require a limitation on the
number of Payment Shares to be included in any registration statement filed
pursuant to this Section 3.1, then such Payment Shares may be omitted from the
registration statement to the extent necessary to consummate the offering on
terms reasonably acceptable to the managing underwriter and a majority in
interest, based upon ownership of Payment Shares, of the Stockholders requesting
registration. If some, but not all, of the Payment Shares that the
Agreement and Plan of Merger
November 6, 1996
Page 10
Stockholders desire to sell exceeds the number of Payment Shares acceptable
by the managing underwriter, then the number of Payment Shares that may be
included in the registration and underwriting shall be allocated among all
such Stockholders in proportion, as nearly as practicable, to the respective
amounts of Payment Shares which they had requested to be included in such
registration at the time of filing the registration statement. Additionally,
if the managing underwriter advises Purchaser in writing that marketing
factors require that the registration of the Payment Shares be deferred, or
if the registration of the Payment Shares, if not deferred, would, in the
opinion of the Board of Directors of Purchaser, determined reasonably and in
good faith, materially and adversely affect an important business situation,
transaction or negotiation affecting Purchaser at the time, then Purchaser
may defer the filing of such registration statement for a period not
exceeding 120 days from the date of such deferral.
3.2 PIGGY BACK REGISTRATION RIGHTS. If at any time Purchaser shall
determine to register (including pursuant to a demand of any person exercising
its registration rights hereunder) any of its securities under the Act, other
than a Form S-8 or Form S-4 or the then equivalent forms, it shall promptly send
to each holder of Payment Shares written notice of such determination and, if
within 30 days after receipt of such notice, any holders of Payment Shares shall
request in writing, Purchaser shall use its reasonable best efforts to include
in such registration statement the Payment Shares so requested to be registered
on the same terms and conditions as any similar securities of Purchaser included
therein, and to effect, as promptly as possible, the registration of such
Payment Shares under the Act, subject, however, to the other provisions of this
Article 3. If a managing underwriter is participating in a registration
described in this Section 3.2 and advises Purchaser in writing that marketing
factors require a limitation on the number of Payment Shares to be included in
any registration statement filed pursuant to this Section 3.2, then such Payment
Shares may be omitted from the registration statement to the extent necessary to
consummate the offering on terms reasonably acceptable to Purchaser and the
managing underwriter, and Purchaser shall so advise the holders of Purchaser
Stock who requested registration; provided, that, Payment Shares requested to be
registered by the Stockholders (if any) shall be omitted or excluded from the
registration statement before any securities to be registered by Purchaser may
be so omitted or excluded. If some, but not all, of the Payment Shares that
the Stockholders desire to sell exceeds the number of Payment Shares acceptable
by the managing underwriter, then the number of Payment Shares that may be
included in the registration and underwriting shall be allocated among all such
Stockholders in proportion, as nearly as practicable, to the respective amounts
of Payment Shares which they had requested to be included in such registration
at the time of filing the registration statement.
3.3 FURTHER OBLIGATIONS OF PURCHASER. If and whenever Purchaser is
required by the provisions of this Article 3 to use its reasonable best efforts
to effect the registration of Payment Shares under the Act, Purchaser will:
(a) prepare and file with the United States Securities and Exchange
Commission (the "SEC") the appropriate registration statement with respect
to such securities and use its reasonable best efforts to cause such
registration statement to become and remain effective for 90 days or until
the intended distribution is completed, whichever first occurs;
Agreement and Plan of Merger
November 6, 1996
Page 11
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for 90
days or until the intended distribution is completed, whichever first
occurs, and to comply with the requirements of the Act and the rules and
regulations promulgated by the SEC thereunder relating to the sale or other
disposition of the securities covered by such registration statement;
(c) furnish to the holders of Payment Shares covered by the
registration statement copies of a prospectus, including a preliminary
prospectus, complying with the requirements of the Act and such other
documents as such holders may reasonably request in order to facilitate the
public sale or other disposition of the Payment Shares covered by such
registration statement;
(d) use its reasonable best efforts to register or qualify the
Payment Shares covered by such registration statement under such securities
or blue sky laws as a majority of the Appointed Representatives involved in
the offering or, in the case of an underwritten offering, the managing
underwriter for the offering, designates; provided, however, that Purchaser
shall not be required to qualify as a foreign corporation in any such
jurisdiction or be required to execute a consent to submit generally to the
jurisdiction of the courts of such jurisdiction or to escrow any of its
securities;
(e) supply the Appointed Representatives or, in the case of an
underwritten offering, the managing underwriter with copies of all
correspondence and communications between Purchaser and the SEC relating to
all registration statements, notifications or offering circulars provided
for hereunder;
(f) endeavor to cause Purchaser's counsel and accountants to furnish
the Appointed Representatives or, in the case of an underwritten offering,
the managing underwriter with such documents, opinions and confirmations as
may be called for by the managing underwriter and which are in the usual
form incident to and as are normally required in an underwritten offering;
and any such opinions as to the Payment Shares or any accountant's comfort
letters shall be also addressed to the Stockholders; and
(g) do any and all such other acts and things as may reasonably,
without material additional cost, be necessary or advisable to enable
holders of Payment Shares to consummate the public sale or other
disposition of their Payment Shares in such jurisdictions as are covered by
the registration statement.
3.4 EXEMPTION FROM REGISTRATION. Notwithstanding anything contained in
this Article 3, Purchaser shall not be required by this Article 3 to register
any Payment Shares under the Act or under any state securities law if, according
to a written opinion of counsel for Purchaser, a copy of which shall be provided
to each holder of the Payment Shares, the proposed public sale or transfer of
the Payment Shares as to which registration is requested is exempt from the
Agreement and Plan of Merger
November 6, 1996
Page 12
registration provisions of the Act and the securities laws of the states in
which the Payment Shares are to be sold or transferred.
3.5 INDEMNIFICATION. The parties hereto further agree that they shall
have the following respective indemnification obligations:
(a) Each person having their Payment Shares registered under this
Article 3 (the "Registering Stockholders") shall indemnify and hold
harmless Purchaser and its officers, directors, and each person (if any)
who controls Purchaser within the meaning of Section 15 of the Act or
Section 20 of the United States Securities Exchange Act of 1934, as
amended, against any losses, claims, damages or liabilities to which such
persons may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which the Payment Shares are
registered under the Act, or in any preliminary prospectus, final
prospectus, or amendment or supplement to any of the foregoing, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission is based upon information furnished by such Registering
Stockholder to Purchaser in writing in connection with the preparation and
filing of the registration statement and specifically stating that it is
being produced in connection with the preparation thereof. The
indemnification obligations of each Registering Stockholder under this
Section 3.6 shall be limited to the proceeds of the Payment Shares sold in
such offering by such Registering Stockholder.
(b) Purchaser shall indemnify and hold harmless each Registering
Stockholder against any losses, claims, damages or liabilities to which
such holders may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which the Purchaser Stock is
registered under the Act, or in any preliminary prospectus, final
prospectus, or amendment or supplement to any of the foregoing, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made, except to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission is based upon information
furnished by such Registering Stockholder to Purchaser in connection with
the preparation and filing of the registration statement.
(c) The indemnifying party will pay any legal or other expenses
reasonably incurred by any indemnified party in connection with
investigating or defending any such
Agreement and Plan of Merger
November 6, 1996
Page 13
loss, claim, damage, liability or action incurred by the indemnified
party as a result of the misinformation furnished by the other party.
(d) Any person entitled to indemnification herein will (i) give
prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party pursuant to this Agreement
with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim.
(e) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and will survive the transfer of
securities. Purchaser also agrees to make such provisions as are
reasonably requested by any indemnified party for contribution to such
party in the event Purchaser's indemnification is unavailable for any
reason.
3.6 PAYMENT OF EXPENSES. All costs and expenses in connection with any
registration statement prepared and filed in accordance with this Article 3,
including (but not limited to) federal and state registration and filing fees,
printing expenses, and the fees and disbursements of counsel and independent
accountants and other experts of Purchaser, shall be borne by Purchaser;
provided, however, that Purchaser shall not be obligated to pay the fees and
disbursements of counsel of any Shareholder or any underwriting commissions or
discounts relating to any Payment Shares.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Purchaser, severally and
not jointly, that as to such Stockholder:
4.1 DUE AUTHORIZATION; EXECUTION AND DELIVERY. Such Stockholder has full
power and authority to enter into and perform this Agreement and to carry out
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as may be limited by the
availability of equitable remedies or by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
Agreement and Plan of Merger
November 6, 1996
Page 14
4.2 GOVERNMENTAL CONSENTS. No approval, authorization, consent, order or
other action of, or filing with, any governmental authority or administrative
agency is required in connection with the execution and delivery by such
Stockholder of this Agreement or the consummation of the transactions
contemplated hereby. No approval, authorization or consent of any other third
party is required in connection with the execution and delivery by such
Stockholder of this Agreement and the consummation of the transactions
contemplated hereby.
4.3 SHARES. As of the Closing, such Stockholder shall be the lawful, sole
and beneficial owner of the Merger Shares owned by such Stockholder, as
reflected on Exhibit A hereto, free and clear of all liens, claims and
encumbrances of every kind.
4.4 FINDERS AND BROKERS. No person has as a result of any agreement or
action of the Stockholders any valid claim against any of the parties hereto for
a brokerage commission, finder's fee or other like payment.
4.5 INVESTMENT REPRESENTATIONS AND WARRANTIES. Each Stockholder hereby
represents and warrants that:
(a) He has such knowledge and experience in business and financial matters
as to be capable of evaluating the merits and risks to him of an
investment in the Payment Shares;
(b) Prior to executing this Agreement, he has had access to information
regarding the financial condition and business of Purchaser;
(c) He is receiving the Payment Shares for his own account for investment
and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Act; and
(d) He understands that he cannot offer for sale, sell or otherwise
dispose of his Payment Shares unless such Payment Shares have been
registered under the Act and any applicable state securities laws, or
unless an exemption from such registration is available with respect
to any such proposed offer, sale or disposition, and he understands
that the certificates evidencing such Payment Shares will have
restrictive legends thereon describing such restrictions on
disposition.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Stockholders as follows:
5.1 ORGANIZATION AND GOOD STANDING. Each of Purchaser and Acquisition is
a corporation duly organized, validly existing and in good standing under the
laws of the State of
Agreement and Plan of Merger
November 6, 1996
Page 15
Delaware and has all requisite corporate power and authority to own and lease
its properties and carry on its business as currently conducted.
5.2 DUE AUTHORIZATION. Each of Purchaser and Acquisition has full
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Purchaser and
Acquisition. This Agreement has been duly executed and delivered by Purchaser
and Acquisition and constitutes the legal, valid and binding obligation of each
of them, enforceable against them in accordance with its respective terms,
except as may be limited by the availability of equitable remedies or by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally.
5.3 EXECUTION AND DELIVERY. The execution and delivery by Purchaser and
Acquisition of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) conflict with or result in a breach of the
certificate of incorporation or bylaws of Purchaser or Acquisition, (ii) violate
any law, statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental authority, or (iii) as of the Closing, violate or
conflict with or constitute a default under (or give rise to any right of
termination, cancellation or acceleration under) any indenture, mortgage, lease,
contract or other instrument to which either Purchaser or Acquisition is a party
or by which it is bound or affected.
5.4 PAYMENT SHARES. On the date of their respective issuances, all of the
Payment Shares shall be duly authorized and validly issued and fully paid and
nonassessable, and all required regulatory approvals pertaining to the Offering
shall have been obtained. The Payment Shares shall be transferred to the
Stockholders free and clear of any lien, privilege, pledge, option or other
encumbrance.
5.5 FINDERS AND BROKERS. No person has as a result of any agreement or
action of the Purchaser any valid claim against any of the parties hereto for a
brokerage commission, finder's fee or other like payment.
6. CERTAIN COVENANTS AND AGREEMENTS
6.1 BEST EFFORTS. Each of the Stockholders, the Company, Acquisition and
Purchaser shall take all reasonable action necessary to consummate the
transactions contemplated by this Agreement and will use all necessary and
reasonable means at their disposal to obtain all necessary consents and
approvals of other persons and governmental authorities required to enable it to
consummate the transactions contemplated by this Agreement. Each party shall
make all filings, applications, statements and reports to all governmental
agencies or entities which are required to be made prior to the Closing Date by
or on its behalf pursuant to any statute, rule or regulation in order to
consummate the transactions contemplated by this Agreement, and copies of all
such filings, applications, statements and reports shall be provided to the
other.
Agreement and Plan of Merger
November 6, 1996
Page 16
6.2 FINANCIAL INFORMATION. Purchaser hereby agrees that it shall provide
any of the Stockholders who have not previously received the Contingent Price
for their Merger Shares with the following:
(a) Unless an Appointed Representative for a Stockholder requests
otherwise, Purchaser shall, within 90 days following the end of each of the
twelve-month periods ending on December 31, 1997, December 31, 1998,
December 31, 1999 and December 31, 2000, respectively (each such twelve-
month period being referred to herein as a "Determination Period"), furnish
to the Stockholders an audited balance sheet of Acquisition as of the close
of such Determination Period and audited statements of income and cash flow
of Acquisition for each Determination Period then ended, including
footnotes, prepared in accordance with generally accepted accounting
principles, consistently applied. Purchaser shall bear the costs of such
audits. In addition, Purchaser shall cause to be furnished to the
Appointed Representatives a balance sheet, statement of income and
statement of cash flow of Acquisition for each fiscal quarter of
Acquisition, beginning with the quarter ending June 30, 1998, up to and
through the date a Contingent Price Notice is delivered to Purchaser and,
if requested by the Appointed Representatives, for each month beginning
with the month ending June 30, 1998, up to and through the date a
Contingent Price Notice is delivered to Purchaser. All such quarterly and
monthly financial statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied (except that such
financial statements shall not include footnotes).
(b) Concurrently with the delivery of audited financial statements in
accordance with paragraph (a) above, Purchaser shall provide a calculation,
certified by Purchaser's independent auditors, of Acquisition's "Adjusted
Net Earnings," "Outstanding Debt," "EBITDA" and "Free Cash Flows" (as each
is defined in EXHIBIT C hereto) for the relevant Determination Period.
Concurrently with the delivery of other, unaudited financial statements in
accordance with paragraph (a) above, Purchaser shall provide the
information necessary to make a calculation of Acquisition's "Adjusted Net
Earnings", "Outstanding Debt", "EBITDA" and "Free Cash Flow" for the
relevant period.
(c) If at any time Purchaser or one of its affiliates, on the one
hand, or the Stockholders, on the other, engages an appraiser to determine
the fair market value of Acquisition, then, subject to the terms of any
applicable confidentiality agreements, the party requesting such appraisal
shall provide the results of such appraisal to the other parties hereunder.
(d) Each of the Stockholders acknowledges that the information and
financial data that shall be provided to them in accordance with this
Section 6.2 is confidential, and they hereby covenant and agree to keep
such information confidential and not to disclose its contents to any
other person, except as required by law or a court order.
Agreement and Plan of Merger
November 6, 1996
Page 17
6.3 SUCCESSORS AND ASSIGNS; SUBSEQUENT SALES OF ACQUISITION.
(a) In the event that Purchaser or any of its successors or assigns
(i) consolidates or merges with or into any other person and shall not be
the continuing or surviving corporation, receiving association or entity of
such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and
assigns of Purchaser assume all of the obligations of Purchaser set forth
herein; provided, that if the corporation issuing stock on behalf of the
person who survives such consolidation or merger or acquires such
properties and assets is not a corporation whose common stock is publicly
traded on a national security exchange or the NMS, then such person shall
pay the Contingent Price in cash. This subparagraph (a) shall similarly
apply to successive consolidations, mergers, sales or transfers.
(b) In the event that Purchaser or any of its successors or assigns
(i) transfers more than a majority of the voting power or control over
Acquisition or (ii) permits the transfer or conveyance of all or
substantially all of Acquisition's properties and assets to any person,
then, prior to Purchaser consummating such transfer, Purchaser shall cause
the acquiring person to execute and deliver an agreement to the Appointed
Representatives providing that such person agrees to maintain Acquisitions
on a stand-alone basis for accounting purposes and to assume all of
Purchaser's obligations hereunder, including the obligations to provide all
the information that is necessary for purposes of calculating the
Contingent Price and to pay the Contingent Price, which shall be paid in
shares of common stock of such acquiring person or corporation of which
such acquiring person is a wholly owned subsidiary; provided, that if the
corporation issuing stock on behalf of such acquiring person is not a
corporation whose common stock is traded on a national security exchange or
the NMS, then the acquiring corporation shall pay the Contingent Price in
cash; provided further, that nothing herein shall relieve Purchaser of its
obligations hereunder.
6.4 EXERCISE OF OPTIONS. X.X. Xxxxxxxxxx and Xxxxxxx X. Xxx hereby agree
that, no later than the time of the Closing, they will exercise their options to
purchase the Option Shares.
7. CONDITIONS TO PURCHASER'S CLOSING
All obligations of Purchaser under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that Purchaser may, in its sole discretion, waive any or all of such
conditions in whole or in part:
7.1 REPRESENTATIONS, ETC. The Stockholders shall have performed in all
material respects the covenants and agreements contained in this Agreement that
are to be performed by each of them at or prior to the Closing, and the
representations and warranties of the Stockholders contained in this Agreement
shall be true and correct as of the Closing Date with the same effect as though
made at such time (except as contemplated or permitted by this Agreement).
Agreement and Plan of Merger
November 6, 1996
Page 18
7.2 CONSENTS. As of the Closing, all consents and approvals of
governmental agencies, and from any other third parties required to consummate
the transactions contemplated by this Agreement, shall have been obtained
without material cost or other materially adverse consequence to Purchaser and
shall be in full force and effect.
7.3 NO ADVERSE LITIGATION. As of the Closing, no order or preliminary or
permanent injunction shall have been entered and no action, suit or other legal
or administrative proceeding by any court or governmental authority, agency or
other person shall be pending or threatened on the Closing Date which may have
the effect of (i) making any of the transactions contemplated hereby illegal, or
(ii) making Purchaser or the Company, or any director or controlling person
thereof, liable for the payment of a material amount of damages to any person.
7.4 CLOSING DELIVERIES. Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 9.1
hereof.
7.5 OFFERING. Purchaser shall have consummated the Offering; provided
that Purchaser is not in any way obligated to consummate the Offering.
7.6 STOCK OPTIONS. All options for shares of BBI Stock then outstanding
shall have been exercised.
8. CONDITIONS TO THE STOCKHOLDERS' CLOSING
All obligations of the Stockholders under this Agreement shall be subject
to the fulfillment at or prior to the Closing of the following conditions, it
being understood that the Stockholders may, in their sole discretion, waive any
or all of such conditions in whole or in part:
8.1 REPRESENTATIONS, ETC. Purchaser shall have performed in all material
respects the covenants and agreements contained in this Agreement that are to be
performed by Purchaser or the Company at or prior to the Closing, and the
representations and warranties of Purchaser or the Company contained in this
Agreement shall be true and correct as of the Closing Date with the same effect
as though made at such time (except as contemplated or permitted by this
Agreement).
8.2 NO ADVERSE LITIGATION. As of the Closing, no order or preliminary or
permanent injunction shall have been entered and no action, suit or other legal
or administrative proceeding by any court or governmental authority, agency or
other person shall be pending or threatened on the Closing Date which may have
the effect of (i) making any of the transactions contemplated hereby illegal or
(ii) making the Stockholders liable for the payment of a material amount of
damages to any person.
8.3 CLOSING DELIVERIES. The Stockholders shall have received each of the
documents or items required to be delivered to them pursuant to Section 9.2
hereof.
Agreement and Plan of Merger
November 6, 1996
Page 19
8.4 OFFERING. Purchaser shall have consummated the Offering; provided
that Purchaser is not in any way obligated to consummate the Offering.
9. DOCUMENTS TO BE DELIVERED AT CLOSING
9.1 TO PURCHASER. At the Closing, there shall be delivered to Purchaser:
(a) a copy of all consents and approvals referred to in Section 7.2
hereof; and
(b) all other items reasonably requested by Purchaser.
(c) an opinion of counsel to Purchaser as to the treatment of the
merger as a tax-free reorganization under the Code.
9.2 TO THE STOCKHOLDERS. At the Closing, there shall be delivered to the
Stockholders:
(a) a certificate, signed by the President of Purchaser, as to the
fulfillment of the conditions set forth in Sections 8.1 and 8.2 hereof;
(b) all other items reasonably requested by the Stockholders;
(c) an opinion of counsel to Purchaser deliverable to the
Stockholders as to the treatment of the Merger as a tax-free reorganization
under the Code; and
(d) an opinion of counsel to Purchaser as to the enforceability of
this Agreement and the due authorization and valid issuance of the
Purchaser Stock.
10. SURVIVAL
All representations, warranties, covenants and agreements made by any party
to this Agreement or pursuant hereto shall be deemed to be material and to have
been relied upon by the parties hereto and shall survive the Closing. The
representations and warranties hereunder shall not be affected or diminished by
any investigation at any time by or on behalf of the party for whose benefit
such representations and warranties were made. All statements contained herein
or in any certificate, exhibit, list or other document delivered pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties.
11. FAILURE TO CLOSE BECAUSE OF DEFAULT
In the event that the Closing is not consummated by virtue of a material
default made by a party in the observance or in the due and timely performance
of any of its covenants or agreements herein contained ("Default"), the parties
shall have and retain all of the rights afforded them at law or in equity by
reason of that Default. In addition, the Stockholders and Purchaser acknowledge
that the Merger Shares and the transactions contemplated hereby are unique, that
a
Agreement and Plan of Merger
November 6, 1996
Page 20
failure by the Stockholders or Purchaser to complete such transactions will
cause irreparable injury to the other, and that actual damages for any such
failure may be difficult to ascertain and may be inadequate. Consequently,
Purchaser and the Stockholders agree that each shall be entitled, in the
event of a Default by the other, to specific performance of any of the
provisions of this Agreement in addition to any other legal or equitable
remedies to which the non-defaulting party may otherwise be entitled. In the
event any action is brought, the prevailing party shall be entitled to
recover court costs, arbitration expenses and reasonable attorneys' fees.
12. TERMINATION RIGHTS
This Agreement may be terminated by either Purchaser or any of the
Stockholders, if either such party is not then in Default, upon written notice
to the other upon the occurrence of any of the following:
(a) if the Closing has not occurred on or before December 30, 1996;
(b) if any party hereto Defaults and such Default has not been cured
within 30 days of written notice of such Default by another party;
(c) subject to the provisions of Sections 7 and 8 hereof, by any
party hereto if on the Closing Date any of the conditions precedent to the
obligations of Stockholders or Purchaser, respectively, set forth in this
Agreement have not been satisfied or waived by such party; or
(d) by mutual consent of the Stockholders and Purchaser.
13. MISCELLANEOUS PROVISIONS
13.1 EXPENSES. The Purchaser shall pay the fees and expenses incurred by
it, the Company and Acquisition in connection with the transactions contemplated
by this Agreement and shall also pay the first $7,500 in legal fees incurred by
the Stockholders pursuant to the negotiation of this Agreement. If any action
is brought for breach of this Agreement or to enforce any provision of this
Agreement, the prevailing party shall be entitled to recover court costs,
arbitration expenses and reasonable attorneys' fees.
13.2 AMENDMENT. This Agreement may be amended at any time but only by an
instrument in writing signed by the parties hereto.
13.3 NOTICES. All notices and other communications delivered hereunder
shall be in writing and shall be deemed given if delivered personally or upon
actual receipt if mailed by certified mail, return receipt requested, or
delivered by nationally recognized "next-day" delivery service to the
Stockholders at their respective addresses appearing on EXHIBIT A hereto or, if
to the other parties hereto, at the appropriate addresses set forth below:
Agreement and Plan of Merger
November 6, 1996
Page 21
If to the Appointed Representatives:
Xxxxx Corporation
Eight Sound Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxx X. Xxxxxxx, Xx.
Columbia Capital Corp.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
X.X. Xxxxxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxx X. Xxx
000 Xxxx Xxxxx Xxxxxx
Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Purchaser, Acquisition or the Company:
Spinnaker Industries, Inc.
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxxx, III
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Agreement and Plan of Merger
November 6, 1996
Page 22
with a copy to:
Xxxxx Corporation
Eight Sound Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and to:
Xxxxxx & Xxxxxxx, L.L.P.
000 X. Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or such other address or addresses as any party shall have designated by notice
to each other party in accordance with this Section 13.3.
13.4 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of a majority of Stockholders Representatives and
Purchaser; provided, that any Stockholder may transfer, sell or assign his
rights hereunder to another Stockholder or to any member of his immediate
family, whether by inter vivos or testamentary transfer; provided, that any
assignee of one or more Stockholders' rights hereunder shall be bound by the
terms and provisions of this Agreement as to the exercise of such rights,
including the method of calculation and receipt of the Payment Shares.
Purchaser or Xxxxx may assign its rights under this Agreement to any of its
subsidiaries or affiliated corporations, or to any of its successors pursuant to
Section 6.3 hereof.
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 HEADINGS. The headings of the Sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof.
13.7 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
contain the entire understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties,
conveyances or undertaking other than those expressly set forth herein. This
Agreement supersedes any prior agreements and understandings between the parties
with respect to the subject matter.
Agreement and Plan of Merger
November 6, 1996
Page 23
13.8 WAIVER. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
13.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
13.10 SEVERABILITY. The event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had not been contained herein.
13.11 INTENDED BENEFICIARIES. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such entities as set forth herein and
shall not benefit, and do not benefit, any unrelated third parties, except for
permitted assigns under Sections 6.3 and 13.4 hereof.
13.12 MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision
of this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted or the provision contains
a covenant of such party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SPINNAKER INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx, Chief Executive Officer
BB MERGER CORP.
By: /s/ Xxx X. Xxxxxxx, III
----------------------------------------
Xxx X. Xxxxxxx, III
XXXXX-BRIDGE INDUSTRIES, INC.
By: /s/ X. X. Xxxxxxxxxx
----------------------------------------
K.C. Caldabauth
Agreement and Plan of Merger
November 6, 1996
Page 24
STOCKHOLDERS:
Xxxxx Corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Chief Financial Officer
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxx X. Xxxxxxx
----------------------------------------
Xxx X. Xxxxxxx
/s/ Lane X. Xxxxxxx
----------------------------------------
Lane X. Xxxxxxx
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx
Xxxxxx Group Partners, L.P.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxx
----------------------------------------
Xxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxx, Xx.
----------------------------------------
Xxxxx X. Xxxxxxx, Xx.
Agreement and Plan of Merger
November 6, 1996
Page 25
/s/ Xxxxx Xxxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ X.X. Xxxxxxxxxx
----------------------------------------
X.X. Xxxxxxxxxx
/s/ Xxxxxx Xxxxxx
----------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
----------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxx
----------------------------------------
Xxxxxxx X. Xxx
/s/ Xxxxxxxxxxx X. Beige
----------------------------------------
Xxxxxxxxxxx X. Beige
/s/ Xxxxxx X. Xxxxx, III
----------------------------------------
Xxxxxx X. Xxxxx, III
/s/ Xxxxxx Xxxxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxxx
Agreement and Plan of Merger
November 6, 1996
Page 26
EXHIBIT A
NAME ADDRESS SHARES
---- ------- ------
Xxxxx Corporation 0 Xxxxx Xxxxx Xxxxx, Xxxxx 000 61,621
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx 0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000 10,000
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx One Galleria Tower, Suite 1100 10,000
00000 Xxxx Xxxx
Xxxxxx, XX 00000
Xxx X. Xxxxxxx 000 X. Xxxxx Xxxxxx, Xxxxx 0000 7,500
Xxxxxx, XX 00000
Lane X. Xxxxxxx 000 X. Xxxxx Xxxxxx, Xxxxx 0000 2,500
Xxxxxx, XX 00000
Xxxx Xxxxxxxx 000 X. Xxxxx Xxxxxx, Xxxxx 0000 3,030
Xxxxxx, XX 00000
Xxxxxx Group Partners Xxx Xxxxxxxx Xxxxx, Xxxxx 0000 17,606
00000 Xxxx Xxxx
Xxxxxx, XX 00000
Xxxx Xxxxxx 0000 Xxxxxx xx xxx Xxxxx 000
Xxx Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxx, Xx. 000 X. Xxxxx Xxxxxx, Xxxxx 000 7,576
Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxxxxx 0000 Xxxxxxxxx Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx 000 X. Xxxxxxx, Xxxxx 0000 0,000
Xxxxxx, XX 00000
X.X. Xxxxxxxxxx 000 X. Xxxxx Xxxxxx 00,000
Xxxx, XX 00000
Xxxxxx Xxxxxx 000 X. Xxxxx Xxxxxx 000
Xxxx, XX 00000
Xxxxxx Xxxxxx 000 X. Xxxxx Xxxxxx 0,000
Xxxx, XX 00000
Xxxxxxx X. Xxx 000 X. Xxxxx Xxxxxx 38,792
Xxxx, XX 00000
Xxxxxxxxxxx X. Beige 000 X. Xxxxx Xxxxxx 5,000
Xxxx, XX 00000
Xxxxxx X. Xxxxx, III 000 X. Xxxxx Xxxxxx 0,000
Xxxx, XX 00000
Xxxxxx Xxxxxxxxxx 000 X. Xxxxx Xxxxxx 0,000
Xxxx, XX 00000
EXHIBIT B
The following is an example of the calculation of the Contingent Price:
(i) Fair Market Value X 265,386 shares of BBI Stock/1,066,386 shares of BBI
Stock = BBI Minority Interest Value
(ii) (BBI Minority Interest Value - $2,189,434.50) DIVIDED BY Purchaser Stock
Value = gross shares of Purchaser Stock
(iii) gross shares of Purchaser Stock - 12,510 Closing Shares = net shares
of Purchaser Stock
(iv) net shares of Purchaser Stock DIVIDED BY 265,386 Merger Shares = shares
of Purchaser Stock/1 Merger Share
EXHIBIT C
The following financial and certain accounting guidelines shall be used by
Purchaser and the FMV Representative, or any Independent Investment Bank chosen
by them or on their behalf, in determining the Fair Market Value of Acquisition,
as a stand alone public entity, pursuant to Section 2.1 of the Agreement. Market
valuation factors considered shall include, but not necessarily be limited to,
comparable multiples of EBITDA and Adjusted Net Earnings (as defined herein).
In determining the Fair Market Value of Acquisition neither party nor any
Independent Investment Banker selected pursuant to Section 2.1(a)(1) of this
Agreement shall take into account, or apply, any discount in value as a result
of the equity of Acquisition being illiquid or as a result of the Contingent
Rights representing a minority interest.
DEFINITIONS
"Adjusted Net Earnings" of Acquisition shall be equal to the amount
reported as "Net Earnings" on the audited (or unaudited) Statement of Earnings
for each twelve months then ended on the Valuation Date (as defined herein),
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied, except that Adjusted Net Earnings shall not be reduced by
any of the following:
a. any management and consulting fees ("Management Fees") incurred
by Purchaser, or payable by Acquisition to Purchaser, Xxxxx, Xxxxxxx &
Co., Xxxxxx Group, Inc. or any one or more of their affiliates, which in
the aggregate exceed 0.25% of Acquisition's net sales, as reported on the
audited financial statements; provided that such limitation shall only
apply for purposes of determining Fair Market Value and shall not limit the
amount of Management Fees that may, in fact, be paid to Purchaser by
Acqusition;
b. charges to earnings, if any, relating to Acquisition's issuance
or repurchase of any equity or debt security or any security convertible
into, exercisable for or exchangeable for any equity security to or from
any person, including, without limitation, any charges to earnings, if any,
required as a result of the transactions contemplated by this Agreement;
c. expenses incurred by either Acquisition or Purchaser related to
the issuance of debt or equity securities, or the refinancing of debt owed
by Acquisition to Transamerica Business Credit Corporation ("Transamerica")
under that certain Loan and Security Agreement between Acquisition and
Transamerica dated September 16, 1994, as amended (the "Transamerica
Agreement");
d. other expenses allocated to, or incurred on behalf of Acquisition
by, Purchaser or its affiliates; and
Exhibit C to Agreement and Plan of Merger
Page 1
e. interest expense related to all obligations of Acquisition to the
extent such expense exceeds that which would have been payable on the
Outstanding Debt (as defined herein), calculated each month end, beginning
with January 1996, using an annual interest rate equal to 1.25% over the
Prime Rate at the end of such month (as published in the Wall Street
Journal); however, interest expense related to borrowings from Purchaser,
which are in excess of Acquisition's total availability under the
Transamerica Agreement, shall be included in the computation of Adjusted
Net Earnings and shall bear interest at the weighted average cost of
capital of Purchaser, as agreed to by FMV Representative and Purchaser, or
if they are unable to mutually agree, then as determined by a mutually
agreed upon Independent Investment Bank.
"EBITDA" shall mean for any period the Adjusted Net Earnings of
Acquisition, as calculated in Section B above with respect to such period, and
as such amount is further adjusted by adding back the following expenses, all as
computed under GAAP throughout such period:
a. the provision for interest expense and income tax expense, each
for the same said period, but only to the extent that such expense was
included in Adjusted Net Earnings for such period;
b. depreciation and amortization expense for such period, but only
to the extent that such expense was included in Adjusted Net Earnings for
such period;
c. franchise taxes for such period, but only to the extent that such
expense was included in Adjusted Net Earnings for such period; and
d. Management Fees expensed for such period, but only to the extent
that such expense was included in Adjusted Net Earnings for such period.
"Outstanding Debt" of Acquisition on the Valuation Date shall be deemed to
be equal to, (i) $19,337,000, representing the total amount owed as of December
31, 1995 to Transamerica, less (ii) Free Cash Flow (as defined below) of
Acquisition for the period January 1, 1996 through the Valuation Date, plus
(iii) total capital lease obligations of Acquisition as of the Valuation Date.
"Free Cash Flow," as used herein, shall be equal to (i) "Cash Flows From
Operating Activities," as defined under GAAP, except that such amount shall be
adjusted (A) to include only the interest expense that would have been payable
on the Outstanding Debt, calculated each month-end for the previous month
beginning with January 1996, using an annual interest rate equal to 1.25% over
the Prime Rate (as published in the Southwest Edition of the Wall Street
Journal), and (B) to exclude cash paid or assets transferred in satisfaction of
expenses excluded from the computation of Net Earnings above; less (ii) "Cash
Flows From Investing Activities," as defined under GAAP.
In addition to the above, the fair market value of Acquisition shall be:
Exhibit C to Agreement and Plan of Merger
Page 2
a. decreased by all amounts owed by Acquisition to Purchaser or its
affiliates for income taxes and Management Fees as of the Valuation Date,
but only to the extent that Management Fees do not exceed 0.25% of
Acquisition's net sales per year;
b. increased by the full undiscounted balance of all amounts owed by
Purchaser or its affiliates to Acquisition as of the Valuation Date; and
c. if there is no Outstanding Debt on the Valuation Date, increased
by the book value of cash and marketable securities held by Acquisition on
such Valuation Date.
"Valuation Date," shall mean the date a Contingent Price Notice is
delivered to Purchaser.
100322.010/ LMH
