EXHIBIT 2
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
DATED AS OF
SEPTEMBER 29, 1999
AMONG
PARAGON CORPORATE HOLDINGS INC.,
MULTI ACQUISITION CORP.
AND
MULTIGRAPHICS, INC.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of
September 29, 1999 among Multigraphics, Inc., a Delaware corporation (the
"COMPANY"), Paragon Corporate Holdings Inc., a Delaware corporation or its
designated affiliate ("BUYER"), and Multi Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Buyer (the "MERGER SUBSIDIARY").
The parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. On and subject to the terms and
conditions of this Agreement and in accordance with Delaware Law, the Merger
Subsidiary will merge with and into the Company (the "MERGER") at the Effective
Time (as hereinafter defined). The Company shall be the corporation surviving
the Merger (the "SURVIVING CORPORATION").
Section 1.2 EFFECT OF THE MERGER.
(a) GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") the Secretary of State of the State of Delaware certifies
that the Certificate of Merger has been filed following ratification and
approval of the Merger by stockholders of the Company in accordance with the
Delaware General Corporation Law ("DELAWARE LAW"). The Merger shall have the
effect set forth in the Delaware Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and delivering
any document) in the name and on behalf of either the Company or the Merger
Subsidiary in order to carry out and effectuate the transactions contemplated by
this Agreement.
(b) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time, until amended in accordance with applicable law.
(c) BYLAWS. The Bylaws of the Surviving Corporation shall be
the Bylaws of the Company immediately prior to the Effective Time.
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(d) DIRECTORS AND OFFICERS. The directors and officers of the
Surviving Corporation as of the Effective Time shall be as set forth on EXHIBIT
A.
(e) CONVERSION OF COMMON STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the Buyer, the Merger
Subsidiary, the Company, or the holder of any of the following securities:
(i) each share (a "SHARE") of common stock of the
Company, $0.025 par value per share (the "COMMON STOCK"),
other than Common Stock owned of record by the Buyer or the
Merger Subsidiary, issued and outstanding immediately prior to
the Effective Time shall cease to be an issued and outstanding
Share of Common Stock and shall become and shall be converted
into a right to receive $1.25 per Share in cash, without
interest as provided in Section 1.3, subject to adjustment
pursuant to Section 1.5;
(ii) each option and warrant to purchase Common Stock
from the Company outstanding at the Effective Time ("COMPANY
OPTION") shall cease to be an issued and existing Company
Option and shall become and be converted into a right to
receive, upon demand and without regard to whether such
Company Options would then be exercisable at the Effective
Time in the absence of consummation of the Merger, an amount
of cash equal to the difference, if positive, between $1.25
per share issuable upon exercise less the applicable exercise
price per share of such Company Option multiplied by the
number of shares of Common Stock which the holder of such
Company Option would have received had such Company Option
been fully exercised on the Effective Date;
(iii) each treasury share and each Share of Common
Stock held of record by the Merger Subsidiary shall be
cancelled and retired and no portion of the Merger
Consideration shall be allocable thereto; and
(iv) each Share of Common Stock held of record by the
Buyer shall be cancelled and retired and no portion of the
Merger Consideration shall be allocable thereto.
The amounts to be paid pursuant to paragraphs (i) and (ii) above are referred to
herein as the "MERGER CONSIDERATION."
(f) CONVERSION OF CAPITAL STOCK OF THE MERGER SUBSIDIARY. At
and as of the Effective Time, each share of common stock, no par value per
share, of the Merger
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Subsidiary shall be converted into one share of common stock of the Surviving
Corporation.
(g) SHARES OF DISSENTING STOCKHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding Shares
held by a person (a "DISSENTING STOCKHOLDER") who objects to the Merger and
complies with all the provisions of Delaware Law concerning the right of holders
of Shares to dissent from the Merger and require appraisal of their Shares
("DISSENTING SHARES") shall not be converted as described in Section 1.2(e)(i),
but shall be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to the Delaware
Law. If, after the Effective Time, such Dissenting Stockholder withdraws his
demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to Delaware Law, his Shares shall be deemed to
be converted as of the Effective Time into the right to receive $1.25 per Share
as provided in Section 1.2(e)(i). The Company shall give Buyer (i) prompt notice
of any demands for appraisal of Shares 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 Buyer, make any payment with respect to, or settle, offer to settle
or otherwise negotiate, any such demands.
Section 1.3 PROCEDURE FOR PAYMENT.
(a) Prior to the Effective Time, Buyer shall appoint an agent
(the "PAYING AGENT") for the purpose of receiving certificates representing
Shares and paying the Merger Consideration. Buyer will make available to the
Paying Agent, in such amounts as may be needed from time to time, the Merger
Consideration to be paid in respect of the Shares. Promptly after the Effective
Time, Buyer will send, or will cause the Paying Agent to send, to each holder of
Shares at the Effective Time a letter of transmittal for use in such exchange
(which shall specify that the delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the certificates representing
Shares to the Paying Agent) and instructions for use in effecting the surrender
of certificate in exchange for the Merger Consideration.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Paying Agent
of a certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares, will be
entitled to receive the Merger Consideration payable in respect of such
Shares. From and after the Effective Time, all Shares which have been so
converted shall no longer be outstanding and shall automatically be canceled
and retired, and each such certificate shall, after the Effective Time,
represent for all purposes, only the right to receive such Merger
Consideration.
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(c) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Paying Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the Paying
Agent that such tax has been paid or is not payable. For purposes of this
Agreement, "PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) Promptly after the Effective Time, the Surviving
Corporation shall mail a confirmation of the Merger and an additional Letter of
Transmittal to each record holder of outstanding Common Stock or Company Options
who has not previously submitted a Letter of Transmittal.
Section 1.4 CLOSING OF TRANSFER RECORDS. At the Effective
Time, the stock transfer book of the Company shall be closed and no further
transfers of Common Stock shall be made on such stock transfer book or the stock
transfer book of the Surviving Corporation.
Section 1.5 EQUITABLE PRICE ADJUSTMENT. If there shall be any
option exercise, stock split, reverse stock split, stock dividend, merger or
similar reorganization, recapitalization, reclassification or other transaction
affecting generally the Common Stock of the Company, or any extraordinary or
stock dividend paid on or with respect to the capital stock of the Company, then
appropriate and equitable adjustments shall be made hereunder with respect to
the Merger Consideration so that the aggregate relative rights and obligations
of the parties hereto shall not be adversely affected by any such action.
Section 1.6 NECESSARY FURTHER ACTION. The Buyer, the Merger
Subsidiary, and the Company each shall use all reasonable efforts to take all
actions as may be necessary or appropriate in order to effectuate the Merger in
accordance with the terms hereof as promptly as possible. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges,
immunities and franchises of either or both of the Merger Subsidiary and the
Surviving Corporation, then the officers and directors of the Surviving
Corporation are fully authorized in the name of either or both of the Merger
Subsidiary and the Surviving Corporation to take all such actions.
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ARTICLE II
THE CLOSING
Section 2.1 THE CLOSING. The closing of the Merger (the
"CLOSING") shall take place at the offices of Squire, Xxxxxxx & Xxxxxxx L.L.P.,
Cleveland, Ohio, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the Merger or such other date, time or place as the
parties may mutually determine (the "CLOSING DATE"). The parties intend that the
Closing shall occur on or before December 31, 1999.
Section 2.2 ACTIONS AT THE CLOSING. At the Closing the Company
and the Merger Subsidiary shall deliver to the Secretary of State of the State
of Delaware a Certificate of Merger (the "CERTIFICATE OF MERGER") in accordance
with the Delaware Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Merger Subsidiary
and the Buyer as of the date hereof and as of the Effective Time as follows:
Section 3.1 AUTHORITY. The Company has all requisite corporate
power and authority, without the consent of any other Person, to execute and
deliver this Agreement and the agreements and instruments to be delivered,
subject to approval of the Merger by the requisite vote of the Company
stockholders, immediately prior to the Effective Time, and to carry out the
transactions contemplated hereby. All acts or proceedings required to be taken
by the Company to authorize the execution and delivery of this Agreement by the
Company and the performance by the Company in accordance with its obligations
under this Agreement have been duly and properly taken (other than, with respect
to the Merger, approval of the Merger by the requisite vote of the Company
stockholders). The action of the Board of Directors of the Company in approving
the Merger and this Agreement is sufficient to render the provisions of Section
203 of Delaware Law inapplicable to the Merger, this Agreement and the
transactions contemplated by this Agreement.
Section 3.2 VALIDITY. This Agreement has been duly executed
and delivered and (assuming the valid authorization, execution and delivery of
this
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Agreement by the Buyer and the Merger Subsidiary) constitutes a lawful, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally and
by general equitable principles. Except for the items listed on Schedule 3.2,
assuming all consents, approvals, authorizations and other actions described in
this Section 3.2 have been obtained and all filings and obligations described in
this Section 3.2 have been made, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not result in
the creation of any lien, charge or encumbrance of any kind or the acceleration
of any indebtedness or other obligation of the Company or any Subsidiary (as
defined in Section 3.4) and are not prohibited by, do not violate or conflict
with any provision of, and do not constitute a default under or a breach of (a)
the charter or by-laws of the Company or any Subsidiary, (b) any note, bond,
indenture, contract, agreement, permit, license or other instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their assets is bound, (c) any order, writ, injunction, decree or
judgment of any court or government agency, or (d) any law, rule or regulation
applicable to the Company or any Subsidiary other than, in the case of clauses
(b), (c) or (d), any such liens, charges, encumbrances, accelerations,
violations, conflicts, defaults or breaches that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Merger. No approval, authorization,
registration, consent, order or other action of or filing with any court,
administrative agency or other government authority, is required for the
execution and delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby or the performance by the
Company of its obligations hereunder, except for (i) in connection, or in
compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), and the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "EXCHANGE ACT"), (ii) the filing of a Certificate of Merger with
the Secretary of State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
other transactions contemplated by this Agreement, (iv) filings with and
approvals of the American Stock Exchange, Inc. and the Securities and Exchange
Commission ("SEC") with respect to the delisting and deregistration of the
Common Stock, and (v) such other approvals, authorizations, registrations,
consents, orders, or other actions and filings the failure of which to be
obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger.
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Section 3.3 DUE ORGANIZATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority and all requisite
rights, licenses, permits and franchises to own, lease and operate its assets
and to carry out the business in which it is engaged (the "BUSINESS"), except
where the failure to have such rights, franchises and permits would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company is duly licensed and qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the nature of
its business and the ownership, leasing or operation of its assets or the
conduct of its business requires such qualification, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the financial condition,
business, assets, results of operations, or future prospects of the Company and
the Subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company has
heretofore delivered to Buyer or its counsel true and complete copies of the
Company's Articles of Incorporation and bylaws as currently in effect.
Section 3.4 SUBSIDIARIES. Except for the entities set forth on
Schedule 3.4 (the "SUBSIDIARIES"), the Company does not own stock or have any
equity investment or other interest in, does not have the right or obligation to
acquire any such interest, and does not control, directly or indirectly, any
corporation, association, partnership, joint venture or other entity and has not
had such an ownership or control relationship with any such entity. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has full corporate
power and authority and all requisite rights, licenses, permits and franchises
to own, lease and operate its assets and to carry out the business in which it
is engaged, except where the failure to be so organized, validly existing or in
good standing or the failure to have such rights, franchises and permits would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Each Subsidiary is duly licensed and qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
nature of its business and the ownership, leasing or operation of its assets or
the conduct of its business requires such qualification except where the effect
of the failure to so qualify would not, individually or in the aggregate, have a
Material Adverse Effect. The authorized, issued and outstanding capital stock of
each Subsidiary is set forth on Schedule 3.4. The Company owns all of the issued
and outstanding capital stock or other equity of each Subsidiary and all such
outstanding shares are fully paid and nonassessable.
Section 3.5 CAPITALIZATION. The entire authorized capital
stock of the Company consists of 9,500,000 shares of Common Stock and 500,000
shares of preferred stock ("PREFERRED STOCK"). As of the date hereof, there are
(and as of the Closing Date, there shall be) 2,845,691 shares of Common Stock
issued and outstanding and no shares of the Company's Preferred Stock have been
issued. All of the issued and outstanding
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shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable, were not issued in violation of any preemptive, subscription or
other right of any person to acquire securities of the Company and constitute in
the aggregate all of the issued and outstanding capital stock of all classes of
the Company. Except as set forth in Schedule 3.5, there is no outstanding
subscription, option, convertible or exchangeable security, preemptive right,
warrant, call, agreement, arrangement or other right (other than this Agreement)
relating to the Company's capital stock or the capital stock of any Subsidiary
or other obligation or commitment of the Company or any Subsidiary to issue or
transfer any shares of capital stock to which the Company or any of its
Subsidiaries is a party or by which any of them is bound. There are no voting
trusts or other agreements, arrangements or understandings applicable to the
exercise of voting or any other rights with respect to the Company's capital
stock or the capital stock of any Subsidiary to which the Company or any of its
Subsidiaries is a party or by which any of them is bound. Except as set forth in
Schedule 3.5 hereto, there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company, the Common Stock or
the capital stock of any Subsidiary.
Section 3.6 TRANSACTIONS WITH AFFILIATES. Since July 31, 1998,
there has not been any dividend declared or paid or other distribution of assets
by the Company to its Stockholders or Affiliates except for intercompany
transactions among the Company and wholly-owned Subsidiaries. Except as set
forth in Schedule 3.6, no affiliate of the Company, directly or indirectly:
(a) owes any material debt to, or has any material equity or
other interest or investment in any corporation, association or other entity
which is a competitor, lessor, lessee, customer or supplier of the Company or
any Subsidiary;
(b) has asserted any cause of action or other claim whatsoever
against or owes any material amount to, or is owed any material amount by, the
Company or any Subsidiary (other than amounts due to be paid in the ordinary
course);
(c) has any material interest in or owns any property or right
used in any material respect in the conduct of the Business; or
(d) is a party to any contract, lease, agreement, arrangement
or commitment entered into with the Company or any Subsidiary or in connection
with the Business except as contemplated by this Agreement.
Section 3.7 FINANCIAL STATEMENTS; PUBLIC REPORTS
(a) The audited financial statements of the Company for the
fiscal years ended July 31, 1995, 1996, 1997 and 1998 and the unaudited
financial statements of
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the Company for the quarterly periods ending October 31, 1998 and January 31,
and April 30, 1999 set forth in Public Reports (as defined below) consisting of
the Company's Annual Reports on Form 10-K for those years (the "AUDITED
FINANCIAL STATEMENTS") and the Company's Quarterly Reports on Form 10-Q for
those quarterly periods (the "UNAUDITED FINANCIAL STATEMENTS") (a) comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, (b) fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of Unaudited Financial Statements, to the lack of
footnotes thereto, to normal year-end audit adjustments and to any other
adjustments described therein), and (c) were prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except as may be indicated in
the notes thereto or, in the case of the Unaudited Financial Statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis throughout the
periods indicated, except for changes made in response to FASB bulletins as
described in footnotes to the Audited Financial Statements. For purposes of this
Agreement, "BALANCE SHEET" means the consolidated balance sheet of the Company
as of April 30, 1999 set forth in Unaudited Financial Statements and "BALANCE
SHEET DATE" means April 30, 1999.
(b) The Company has made all filings with the SEC that it has
been required to make under the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the "Securities Act") and
the Exchange Act (collectively the "PUBLIC REPORTS"). Each of the Public Reports
at the time the same was filed with the SEC complied with the Securities Act and
the Exchange Act in all material respects. None of the Public Reports, as of
their respective dates, contained, and the Company Proxy Statement (as defined
in Section 3.8) will not contain or, omit, as applicable, any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. The Company has delivered to the Merger Subsidiary or its
counsel a correct and complete copy of each Public Report (together with all
material exhibits and schedules thereto and as amended to date) for the year
ended July 31, 1998 and the interim periods through the date hereof.
Section 3.8 DISCLOSURE DOCUMENTS.
(a) The proxy statement of the Company (the "COMPANY PROXY
STATEMENT") to be filed with the SEC in connection with the Merger, and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act.
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(b) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Company Proxy Statement based on
information supplied by Buyer or Merger Subsidiary specifically for inclusion or
incorporation by reference therein.
Section 3.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Schedule 3.9, since the Balance Sheet Date, the Company and Subsidiaries have
conducted their business in the ordinary course consistent with past practice
and there has not been:
(a) any event, occurrence or development or state of
circumstances or facts that has had or could reasonably be expected to have a
Material Adverse Effect;
(b) any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any creation or assumption by the Company or any
Subsidiary of any lien on any material asset other than in the ordinary course
of business consistent with past practices;
(f) any making of any loan, advance or capital contributions
to or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company or any
Subsidiary
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which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such change required
by reason of a concurrent change in generally accepted accounting principles or
in Regulation S-X promulgated under the Exchange Act;
(j) any tax election, other than those consistent with past
practice, not required by law or any settlement or compromise of any tax
liability in either case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, (ii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements, (iii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company or any
Subsidiary or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary, other than
any such increases payable to employees other than directors or officers in the
ordinary course of business consistent with past practice or as part of a
standard employment package to any person promoted or hired; or
(l) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary, which
employees were not subject to a collective bargaining agreement at the Balance
Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees.
Section 3.10 NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities or obligations of the Company or any Subsidiary, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a
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liability or obligation, in each case, that would be required by GAAP to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries,
other than:
(a) liabilities or obligations disclosed or provided for
in the Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the Balance Sheet Date, which in
the aggregate are not material to the Company and the Subsidiaries, taken as a
whole;
(c) liabilities or obligations under this Agreement or
incurred in connection with the consummation of the transactions contemplated by
this Agreement; and
(d) the item disclosed on Schedule 3.10.
Section 3.11 LITIGATION. Except as disclosed in Schedule 3.11
or as set forth in the Company's annual report on Form 10-K for the fiscal year
ended July 31, 1998 (the "MOST RECENT 10-K") or the Company's quarterly report
on Form 10-Q for the three months ended April 30, 1999 (the "MOST RECENT 10-Q"),
there is no action, suit, investigation or proceeding pending, or to the
knowledge of the Company threatened, against or affecting the Company or any
Subsidiary or any of their respective properties or any of their respective
officers or directors in their capacity as officers or directors of the Company
before any court or arbitrator or before or by any governmental body, agency or
official as of the date hereof which could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
Section 3.12 TAXES. Except as set forth in Schedule
3.12:
(a) Each of the Company and its Subsidiaries (i) has filed all
Tax Returns that it was required to file, except where failures to file such Tax
Returns would not, individually or in the aggregate, have a Material Adverse
Effect, and has paid all Taxes shown to be due on such Tax Returns, (ii) all Tax
Returns filed by each of the Company and its Subsidiaries are complete and
accurate and disclose all Taxes required to be paid by each of the Company and
its Subsidiaries for the periods covered thereby; except where failures to be
complete and accurate and to disclose all Taxes would not, individually or in
the aggregate, have a Material Adverse Effect, (iii) the Tax Returns referred to
in clause (i) relating to income Taxes have been examined by the appropriate
taxing authority (and the results of any such examination relating to taxable
years commencing after 1992 have been disclosed in writing to Buyer) or the
period for assessment of the Taxes in respect of such Tax Returns has expired;
(iv) there is no action, suit, investigation, audit, claim, or assessment
pending or proposed or threatened in writing with respect to Taxes of the
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Company or any Subsidiary; (v) all deficiencies asserted or assessments made as
a result of any examination of the Tax Returns referred to in clause (i) have
been paid in full; and (vi) there are no liens for Taxes upon the assets of the
Company or any Subsidiary, except relating to current taxes not yet due. No
claim has ever been made in writing by an authority in a jurisdiction where any
of the Company and its Subsidiaries does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction, except where such claim would not,
individually or in the aggregate, have a Material Adverse Effect, nor to the
knowledge of Seller is there any basis for such claim.
(b) Each of the Company and its Subsidiaries has withheld or
collected all Taxes required to have been withheld or collected, and has paid on
a timely basis all such Taxes that are due on or prior to the date hereof and,
in the case of Taxes not yet due, has accrued, reserved against and entered such
Taxes on the books of the Company, except where failures to withhold or collect
and to pay or accrue, reserve against or enter on the books of the Company would
not, individually, or in the aggregate, have a Material Adverse Effect.
(c) The Company has made available to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against, agreed to or filed by any of the
Company and its Subsidiaries since July 31, 1995.
(d) None of the Company and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency, which waiver or extension is
currently in effect.
(e) None of the Company and its Subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible corporations. Except
for the agreements referred to in Schedule 3.9, none of the Company and its
Subsidiaries has made any payments, is obligated to make any payments, or is
a party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code Section 280G.
None of the Company and its Subsidiaries has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). Each
of the Company and its Subsidiaries has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section 6662.
None of the Company and its Subsidiaries is a party to any written Tax
allocation or sharing agreement. None of the Company and its Subsidiaries (A)
has been a member of an affiliated group (as defined in Section 1504(a) of
the Code) filing a consolidated federal income Tax Return (other than a group
the common parent of which was the Company) or (B) has any liability for the
Taxes of any Person (other than any of the Company and its Subsidiaries)
under Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or
13
successor, by contract, or otherwise.
(f) For purposes of this Agreement:
"TAX" or "TAXES" means any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 3.13 COMPLIANCE WITH LAWS. Neither the Company nor any
Subsidiary is in violation of, or has violated, any applicable provisions of any
laws, statutes, ordinances or regulations, including all applicable provisions
of ERISA and all applicable Environmental Laws (each as hereinafter defined),
except for any such violation that, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect.
Section 3.14 PATENTS AND OTHER PROPRIETARY RIGHTS. Except as
disclosed in Schedule 3.14 and matters which, individually or in the aggregate,
would not have a Material Adverse Effect, the Company and Subsidiaries have
rights to use, whether through ownership, licensing or otherwise, all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of which the Company is aware that
are necessary for its business as now conducted (collectively the "INTELLECTUAL
PROPERTY RIGHTS"). To the best of the Company's knowledge, the Company and
Subsidiaries have not and do not violate or infringe any intellectual property
right of any other person or entity, and the Company and Subsidiaries have not
received any communication alleging that it violates or infringes the
intellectual property right of any other person or entity, except as disclosed
in writing to Buyer prior to the date hereof and except for any such violations
or infringements as would not, individually or in the aggregate, have a Material
Adverse Effect. To the best of the Company's knowledge, since July 1, 1995, the
Company and Subsidiaries have not been sued for infringing any intellectual
property right of another entity or person.
14
Section 3.15 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Most Recent 10-K or the Most
Recent 10-Q, since July 1, 1995:
(i) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
received by, or, to the knowledge of the Company, is pending
or threatened by any Person against, the Company or any
Subsidiary nor has any material penalty been assessed against
the Company or any Subsidiary with respect to any (A) alleged
violation of any Environmental Law or liability thereunder,
(B) alleged failure to have any permit, certificate, license,
approval, registration or authorization required under any
Environmental Law, (C) generation, treatment, storage,
recycling, transportation or disposal of any Hazardous
Substance or (D) discharge, emission or release of any
Hazardous Substance except, in each case, for such matters as
would not have a Material Adverse Effect; and
(ii) there are no Environmental Liabilities that have
had or could reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Schedule 3.15, since July 1, 1995,
there has been no material environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any property or
facility now or previously owned or leased by the Company or any Subsidiary
which has not been delivered to Buyer prior to the date hereof.
(c) For purposes of this Section 3.15, the following terms
shall have the meanings set forth below:
"COMPANY" and "SUBSIDIARY" shall include any entity that is,
in whole or in part, a predecessor of the Company or any Subsidiary;
"ENVIRONMENTAL LAWS" means any federal, state, local or
foreign law, treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit, agreement or governmental
restriction or requirement relating to human health, the environment or
pollutants, contaminants, chemicals, toxins, hazardous substances or
wastes;
"ENVIRONMENTAL LIABILITIES" means any and all liabilities of
or relating to the Company and any Subsidiary, whether contingent or
fixed, actual or potential,
15
known or unknown, which (i) arise under or relate to matters covered by
Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Effective Time; and
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, corrosive
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics,
which in any event is regulated under Environmental Laws.
Section 3.16 EMPLOYEE BENEFITS.
(a) Schedule 3.16 lists each employee benefit plan, as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") that any of the Company and its Subsidiaries maintains or to
which any of the Company and its Subsidiaries contributes or has any obligation
to contribute (the "COMPANY PLANS"). Each Company Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable laws. Neither the Company nor any of its Subsidiaries has any
material liability for failing to file or distribute any required reports and
descriptions (including Form 5500 Annual Reports, summary annual reports, and
summary plan descriptions) with respect to each Company Plan. The requirements
of part 6 of Title I of ERISA have been satisfied in all material respects with
respect to each Company Plan that is an employee welfare benefit plan, as
defined in Section 3(1) of ERISA. Each Company Plan intended to qualify under
Section 401(a) ET SEQ. of the Code satisfies, in all material respects, the
requirements of a "qualified plan" under Code Section 401(a), has received a
favorable determination letter from the Internal Revenue Service that it is a
"qualified plan," and the Company is not aware of any facts or circumstances
that could result in the revocation of such determination letter. The Company
has made available to the Buyer correct and complete copies of the plan
documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each Company Plan.
(b) There are no actions, suits or claims pending (other than
routine claims for benefits) with respect to any Company Plan that could result
in material liability to the Company or its Subsidiaries. No prohibited
transaction described in ERISA Section 406 or Code Section 4975 has occurred
with respect to any Company Plan that could result in material liability to the
Company or any of its Subsidiaries.
(c) None of the Company, its Subsidiaries, and the other
members of the controlled group that includes the Company and its Subsidiaries
contributes to, or has within
16
the past six years contributed to or been required to contribute to any defined
benefit pension plan or any multiemployer plan, as defined under ERISA (a
"MULTIEMPLOYER PLAN") or has any liability (including withdrawal liability as
defined in ERISA Section 4201) under any Multiemployer Plan.
(d) Except as set forth on SCHEDULE 3.16, None of the Company
and its Subsidiaries maintains or ever has maintained or contributes, ever has
contributed, or ever has been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their spouses,
or their dependents (other than in accordance with part 6 of Title I of ERISA.
Section 3.17 FINDERS' FEES. Except for U.S Bancorp Xxxxx
Xxxxxxx Inc., a copy of whose engagement agreement has been provided to Buyer,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf, of the Company or any
Subsidiary who might be entitled to any fee or commission from Buyer or any of
its affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
BUYER AND MERGER SUBSIDIARY
The Buyer and the Merger Subsidiary hereby jointly and
severally represent and warrant to the Company as of the date of this Agreement
and as of the Effective Time as follows:
Section 4.1 AUTHORITY. The Merger Subsidiary and the Buyer
each have all requisite corporate power and authority, without the consent of
any other Person, to execute and deliver this Agreement and the agreements to be
delivered at the consummation of transactions contemplated after approval of the
Merger by the requisite vote of Company stockholders and immediately prior to
the Effective Time, and to carry out the transactions contemplated hereby and
thereby. All corporate and other acts or proceedings required to be taken by the
Merger Subsidiary and the Buyer to authorize the execution, delivery and
performance of this Agreement and all transactions contemplated hereby have been
duly and properly taken. The Buyer and the Merger Subsidiary have either
sufficient cash resources or financing commitments necessary to fund the cash
payments for all of the Shares, as contemplated by the Merger, and to pay all
fees and expenses related to the transactions contemplated by this Agreement,
and upon request of
17
the Company's Board, will provide written evidence of such cash resource and/or
financing commitments.
Section 4.2 VALIDITY. This Agreement has been duly executed
and delivered and (assuming the valid authorization, execution and delivery of
this Agreement by the Company) constitutes a lawful, valid and legally binding
obligations of the Merger Subsidiary and the Buyer, enforceable in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally and by general equitable principles. Assuming all consents,
approvals, authorizations and other actions described in this Section 4.2 have
been obtained and all filings and obligations described in this Section 4.2 have
been made, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not result in the creation of any
lien, charge or encumbrance of any kind or the acceleration of any indebtedness
or other obligation of the Merger Subsidiary or the Buyer and are not prohibited
by, do not violate or conflict with any provision of, and do not constitute a
default under or a breach of (a) the charter or By-laws of the Merger Subsidiary
or the Buyer, (b) any note, bond, indenture, contract, agreement, permit,
license or other instrument to which the Merger Subsidiary or the Buyer is a
party or by which the Merger Subsidiary or the Buyer or any of its assets is
bound, (c) any order, writ, injunction, decree or judgment of any court or
governmental agency, or (d) any law, rule or regulation applicable to the Merger
Subsidiary or the Buyer other than, in the case of clauses (b), (c) or (d), any
such liens, charges, encumbrances, accelerations, violations, conflicts,
defaults or breaches that, individually or in the aggregate, would not prevent
or materially delay the consummation of the Merger. No approval, authorization,
registration, consent, order or other action of or filing with any court,
administrative agency or other government authority, is required for the
execution and delivery by the Buyer and the Merger Subsidiary of this Agreement
or the consummation by Buyer and the Merger Subsidiary of the transactions
contemplated hereby or the performance by Buyer and the Merger Subsidiary of
their respective obligations hereunder, except for (i) in connection, or in
compliance, with the provisions of the HSR Act, and the Exchange Act, (ii) the
filing of a Certificate of Merger with the Secretary of State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the other transactions contemplated by this
Agreement, (iv) filings with and approvals of the American Stock Exchange, Inc.
and the SEC with respect to the delisting and deregistration of the Common
Stock, and (v) such other approvals, authorizations, registrations, consents,
orders, or other actions and filings the failure of which to be obtained or made
would not, individually or in the aggregate, prevent or materially delay the
consummation of the Merger.
18
Section 4.3 DUE ORGANIZATION. The Merger Subsidiary is a
corporation organized and validly existing under the laws of the State of
Delaware, and has full corporate power and authority to carry on the business in
which it is engaged. The Buyer is a corporation validly existing under the laws
of the State of Delaware and has full corporate power and authority to carry on
the business in which it is engaged.
Section 4.4 DISCLOSURE DOCUMENTS. None of the information
supplied or to be supplied by Buyer or Merger Subsidiary specifically for
inclusion in the Company Proxy Statement will, at the time the Company Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Company Stockholder Meeting (as defined in Section 5.2), 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 are made, not misleading.
Section 4.5 INTERIM OPERATIONS OF SUB. Merger Subsidiary was
formed solely for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
Section 4.6 OWNERSHIP OF SHARES. As of the date of this
Agreement, neither Buyer nor any of its affiliates is the record owner of, or
has any beneficial interest in, any Shares.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 CONDUCT OF THE COMPANY. From the date hereof until
the Effective Time, the Company and the Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees subject to the exception provided below. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or with the prior written consent of Buyer:
(a) the Company will not adopt or propose any change in its
Certificate of Incorporation or bylaws;
(b) the Company will not, and will not permit any Subsidiary
to, merge or consolidate with any other Person or acquire a material amount of
assets of any
19
other Person, other than purchases of materials or products in the ordinary
course of business;
(c) the Company will not, and will not permit any Subsidiary
to, sell, lease, license or otherwise dispose of any material assets or property
except (i) pursuant to existing contracts or commitments and (ii) in the
ordinary course consistent with past practice;
(d) the Company will not, and will not permit any Subsidiary
to, settle or compromise any suit or claims or threatened suit or claim relating
to the transactions contemplated hereby;
(e) the Company will not, and will not permit any Subsidiary
to, agree or commit to do any of the foregoing;
(f) the Company will not, and will not permit any Subsidiary
to, take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time and the Company will
promptly notify Buyer and Merger Subsidiary if it becomes aware that any
representation or warranty hereunder is or has become inaccurate in any material
respect;
(g) the Company will not enter into any agreement or
commitment, or make or commit to make any capital expenditure, involving the
payment individually in excess of $75,000 or in the aggregate in excess of
$300,000.
Section 5.2 STOCKHOLDER MEETING; PROXY OR INFORMATIONAL
MATERIAL. The Company shall cause a meeting of its stockholders (the "COMPANY
STOCKHOLDER MEETING") to be duly called and held as soon as reasonably
practicable following the date hereof for the purpose of voting on the approval
and adoption of this Agreement. The Directors of the Company shall, except as
may be required, in response to an unsolicited bona fide written Acquisition
Proposal (as defined in Section 5.4), in order to comply with the fiduciary
duties of the Board of Directors under applicable law as advised in writing by
Company counsel, recommend approval and adoption of this Agreement by the
Company's stockholders. In connection with such meeting, the Company (a) will
promptly prepare and file with the SEC, will use its best efforts to have
cleared by the SEC and will thereafter mail to its stockholders as promptly as
practicable the Company Proxy Statement and all other proxy materials for such
meeting, (b) will use its best efforts to obtain the necessary approval by its
stockholders of this Agreement and the transactions contemplated hereby and (c)
will otherwise comply with all legal requirements applicable to such meeting.
Buyer shall cooperate with the Company in the preparation of the Proxy Statement
or any amendment or supplement thereto. Buyer
20
agrees to cause all Shares owned by Buyer or any subsidiary of Buyer to be voted
in favor of the Merger.
Section 5.3 ACCESS TO INFORMATION. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which the
Company is subject (from which it shall use reasonable efforts to be released),
from the date hereof until the Effective Time, the Company will give Buyer, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of the Company
and the Subsidiaries and such financial and operating data and other information
as such Persons may reasonably request and will instruct the Company's
employees, counsel and financial advisors to cooperate with Buyer in its
investigation of the business of the Company and the Subsidiaries; provided that
no investigation pursuant to this Section 5.3, shall affect any representation
or warranty given by the Company to Buyer hereunder. In no event shall the
Company be required to supply to Buyer or its officers, employees, accountants,
counsel and other representatives any information relating to indications of
interest from, or discussions with, any other potential acquirors of the Company
which were received or conducted prior to the date hereof, except to the extent
necessary for use in the Company Proxy Statement. Except as otherwise agreed to
by the Company, until the Effective Time and notwithstanding termination of this
Agreement, the terms of the Confidentiality Agreement dated as of August 26,
1999 (the "Confidentiality Agreement"), shall apply to all information about the
Company that has been furnished under this Agreement by the Company to Buyer or
Sub.
Section 5.4 OTHER OFFERS. From the date hereof until the
termination hereof, the Company and the Subsidiaries and the officers,
directors, employees or other agents of the Company and the Subsidiaries will
not, directly or indirectly, (i) take any action to solicit, initiate or
encourage any Acquisition Proposal or (ii) except as may be required in response
to an unsolicited bona fide written Acquisition Proposal in order to comply with
the fiduciary duties of the Board of Directors under applicable law as advised
by Company counsel, engage in negotiations with, or disclose any nonpublic
information relating to the Company or any Subsidiary or afford access to the
properties, books or records of the Company or any Subsidiary to, any Person.
The Company will promptly (and in no event later than 24 hours after receipt of
the relevant Acquisition Proposal) notify (which notice shall be provided orally
and in writing and shall identify the Person making the relevant Acquisition
Proposal and set forth the material terms thereof) Buyer after (i) the Company
has received any Acquisition Proposal, (ii) the Company has actual knowledge
that any Person is considering making an Acquisition Proposal, or (iii) the
Company has received any request for nonpublic information relating to the
Company or any Subsidiary, or for access to the properties, books or records of
the Company or any Subsidiary, by any Person that the Company has actual
knowledge is considering making, or has made, an Acquisition Proposal. The
Company
21
will keep Buyer fully informed of the status and details of any such Acquisition
Proposal or request. The Company shall not engage in negotiations with, or
disclose any nonpublic information to, any such Person unless it receives from
such Person an executed confidentiality agreement with terms no less favorable
to the Company than the Confidentiality Agreement. The Company shall, and shall
cause its Subsidiaries and the Company's directors, officers, employees,
financial advisors and other agents or representatives to, cease immediately and
cause to be terminated all activities, discussions or negotiations, if any, with
any Persons conducted heretofore with respect to any Acquisition Proposal. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means any offer or proposal
for a merger or other business combination involving the Company or any
Subsidiary or the acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary, other than the
transactions contemplated by this Agreement. The Company shall not, and shall
cause its Subsidiaries not to, enter into any agreement or undertaking with
respect to any Acquisition Proposal unless, as a condition precedent thereto or
concurrently therewith, all amounts due and owing to Buyer by the Company under
that certain Credit Facility and Security Agreement between Buyer and the
Company dated of even date herewith (the "CREDIT AGREEMENT") are repaid in full
by the Company or paid by a party to such Acquisition Proposal.
ARTICLE VI
COVENANTS OF THE BUYER AND THE COMPANY
Section 6.1 CERTAIN FILINGS. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the Company
Proxy Statement, (b) in determining whether any action by or in respect of, or
filing with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Proxy Statement and seeking timely to obtain any such actions, consents,
approvals or waivers (which actions shall include furnishing all information
required under the HSR Act and in connection with approvals of or filings with
any other governmental body, agency or official)
Section 6.2 PUBLIC ANNOUNCEMENTS. Buyer and the Company will
mutually agree before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities
22
exchange or automated quotation system, will not issue any such press release or
make any such public statement prior to such agreement.
Section 6.3 NOTICES OF CERTAIN EVENTS. The Company shall
promptly notify Buyer, and Buyer shall promptly notify the Company, of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(c) with respect only to the Company, any actions, suits,
claims, investigations or proceedings commenced or, to the best of its knowledge
threatened which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.11 or which relate to the
consummation of the transactions contemplated by this Agreement; and
(d) any circumstance or condition that the Buyer or the
Company, respectively, shall become aware of that makes any representation or
warranty hereunder inaccurate in any material respect.
Section 6.4 BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
Section 6.5 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be authorized
to execute and deliver, in the name and on behalf of the Company or the Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or the Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
23
Section 6.6 INDEMNIFICATION; DIRECTORS AND OFFICERS
INSURANCE.
(a) From and after the Effective Time, Buyer shall cause the
Surviving Corporation to indemnify and hold harmless all past and present
officers and directors of the Company (the "INDEMNIFIED PARTIES") to the same
extent and in the same manner and subject to the same limits as such persons are
indemnified as of the date of this Agreement by the Company pursuant to Delaware
Law, the Company's Certificate of Incorporation or the Company's By-Laws for
acts or omissions occurring at or prior to the Effective Time.
(b) Buyer shall cause the Surviving Corporation to provide,
for an aggregate period of not less than three years from the Effective Time,
the Company's current directors and officers an insurance and indemnification
policy that provides coverage for events occurring prior to the Effective Time
(the "D&O INSURANCE") that is substantially similar to the Company's existing
policy or, if substantially equivalent insurance coverage is unavailable, the
best available coverage; provided, however, that the Surviving Corporation shall
not be required to pay an annual premium for the D&O Insurance in excess of 120%
of the last annual premium paid prior to the date hereof but in such case shall
purchase as much coverage as possible for such amount.
(c) Buyer hereby agrees that, effective at the Effective Time,
Buyer will guarantee the obligations of the Surviving Corporation under Section
6.6(a) and (b).
(d) This Section 6.6 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Buyer, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Buyer and the Surviving Corporation.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Buyer and the Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the
stockholders of the Company in accordance with such law;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger; PROVIDED, HOWEVER, that each of the parties shall have used its
reasonable best efforts to prevent the
24
entry of any such temporary restraining order, injunction or other order and to
appeal as promptly as possible any injunction or other order that may be
entered; and
(c) any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
Section 7.2 CONDITIONS TO THE OBLIGATIONS OF BUYER AND MERGER
SUBSIDIARY. The conditions to the obligations of Buyer and Merger Subsidiary to
complete the Merger are as set forth on ANNEX I.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if Merger has not been
consummated by March 31, 2000; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of any condition to closing of the Merger or if the
failure of such condition results from facts or circumstances that constitute a
breach of any representation or warranty under this Agreement by such party;
(c) by either the Company or Buyer, if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree shall become
final and nonappealable;
(d) by Buyer, upon the occurrence of any Trigger Event
described in clause (i) or (ii) of Section 9.4(b);
(e) by the Company, upon the occurrence of any Trigger Event
described in clause (i)(A) of Section 9.4(b).
The party desiring to terminate this Agreement shall give written notice of such
termination to the other party in accordance with Section 9.1.
25
Section 8.2 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 8.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that with
respect to the last sentence of Section 5.3, Section 9.4, and this Section 8.2;
PROVIDED, HOWEVER, that nothing herein shall relieve any party for liability for
any breach hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given,
if to Buyer or Merger Subsidiary to:
Paragon Corporate Holdings Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Chairman
with copies to:
Xxxxx X. Xxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Company to:
Multigraphics Inc.
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
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with copies to:
Sidley & Austin
Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
Section 9.2 RELIANCE; SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time; provided, however, this Section 9.2 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time of the Merger.
Section 9.3. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Buyer and the
Merger Subsidiary or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) A termination of this Agreement pursuant to Section 8.1 or
an amendment of this Agreement in accordance with Section 9.3(a) shall, in order
to be effective, require in the case of the Company action by its Board of
Directors or the duly authorized designee of its Board of Directors.
(c) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
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Section 9.4. FEES AND EXPENSES.
(a) Except as otherwise provided in this Section 9.4, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
(b) The Company agrees to pay Buyer a fee in immediately
available funds equal to Five Hundred Thousand Dollars ($500,000) promptly, but
in no event later than two business days, after the termination of this
Agreement as a result of the occurrence of any of the events set forth below (a
"TRIGGER EVENT"):
(i) (A) the Company shall have entered into, or shall
have publicly announced its intention to enter into, an
agreement or an agreement in principle with respect to any
Acquisition Proposal, or (B) the Board of Directors of the
Company shall have withdrawn or materially modified in a
manner adverse to Buyer the Board's approval or recommendation
of the Merger;
(ii) any person or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Buyer, the Merger
Subsidiary or any affiliate thereof) shall have become the
beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of a majority of the outstanding Shares;
(iii) this Agreement shall have been terminated in
accordance with Section 8.1(b) and (x) the Company shall have
failed to observe or perform in any material respect any of
its obligations under this Agreement or (y) an Acquisition
Proposal is received prior to the Effective Time and not
publicly rejected by the Company's Board of Directors; or
(iv) in the event that a majority of the
stockholders of the Company do not vote in favor of the Merger
at the stockholders meeting called for that purpose.
(c) The Buyer agrees to pay the Company an amount in
immediately available funds equal to Two Million Dollars ($2,000,000) if this
Agreement shall have been terminated by Buyer for any reason other than as set
forth in Section 8.1. The liability of Buyer set forth in this subsection shall
be the maximum and sole and exclusive liability of Buyer hereunder for any
reason whatsoever.
(d) In addition to any amounts payable to Buyer pursuant to
and at the same time as required by Section 9.4(b), the Company agrees to
reimburse Buyer, up to
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Five Hundred Thousand Dollars ($500,000), in immediately available funds for all
costs and expenses incurred by or on behalf of Buyer in connection with the
transactions contemplated by this Agreement and the Credit Agreement.
Section 9.5 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates.
Section 9.6 GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of Delaware.
Section 9.7 COUNTERPARTS; EFFECTIVENESS; THIRD PARTY
BENEFICIARIES. This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of
the other parties hereto. No provision of this Agreement, except for Section
6.6, is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 9.8 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement constitute the entire agreement among Buyer, the
Merger Subsidiary and the Company with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
Buyer, the Merger Subsidiary and the Company with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as an instrument under seal by their respective
authorized officers as of the day and year first above written.
PARAGON CORPORATE HOLDINGS INC.
By /s/ Xxxxxx X. Xxxxxx
---------------------
Vice President and
CFO
MULTI ACQUISITION CORP.
By /s/ Xxxxxx X. Xxxxxx
---------------------
Secretary/
Treasurer
MULTIGRAPHICS, INC.
By /s/ Xxxx X. Xxxxxxxx
---------------------
President & CEO
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ANNEX I
Notwithstanding any other provision of this Agreement, Buyer
shall not be required to at any time on or after the date hereof and prior to
the Effective Time to consummate the Merger, if any of the following conditions
exist:
(a) there shall be threatened, instituted or pending any
action, suit, investigation or proceeding by any government or governmental
authority or agency, domestic or foreign, or before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly to restrain or
prohibit the consummation of the Merger, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions contemplated by
the Merger, (ii) seeking to restrain or prohibit Buyer's ownership or operation
(or that of its respective subsidiaries or affiliates) of all or any material
portion of the business or assets of the Company and the Subsidiaries, taken as
a whole, or of Buyer and its subsidiaries, taken as a whole, or to compel Buyer
or any of its subsidiaries or affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, or of Buyer and its subsidiaries, taken as a
whole, (iii) seeking to impose or confirm material limitations on the ability of
Buyer or any of its subsidiaries or affiliates effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote any Shares acquired or owned by Buyer or any of its subsidiaries or
affiliates on all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Buyer or any of its subsidiaries or affiliates
of any Shares, or (v) that otherwise is reasonably likely to have a Material
Adverse Effect or materially adversely affect Buyer and its subsidiaries, taken
as a whole; or there shall be pending by any other Person, domestic or foreign,
any action, suit or proceeding which is reasonably likely to have a Material
Adverse Effect or materially adversely affect Buyer and its subsidiaries, taken
as a whole; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger, by any court, government
or governmental authority or agency, domestic or foreign, that is reasonably
likely, directly or indirectly, to result in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above; or
(c) (i) there shall be initiated, threatened, instituted or
pending any action, suit, investigation or proceeding by any government or
governmental authority or agency, domestic or foreign, that would reasonably be
expected to materially adversely affect the Company and its Subsidiaries, taken
as a whole, or (ii) except as disclosed in writing to Buyer prior to the date
hereof, there has been since the Balance Sheet Date any
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event, occurrence or development or state of circumstances or facts which has
had or could reasonably be expected to have a Material Adverse Effect; or
(d) there shall have occurred and be continuing (i) any
general suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States of America (excluding any
coordinated trading halt triggered solely as a result of a specified decrease in
a market index), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States of America, (iii) any
limitation (whether or not mandatory) by any United States governmental entity
on, or other event that materially adversely affects, the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States of America which in any case is reasonably expected
to have a Material Adverse Effect or to materially adversely affect Buyer's or
Merger Subsidiary's ability to complete the Merger or (v) in case of any of the
foregoing existing on the date of this Agreement, material acceleration or
worsening thereof which in any case is reasonably expected to have a Material
Adverse Effect or to materially adversely affect Buyer's or Merger Subsidiary's
ability to complete the Merger;
(e) the Company shall have failed to perform in any material
respect any of its material covenants or agreements under the Merger Agreement;
or any of the representations and warranties of the Company set forth in the
Merger Agreement shall not be true when made or at the Effective Time as if made
at and as of such time (except as to any representation or warranty which speaks
as of a specific date, which must be untrue as of such date), except where the
failure to perform such covenant or the breach of such representation or
warranty (i) would not have a Material Adverse Effect or (ii) are capable of
being and are cured within 20 days after written notice from Buyer to the
Company of such failure or breach; or
(f) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal or the Board of Directors of
the Company shall have withdrawn or materially modified in a manner adverse to
Buyer the Board's approval or recommendation of the Merger; or
(g) any person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Buyer, the Merger Subsidiary or any affiliate thereof)
shall have become the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of a majority of the outstanding Shares; or
(h) the Merger Agreement shall have been terminated in
accordance with its terms.
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The foregoing conditions are for the sole benefit of Buyer and
the Merger Subsidiary and may, subject to the terms of the Agreement, be waived
by Buyer or the Merger Subsidiary in whole or in part at any time and from time
to time in their discretion. The failure by Buyer or the Merger Subsidiary at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time prior to the Effective Time.
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