AGREEMENT AND PLAN OF MERGER
AMONG
IMPERIAL XXXXX CORPORATION,
IHK MERGER SUB CORPORATION
AND
SAVANNAH FOODS & INDUSTRIES, INC.
DATED AS OF SEPTEMBER 12, 1997
TABLE OF CONTENTS
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PAGE
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ARTICLE I THE OFFER
SECTION 1.01 The Offer............................................ 2
SECTION 1.02 Company Actions...................................... 3
SECTION 1.03 Stockholder Lists.................................... 4
SECTION 1.04 Directors............................................ 4
ARTICLE II THE MERGER
SECTION 2.01 The Merger........................................... 5
SECTION 2.02 Effective Time; Closing.............................. 5
SECTION 2.03 Effects of the Merger................................ 6
SECTION 2.04 Certificate of Incorporation and By-Laws............. 6
SECTION 2.05 Directors and Officers............................... 6
SECTION 2.06 Conversion of Shares................................. 6
SECTION 2.07 Conversion of Common Stock of Merger Sub............. 8
SECTION 2.08 Stockholders' Meetings............................... 9
SECTION 2.09 Rights Under Stock Plans............................. 9
SECTION 2.10 Exchange of Certificates............................. 10
SECTION 2.11 Elections............................................ 12
SECTION 2.12 Dissenting Shares.................................... 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries......... 14
SECTION 3.02 Certificate of Incorporation and By-Laws............. 15
SECTION 3.03 Capitalization....................................... 15
SECTION 3.04 Authority Relative to this Agreement................. 16
SECTION 3.05 No Conflict; Required Filings and Consents........... 17
SECTION 3.06 Permits; Compliance.................................. 17
SECTION 3.07 SEC Filings; Financial Statements.................... 18
SECTION 3.08 Absence of Certain Changes or Events................. 19
SECTION 3.09 Absence of Litigation................................ 20
SECTION 3.10 Employee Benefit Plans; Labor Matters................ 20
SECTION 3.11 Intellectual Property................................ 23
SECTION 3.12 Taxes................................................ 24
SECTION 3.13 Environmental Matters................................ 24
SECTION 3.14 Products............................................. 25
SECTION 3.15 Properties and Assets; Real Property
and Leases......................................... 25
SECTION 3.16 Insurance............................................ 26
SECTION 3.17 Opinion of Financial Advisor......................... 27
SECTION 3.18 Vote Required........................................ 27
SECTION 3.19 Brokers.............................................. 27
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SECTION 3.20 Company Rights Agreement............................. 28
SECTION 3.21 Information Supplied................................. 28
SECTION 3.22 Termination of Existing Merger Agreement............. 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF IHK AND MERGER SUB
SECTION 4.01 Organization and Qualification; Subsidiaries......... 29
SECTION 4.02 Certificate of Incorporation and By-Laws............. 30
SECTION 4.03 Capitalization....................................... 30
SECTION 4.04 Authority Relative to this Agreement................. 31
SECTION 4.05 No Conflict; Required Filings and Consents........... 31
SECTION 4.06 Permits; Compliance.................................. 32
SECTION 4.07 SEC Filings; Financial Statements.................... 32
SECTION 4.08 Absence of Certain Changes or Events................. 33
SECTION 4.09 Absence of Litigation................................ 34
SECTION 4.10 Employee Benefit Plans; Labor Matters................ 35
SECTION 4.11 Intellectual Property................................ 37
SECTION 4.12 Taxes................................................ 38
SECTION 4.13 Environmental Matters................................ 38
SECTION 4.14 Products............................................. 39
SECTION 4.15 Properties and Assets; Real Property and Leases...... 39
SECTION 4.16 Insurance............................................ 40
SECTION 4.17 Opinion of Financial Advisor......................... 40
SECTION 4.18 Vote Required........................................ 40
SECTION 4.19 Brokers.............................................. 41
SECTION 4.20 Information Supplied................................. 41
SECTION 4.21 Financing............................................ 42
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending
the Merger......................................... 42
SECTION 5.02 Conduct of Business by IHK and the IHK Subsidiaries
Pending the Merger................................. 45
SECTION 5.03 Government Filings................................... 47
ARTICLE VI ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meetings............................... 48
SECTION 6.02 Registration Statement; Proxy Statement.............. 49
SECTION 6.03 Access to Information; Confidentiality............... 51
SECTION 6.04 Approvals and Consents; Cooperation.................. 52
SECTION 6.05 No Solicitation of Transactions...................... 52
SECTION 6.06 Employee Benefits Matters............................ 53
SECTION 6.07 Directors' and Officers' Indemnification
and Insurance...................................... 53
SECTION 6.08 Obligations of IHK and Merger Sub.................... 54
SECTION 6.09 Affiliates' Letters.................................. 54
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SECTION 6.10 Letters of Accountants............................... 55
SECTION 6.11 Listing Market....................................... 55
SECTION 6.12 IHK Board Representation............................. 55
SECTION 6.13 Company Rights Plan.................................. 56
SECTION 6.14 Public Announcements................................. 56
SECTION 6.15 Subsequent Financial Statements...................... 56
ARTICLE VII CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect
the Merger......................................... 57
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.......................................... 58
SECTION 8.02 Effect of Termination................................ 60
SECTION 8.03 Amendment............................................ 60
SECTION 8.04 Waiver............................................... 60
SECTION 8.05 Fees and Expenses.................................... 60
ARTICLE IX GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties
and Agreements..................................... 62
SECTION 9.02 Notices.............................................. 62
SECTION 9.03 Severability......................................... 63
SECTION 9.04 Assignment........................................... 63
SECTION 9.05 Interpretation....................................... 64
SECTION 9.06 Specific Performance................................. 64
SECTION 9.07 Governing Law........................................ 64
SECTION 9.08 Parties in Interest.................................. 64
SECTION 9.09 Counterparts......................................... 65
SECTION 9.10 Waiver of Jury Trial................................. 65
SECTION 9.11 Entire Agreement..................................... 65
SECTION 9.12 Certain Definitions.................................. 65
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TABLE OF DEFINED TERMS
(not a part of the Agreement)
SECTION
-------
Acquisition Proposal.................................. 6.05(a)
Affiliate............................................. 9.12(a)
Agreement............................................. Preamble
AMEX.................................................. 9.12(o)
Beneficial Owner...................................... 9.12(b)
Benefit Trust......................................... 3.03
Benefit Trust Agreement............................... Annex B
Benefit Trust Shares.................................. 3.03
Blue Sky Laws......................................... 3.05(b)
Business Day.......................................... 9.12(c)
Cash Consideration.................................... 2.06(a)
Claim................................................. 6.07(b)
Closing............................................... 2.02
Closing Price......................................... 9.12(d)
Code.................................................. 2.09(a)
Company............................................... Preamble
Company Affiliate..................................... 6.09
Company Common Stock.................................. 1.01(a)
Company Disclosure Schedule........................... Article III Preamble
Company Environmental Permits......................... 3.13(b)
Company ERISA Affiliate............................... 3.01(3)
Company Executive Deferred Compensation Plans......... 3.10(h)
Company Financial Statements.......................... 3.07(b)
Company Material Adverse Effect....................... 3.01
Company Options....................................... 2.09(a)
Company Permits....................................... 3.06
Company Plans......................................... 3.10(a)
Company Preferred Stock............................... 3.03
Company Products...................................... 3.14
Company Rights........................................ 3.03
Company Rights Agreement.............................. 3.03
Company Rights Agreement Amendment.................... 3.20
Company SEC Reports................................... 3.07(a)
Company Specified Stockholders........................ 9.12(e)
Company Stock Option Plan............................. 2.09(a)
Company Stockholder Approval.......................... 2.08
Company Stockholder Meeting........................... 6.01(a)
v
Company Subsequent Financial Statements............... 6.15(a)
Company Subsidiary.................................... 3.01
Confidentiality Agreement............................. 6.03(b)
Continuing Director................................... 1.04(a)
Control............................................... 9.12(e)
Deed Reservations..................................... 3.15(c)
Dissenting Shares..................................... 2.12
DGCL.................................................. 1.02
DLJ................................................... 1.02
Effective Time........................................ 2.02(b)
Election Date......................................... 2.11(c)
Environmental Laws.................................... 3.13(a)
ERISA................................................. 3.10(a)
Exchange Act.......................................... 9.12(f)
Exchange Agent........................................ 2.10(a)
Exchange Fund......................................... 2.10(f)
Excluded Shares....................................... 2.06(a)
Expense Amount........................................ 8.05(b)
Expenses.............................................. 8.05(a)
Flo-Sun Agreement..................................... 3.22
Governmental Entity................................... 9.12(g)
Hazardous Substances.................................. 3.13
HSR Act............................................... 1.01(a)
IHK................................................... Preamble
IHK Disclosure Schedule............................... Article IV Preamble
IHK Environmental Permits............................. 4.13
IHK ERISA Affiliate................................... 4.10(b)
IHK Financial Statements.............................. 4.07(b)
IHK Junior Preferred Stock............................ 2.06(a)
IHK Material Adverse Effect........................... 4.01
IHK Permits........................................... 4.06
IHK Plans............................................. 4.10(a)
IHK Preferred Stock................................... 4.03
IHK Products.......................................... 4.14
IHK Purchase Rights................................... 2.06(a)
IHK Rights Agreement.................................. 2.06(a)
IHK SEC Reports....................................... 4.07(a)
IHK Shareholders' Meeting............................. 6.01(b)
IHK Specified Stockholders............................ 9.12(i)
IHK Stockholder Approval.............................. 2.08
IHK Subsequent Financial Statements................... 6.15(b)
IHK Subsidiary........................................ 4.01
Indemnified Parties................................... 6.07(a)
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Intellectual Property Rights.......................... 3.11
Knowledge or Known.................................... 9.12(h)
Law................................................... 9.12(i)
Xxxxxx Brothers....................................... 4.17
Liens................................................. 3.15(c)
Listing Market........................................ 6.11
Merger................................................ Recitals
Merger Consideration.................................. 2.06(a)
Merger Shares......................................... 2.06(b)
Merger Sub............................................ Preamble
Multiemployer Plan.................................... 3.10(b)
Multiple Employer Plan................................ 3.10(b)
NYSE.................................................. 9.12(o)
Offer................................................. 1.01(a)
Offer Documents....................................... 1.01(b)
Offer Price........................................... 1.01(a)
Order................................................. 9.12(j)
Permitted Liens....................................... 3.15(c)
Person................................................ 9.12(k)
Proxy Statement....................................... 6.02(b)
Registration Statement................................ 3.21
Representatives....................................... 6.03(a)
Schedule 14D-1........................................ 1.01(b)
Schedule 14D-9........................................ 1.02
SEC................................................... 1.01(b)
Securities Act........................................ 9.12(l)
Special Meetings...................................... 2.08
Stock Consideration................................... 9.12(m)
Stockholder Approvals................................. 2.08
Stockholders' Meetings................................ 2.08
Subsidiary or Subsidiaries............................ 9.12(n)
Substitute Options.................................... 6.05(a)
Superior Proposal..................................... 7.05(a)
Surviving Corporation................................. 2.01
Terminating Company Breach............................ 8.01(g)
Terminating IHK Breach................................ 8.01(g)
Termination Fee....................................... 8.05(b)
Total Shares.......................................... 2.06(b)
Trading Day........................................... 9.12(o)
U.S. GAAP............................................. 3.07(b)
WARN.................................................. 3.10(f)
Waterway Works........................................ 3.15(c)
vii
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September 12,
1997 among IMPERIAL XXXXX CORPORATION, a Texas corporation ("IHK"), IHK MERGER
SUB CORPORATION, a Delaware corporation ("Merger Sub"), and SAVANNAH FOODS &
INDUSTRIES, INC., a Delaware corporation (the "Company").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Board of Directors of each of IHK and the Company has
determined that it is in the best interests of their respective stockholders for
Merger Sub to acquire the Company upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Merger Sub, this
Agreement and the transactions contemplated hereby, and has unanimously agreed
to recommend that the Company's stockholders approve this Agreement and the
transactions contemplated hereby and tender their shares of Company Common Stock
(as defined below) in the Offer (as defined below);
WHEREAS, if at least 50.1% of the outstanding shares of Company Common
Stock are purchased pursuant to the Offer, IHK, Merger Sub and the Company have
agreed (subject to the terms and conditions of this Agreement), after the
expiration or termination of the Offer and as soon as practicable following the
approval of the stockholders of the Company, to effect the merger of Merger Sub
with and into the Company (the "Merger") as more fully described herein; and
WHEREAS, the Company has advised IHK, Merger Sub and the IHK Specified
Stockholders (as hereinafter defined) that it will not enter into this Agreement
unless the IHK Specified Stockholders execute and deliver to the Company an
Agreement and Irrevocable Proxy in the form set forth in Annex C to this
Agreement; and
WHEREAS, IHK has advised the Company and the Company Specified Stockholders
that IHK will not enter into this Agreement unless the Company Specified
Stockholders (as hereinafter defined) execute and deliver to IHK the
Stockholders Agreement in form set forth as Annex D to this Agreement and
providing that the Company Specified Stockholders will tender their shares of
Company Common Stock into the Offer under the terms set forth therein; and
WHEREAS, IHK, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 hereof, promptly (but in no event later than five
Business Days (as defined below) following the date hereof), Merger Sub shall
commence (within the meaning of Rule 14d-2 under the Exchange Act) an offer to
purchase (the "Offer") at least 50.1% of all shares outstanding (on a fully
diluted basis) of common stock, par value $.25 per share, of the Company
("Company Common Stock") at a price of $20.25 per share, net to the seller in
cash (such price, or any such higher price as may be paid in the Offer, being
referred to herein as the "Offer Price"). The obligation of Merger Sub to
consummate the Offer and to accept for payment and to pay for any shares of
Company Common Stock tendered pursuant thereto shall be subject only to those
conditions set forth in Annex A hereto. The Company agrees that no shares of
Company Common Stock held by the Company or any of the Company Subsidiaries (as
defined below) will be tendered pursuant to the Offer; provided, however, that
prior to the Effective Time (as defined below), shares of Company Common Stock
held by the Company may be allocated, issued, delivered or transferred pursuant
to the Company Stock Option Plan (as such term is defined in Section 2.09) in
accordance with the terms thereof or Section 2.09. Merger Sub will not, without
the prior written consent of the Company, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of shares of
Company Common Stock sought pursuant to the Offer, (iii) impose additional
conditions to the Offer, (iv) change the conditions to the Offer, except that
Merger Sub in its sole discretion may waive any of the conditions to the Offer
(but may not waive the condition that not less than 50.1% of the Company Common
Stock outstanding on a fully diluted basis shall have been validly tendered and
not withdrawn), or (v) make any other change in the terms or conditions of the
Offer which is adverse to the holders of the shares of Company Common Stock.
Merger Sub agrees that, subject to the terms and conditions of the Offer and
this Agreement, it will accept for payment and pay for all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer promptly
after expiration of the Offer; provided, however, that Merger Sub shall not be
obligated to accept for payment and pay for in the Offer, in the aggregate, more
than 50.1% of the outstanding shares of Company Common Stock. The Offer shall
initially provide that it shall expire 20 Business Days after it is commenced,
and may not be extended except as provided below. If the conditions set forth
in Annex A are not satisfied or, to the extent permitted by this Agreement,
waived by Merger Sub as of any scheduled expiration date, Merger Sub may extend
the Offer from time to time until the earlier of the consummation of the Offer
or 30 Business Days after the date hereof, and shall extend the Offer (x) to the
extent necessary to comply with the waiting period requirements (including any
extension or second request) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act") and (y) upon the request of the Company, to a date no later than November
30, 1997 to the extent
2
necessary for IHK to satisfy the condition set forth in clause (2) of Annex A.
The Company and Merger Sub shall use commercially reasonable efforts to satisfy
the conditions set forth in Annex A as soon as practicable.
(b) On the date of commencement of the Offer, IHK and Merger Sub shall file
or cause to be filed with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 (together with all amendments thereto,
the "Schedule 14D-1") with respect to the Offer, which shall contain the offer
to purchase and related letter of transmittal and other ancillary Offer
documents and instruments pursuant to which the Offer will be made (collectively
with any supplements or amendments thereto, the "Offer Documents"). Merger Sub
will disseminate the Offer Documents to holders of shares of Company Common
Stock. IHK, Merger Sub and the Company will promptly correct any information
provided by them for use in the Offer Documents that becomes false or misleading
in any material respect, and Merger Sub will take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable law. The Company and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-1
(including the Offer Documents) prior to its filing with the SEC. Merger Sub
agrees to provide the Company with any comments that may be received from the
SEC or its staff with respect to the Schedule 14D-1 (including the Offer
Documents) and any amendments thereto, promptly after receipt thereof.
SECTION 1.02 Company Actions. The Company hereby consents to the Offer
and represents and warrants that (a) its Board of Directors (at a meeting duly
called and held), has (i) determined that the Offer and the Merger are fair to
and in the best interests of the stockholders of the Company, (ii) resolved to
approve the Offer and the Merger and recommend (subject to its fiduciary duties
after taking into account advice of legal counsel) acceptance of the Offer and
approval and adoption of this Agreement by such stockholders of the Company,
(iii) taken all necessary steps to render Section 203 of the Delaware General
Corporation Law (the "DGCL") inapplicable to the Merger, (iv) resolved to elect
not to be subject, to the extent permitted by law, to any state takeover law
other than Section 203 of the DGCL that may purport to be applicable to the
Offer, the Merger or the transactions contemplated by this Agreement and (v)
approved the Company Rights Agreement Amendment (as defined below), and (b)
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ"), the Company's
financial advisor, has advised the Company's Board of Directors that, in their
opinion, the consideration to be paid in the Offer and the Merger to the
Company's stockholders is fair, from a financial point of view, to such
stockholders. Upon commencement of the Offer, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") containing the recommendations of its Board of Directors in favor of the
Offer and the Merger and shall permit the inclusion in the Offer Documents of
such recommendations, in each case subject to the fiduciary duties of the Board
of Directors of the Company. The Company, IHK and Merger Sub will promptly
correct any information provided by them for use in the Schedule 14D-9 that
becomes false or misleading in any material respect, and the Company will take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of shares of Company Common
3
Stock, in each case as and to the extent required by applicable law. IHK and
its counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
IHK with any comments that may be received from the SEC or its staff with
respect to the Schedule 14D-9 and any amendments thereto, promptly after receipt
thereof.
SECTION 1.03 Stockholder Lists. In connection with the Offer, the
Company shall promptly furnish Merger Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of shares of Company Common Stock as of a recent
date and shall furnish Merger Sub with such information and assistance as Merger
Sub or its agents may reasonably request in communicating the Offer to the
record and beneficial stockholders of the Company. Subject to the requirements
of applicable law, IHK and Merger Sub will hold such listings and other
information in confidence and in accordance with the terms of the
Confidentiality Agreement (as defined below), shall use such information only in
connection with the Offer and the Merger and, if this Agreement is terminated,
shall deliver to the Company all copies of all such information (and extracts or
summaries thereof) then in their or their agents' or advisors' possession.
SECTION 1.04 Directors.
(a) Promptly upon the purchase by Merger Sub pursuant to the Offer of such
number of shares of Company Common Stock as represents at least 50.1% of the
outstanding shares of Company Common Stock and from time to time thereafter,
Merger Sub shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as will give
Merger Sub representation on the Board of Directors of the Company equal to the
product of the number of directors on the Board of Directors of the Company and
the percentage that such number of shares of Company Common Stock so purchased
bears to the number of shares of Company Common Stock outstanding, and the
Company shall promptly, to the extent permitted by the Company's Certificate of
Incorporation and By-Laws and the DGCL, upon request by Merger Sub, either (at
the Company's election) increase the size of the Board of Directors of the
Company or exercise all reasonable efforts to secure the resignations of such
number of directors as is necessary to provide Merger Sub with such level of
representation and to enable Merger Sub's designees to be so elected.
Notwithstanding the foregoing, at all times prior to the Effective Time (as
hereinafter defined) of the Merger the Board of Directors of the Company shall
include at least two directors in office as of the date hereof (any such
director remaining in office being a "Continuing Director"). The Company's
obligations to appoint designees to the Board of Directors of the Company shall
be subject to Section 14(f) of the Exchange Act. At the request and expense of
Merger Sub, the Company shall take all action necessary to effect any such
election, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. IHK
and Merger Sub will timely supply to the Company in writing and IHK and Merger
Sub will be solely responsible for any and all information with respect to
themselves and their respective officers, directors and affiliates and director
designees required by such Section and Rule.
4
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section and prior to the Effective Time, such designees shall
abstain from acting upon, and the approval of a majority of the Continuing
Directors shall be required to authorize and shall be sufficient to authorize,
any resolution with respect to any termination of this Agreement by the Company,
any amendment of this Agreement requiring action by the Board of Directors of
the Company, any extension of time for the performance of any of the obligations
or other acts of IHK or Merger Sub under this Agreement, any waiver of
compliance with any of the agreements or conditions under this Agreement for the
benefit of the Company, and any action to seek to enforce any obligation of IHK
or Merger Sub under this Agreement. The Continuing Directors shall be appointed
as a Special Committee of the Board of Directors of the Company and, in addition
to having all of the powers of the Continuing Directors set out in the preceding
sentence, the Special Committee shall have the full power over all issues
relating to the relationship between the Company on the one hand and IHK and
Merger Sub on the other and the Company shall not take any action if, in the
opinion of a majority of the Special Committee, such action would frustrate or
be reasonably likely to impair or delay the ability of the parties to consummate
the Merger. In connection herewith, the Continuing Directors (as such or in
their capacity as the Special Committee) shall be authorized, on behalf of and
at the expense of the Company, to retain financial and legal advisors.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, the Merger
shall occur as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. The Company
shall be the surviving corporation in the Merger (the "Surviving Corporation")
under the name SAVANNAH FOODS & INDUSTRIES, INC. (or such other name as the
parties shall agree) and shall continue its existence under the laws of
Delaware. The separate corporate existence of Merger Sub shall cease.
SECTION 2.02 Effective Time; Closing.
(a) The closing of the Merger (the "Closing") will take place on the day
that is two Business Days (as defined below) after satisfaction or waiver
(subject to applicable Law (as defined below)) of the conditions set forth in
Article VII (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date), unless another time or date is agreed to in writing by
the parties hereto. The Closing shall be held at the offices of Xxxxxxx & Xxxxx
L.L.P., 4200 Texas Commerce Tower, 000 Xxxxxx, Xxxxxxx, Xxxxx 00000, unless
another place is agreed to in writing by the parties hereto.
5
(b) As soon as practicable following the Closing, the parties hereto shall
cause the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of Delaware in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL. The term "Effective Time"
means the date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time as may be agreed
in writing by each of the parties hereto and specified in the Certificate of
Merger; provided, however, that for financial accounting purposes, the Effective
Time shall be the first day of the month in which the Closing occurs.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL and set forth herein.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation and By-Laws. The Certificate
of Incorporation and the By-Laws of Merger Sub, in each case as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation; provided, however, that
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read in its entirety as follows: "ARTICLE I. The name of the
Corporation is SAVANNAH FOODS & INDUSTRIES, INC." (or such other name as the
parties shall agree).
SECTION 2.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time and the officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected and qualified.
SECTION 2.06 Conversion of Shares.
(a) At the Effective Time, except as otherwise provided herein and subject
to Section 2.06(b), each share of Company Common Stock, issued and outstanding
immediately prior to the Effective Time (other than the shares of Company Common
Stock owned by IHK, Merger Sub or any of their Subsidiaries or held in the
treasury of the Company, all of which shall be canceled and cease to exist,
without consideration being payable therefore (the "Excluded Shares"), shall, by
virtue of the Merger and, except as provided in Section 2.11, without any action
on the part of the holder thereof, be converted into, exchanged for and
represent the right to receive (without interest), subject to the proration
procedures described below, either (i) the Stock Consideration (as defined
below) or (ii) cash in an amount equal to the Offer Price ("Cash Consideration"
and, together with the Stock Consideration, the "Merger Consideration"));
provided, however, that, in any event, if between the date of this Agreement and
the Effective Time the outstanding shares of IHK Common Stock or Company Common
Stock shall have been changed into a different number of shares or a
6
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Cash
Consideration and the Stock Consideration shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. All shares of Company Common Stock so
converted or exchanged shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to receive, upon
the surrender of such certificate in accordance with the provisions of Section
2.11, only the applicable Merger Consideration and any cash to be paid in lieu
of fractional shares of IHK Common Stock and associated fractional rights ("IHK
Purchase Rights") to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock, without par value, of IHK ("IHK Junior Preferred
Stock") pursuant to the Rights Agreement, dated as of September 14, 1989, as
amended (the "IHK Rights Agreement"), between IHK and The Bank of New York, as
rights agent, to which such holder is entitled pursuant to Section 2.10(e)
(without interest thereon). The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided herein or by law. IHK shall
prepare a statement setting forth the calculations required or otherwise
contemplated by this Section 2.06 in reasonable detail prior to the Closing Date
and shall furnish a copy thereof to the Company.
(b) Notwithstanding anything in this Agreement to the contrary, the number
of shares of Company Common Stock (the "Cash Election Number") to be converted
into the right to receive the Cash Consideration in the Merger shall be equal to
70% of the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time less the sum of (i) the number of
Dissenting Shares (as hereinafter defined) and (ii) the number of Excluded
Shares.
(c) In the event that the aggregate number of shares in respect of which
Cash Elections (as defined below) have been made (the "Cash Election Shares")
exceeds the Cash Election Number, each share of Company Common Stock in respect
of which a Cash Election has not been made shall be converted into the right to
receive the Stock Consideration, and each of the Cash Election Shares shall be
converted into the right to receive the Stock Consideration or the Cash
Consideration in the following manner:
(i) A proration factor (the "Proration Factor") shall be determined by
dividing the Cash Election Number by the total number of Cash Election Shares.
(ii) The number of Cash Election Shares as to which each stockholder who
made a Cash Election shall be converted into the right to receive the Cash
Consideration (on a consistent basis among stockholders who made a Cash Election
pro rata to the number of shares as to which they made such elections) shall be
equal to the product of the Proration Factor multiplied by the total number of
Cash Election Shares beneficially owned by such stockholder.
7
(iii) Subject to Section 2.10(e), each Cash Election Share other than
those shares that shall receive the Cash Election Amount in accordance with
Section 2.06(c)(ii), shall be converted into the right to receive the Stock
Consideration.
(d) Subject to Section 2.10(e), if the number of Cash Election Shares is
less than the Cash Election Number, then:
(i) Each Cash Election Share shall be converted into the right to receive
the Cash Consideration; and
(ii) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time other than Cash Election Shares, the shares of
Company Common Stock to be canceled in accordance with Section 2.06(e) and
Dissenting Shares (the "Eligible Shares"), shall be converted into the right to
receive the Cash Consideration or the Stock Consideration in the following
manner:
(A) The number of Eligible Shares to be converted into the right to receive
the Cash Consideration shall be equal to the excess of the Cash Election Number
over the number of Cash Election Shares (which shall be allocated on a basis
consistent among all stockholders who beneficially own Eligible Shares pro rata
to the number of Eligible Shares beneficially owned by each such stockholder).
(B) Each other Eligible Share shall be converted into the right to receive
the Stock Consideration.
(e) At the Effective Time, each Excluded Share shall be canceled without
any conversion thereof and no payment or distribution shall be made with respect
thereto.
SECTION 2.07 Conversion of Common Stock of Merger Sub. Each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become at the Effective Time one
share of common stock of the Surviving Corporation.
SECTION 2.08 Stockholders' Meetings. Subject to applicable law, each
of IHK and the Company, acting through its respective Board of Directors, shall,
in accordance with applicable law, duly call, give notice of, convene and hold a
special meeting (the "Special Meetings" or the "Stockholders' Meetings") of its
respective stockholders as soon as practicable for the purpose (in the case of
the Company) of approving and adopting the agreement of merger (within the
meaning of Section 251 of the DGCL) set forth in this Agreement and approving
the Merger (the "Company Stockholder Approval") or (in the case of IHK) the
issuance of the shares of IHK Common Stock to the stockholders of the Company
in the Merger (the "IHK Stockholder Approval" and together with the Company
Stockholder Approval, the "Stockholder Approvals"), and, subject to the
fiduciary duties of the respective Boards of Directors under applicable law as
determined by such
8
directors in good faith after consultation with and based upon the advice of
outside counsel, include in the Proxy Statement (as defined in Section 6.02) of
each of the Company and IHK for use in connection with the Special Meetings,
the recommendation of their Boards of Directors that stockholders vote in favor
of the Company Stockholder Approval or IHK Stockholder Approval, as the case may
be. The Company and IHK agree to use commercially reasonable efforts to cause
the Special Meetings to occur within 30 days after the Registration Statement
(as defined below in Section 3.21) is effective under the Securities Act. IHK
and Merger Sub agree that, at the Company Stockholders' Meeting, all of the
shares of Company Common Stock acquired pursuant to the Offer or otherwise by
IHK or Merger Sub will be voted in favor of the Company Stockholder Approval.
SECTION 2.09 Rights Under Stock Plans.
(a) Each unexpired and unexercised option to purchase shares of Company
Common Stock (the "Company Options") issued pursuant to the Company's 1996
Equity Incentive Plan (the "Company Stock Option Plan"), or otherwise granted
by the Company outside the Company Stock Option Plan, each of which issued and
outstanding Company Options are set forth in Section 3.03 of the Company
Disclosure Schedule (as defined below), shall, at the Effective Time and at the
election of the holder of such Company Options, either (i) be assumed by IHK and
shall constitute an option to acquire, on the same terms and conditions as were
applicable under such assumed Company Option, a number of shares of IHK Common
Stock equal to the product of (A) the Stock Consideration and (B) the number of
shares of Company Common Stock subject to such Company Option, at a price per
share equal to the amount obtained by dividing the exercise price of such
Company Option by the Stock Consideration (the "Substitute Options") or (ii)
each Company Option which is vested or exercisable or shall become vested or
exercisable as a result of the Offer or the Merger shall be canceled by the
Company, and each holder of a Company Option so canceled shall be entitled to
receive an amount in cash equal to the difference between the Offer Price and
the exercise price of such Company Option. Each holder of a Company Option
shall make such election by notifying the Company and IHK by 5:00 p.m. New York
City time on the Election Date (as defined below). At the Effective Time, IHK
shall deliver to holders of Company Options, who make the election set forth in
clause (i) of the preceding sentence, appropriate option agreements representing
the right to acquire shares of IHK Common Stock on the same terms and conditions
as contained in the outstanding Company Options. IHK shall adopt and comply
with the terms of the Company Stock Option Plan as it applies to Company Options
assumed as set forth above including, without limitation, provisions regarding
the accelerated vesting of Company Options which shall occur by virtue of
consummation of the Merger, to the extent required by the terms of such Company
Options or the Company Stock Option Plan. The date of grant of each Substitute
Option shall be deemed to be the date on which the corresponding Company Option
was granted. It is the intention of the parties that, subject to applicable
Law, the Substitute Options qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to the extent that the Company Options qualified as
incentive stock options prior to the Effective Time.
9
(b) IHK shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of IHK Common Stock for delivery upon exercise of
Company Options assumed in accordance with this Section 2.09. Promptly after
the Effective Time, the shares of IHK Common Stock subject to Substitute Options
shall be covered by an effective registration statement on Form S-8 (or any
successor form) or another appropriate form and IHK shall use commercially
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements for so long as Substitute Options remain outstanding.
In addition, IHK shall use commercially reasonable efforts to cause the shares
of IHK Common Stock subject to Substitute Options to be listed on the Listing
Market (as defined below).
SECTION 2.10 Exchange of Certificates.
(a) Prior to the mailing of the Proxy Statement, IHK shall appoint a bank
or trust company to act as paying agent (the "Exchange Agent") for the payment
of the Merger Consideration. As of or promptly after the Effective Time, IHK
shall deposit the aggregate Merger Consideration with the Exchange Agent for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II.
(b) As soon as practicable after the Effective Time, each holder of an
outstanding certificate or certificates which prior thereto represented shares
of Company Common Stock shall, upon surrender to the Exchange Agent of such
certificate or certificates and acceptances thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number of full shares
of IHK Common Stock received as Stock Consideration and the Cash Consideration,
if any, into which the number of shares of Company Common Stock previously
represented by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. After the Effective Time, there shall be no
further transfer on the records of the Company or its transfer agent of
certificates representing shares of Company Common Stock, and if such
certificates are presented to the Surviving Corporation for transfer, they shall
be canceled against delivery of cash and/or certificates for shares of IHK
Common Stock in accordance with this Agreement. If any certificate for such
shares of IHK Common Stock is to be issued in, or if cash is to be remitted to,
a name other than that in which the certificate for shares of Company Common
Stock surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed, with
signature guaranteed or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Surviving Corporation or its
transfer agent any transfer or other taxes required by reason of the issuance of
certificates for such shares of IHK Common Stock in a name other than that of
the registered holder of the certificate surrendered, or establish to the
satisfaction of the Surviving Corporation or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.10(b), each certificate for shares of Company Common Stock shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger Consideration as contemplated by
Section 2.06.
10
(c) No dividends or other distributions with respect to shares of IHK
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered certificate for shares of Company Common Stock with
respect to the shares of IHK Common Stock represented thereby and no cash
payment in lieu of fractional shares of IHK Common Stock shall be paid to any
such holder pursuant to Section 2.10(e) until the surrender of the certificate
for shares of Company Common Stock with respect to the shares of IHK Common
Stock represented thereby in accordance with this Article II. Subject to the
effect of applicable laws, following surrender of any such certificates, these
shall be paid to the holder of the certificate representing whole shares of IHK
Common Stock issued in connection therewith, without interest (i) at the time of
such surrender the amount of any cash payable in lieu of fractional shares to
which such holder is entitled pursuant to Section 2.10(e) and the proportionate
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such shares of IHK Common Stock,
and (ii) at the appropriate payment date, the proportionate amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of IHK Common Stock.
(d) All cash paid upon the surrender for exchange of certificates
representing shares of Company Common Stock in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.10(e)) shall be deemed
to have been issued (and paid) in full satisfaction of all rights pertaining to
the shares of Company Common Stock exchanged for cash theretofore represented by
such certificates.
(e) Notwithstanding any other provisions of this Agreement, each holder of
shares of Company Common Stock after the Effective Time who would otherwise have
been entitled to receive as Stock Consideration a fraction of a share of IHK
Common Stock (after taking into account all shares of Company Common Stock
delivered by such holder) shall receive, in lieu thereof, a cash payment
(without interest) equal to such fraction multiplied by the Cash Consideration.
(f) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 2.10 (the "Exchange Fund") which remains
undistributed to the holders of the certificates representing shares of Company
Common Stock for six months after the Effective Time shall be delivered to IHK,
and any holders of shares of Company Common Stock prior to the Effective Time
who have not theretofore complied with this Article II shall thereafter look
only to IHK and only as general creditors thereof for payment of their claim for
cash or shares of IHK Common Stock, if any.
(g) None of Merger Sub, the Company, IHK or the Exchange Agent shall be
liable to any person in respect of any cash or any shares of IHK Common Stock
from the Exchange Fund delivered to a public office pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
shares of Company Common Stock shall not have been surrendered immediately prior
to the date on which any Merger Consideration in respect of such certificate
would otherwise escheat to or become the property of any Government Authority,
any such Merger Consideration in respect of such certificate shall, as such time
and to the extent permitted by
11
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(h) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by IHK, on a daily basis, provided that such investments shall be in
obligations of the United States of America or obligations fully guaranteed as
to principal and interest by the United States of America, any of which may be
made through a repurchase agreement in commercially reasonable form with any
bank or other financial institution having capital, surplus and undivided
profits of at least $500,000,000. Any interest and other income resulting from
such investments shall be paid to IHK. To the extent that there are losses with
respect to such investments, or the Exchange Fund diminishes for other reasons
below the level required to make prompt payments of the Merger Consideration as
contemplated hereby, IHK shall promptly replace or restore the portion of the
Exchange Fund lost through investments or other events so as to ensure that the
Exchange Fund is, at all times, maintained at a level sufficient to make such
payments.
(i) The Company shall pay all charges and expenses of the Exchange Agent.
SECTION 2.11 Elections.
(a) Each person who, on or prior to the Election Date referred to in
paragraph (c) below, is a record holder of shares of Company Common Stock (other
than holders of shares to be canceled as set forth in Section 2.06(a)) will be
entitled, with respect to all or any portion of his shares, to make an
unconditional election (a "Cash Election") on or prior to such Election Date to
receive the Cash Consideration (subject to Section 2.06), on the basis
hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement, IHK shall appoint the
Exchange Agent for the payment of the Merger Consideration.
(c) The Company shall prepare and mail a form of election, which form shall
be subject to the reasonable approval of IHK and Merger Sub (the "Form of
Election"), with the Proxy Statement to the record holders of shares of Company
Common Stock as of the record date for the Company Stockholders' Meeting, which
Form of Election shall be used by each record holder of shares of Company Common
Stock who wishes to make a Cash Election, subject to the provisions of Section
2.06 hereof, for any or all shares of Company Common Stock held by such holder.
The Company will use commercially reasonable efforts to make the Form of
Election and the Proxy Statement available to all persons who become holders of
shares of Company Common Stock during the period between such record date and
the Election Date referred to below. Any such holder's Cash Election shall have
been properly made only if the Exchange Agent shall have received at its
designated office, by 5:00 p.m., New York City time on the Business Day (the
"Election Date") next preceding the day on which the vote is taken at the
Company Stockholders' Meeting (or any adjournment thereof) a Form of Election
properly completed and signed and accompanied by certificates for the shares of
Company Common Stock to which such Form of Election relates (or by an
appropriate guarantee of delivery of such certificates as set forth in such Form
of Election from
12
a firm which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within three NYSE
trading days after the date of execution of such guarantee of delivery).
Failure to deliver shares covered by such a guarantee of delivery within the
time set forth therein shall invalidate an otherwise properly made Cash
Election.
(d) Any Form of Election may be revoked by the stockholder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent (i)
prior to 5:00 p.m., New York City time, on the Election Date or (ii) after the
date of the Company Stockholders Meeting, if (and to the extent that) the
Exchange Agent is legally required to permit revocations and the Effective Time
shall not have occurred prior to such date. In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified in writing by
IHK, Merger Sub and the Company that the Merger has been abandoned. If a Form
of Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the shares of Company Common Stock to which such
Form of Election relates shall be promptly returned to the stockholder
submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be binding as to whether
or not elections to receive the Cash Consideration have been properly made or
revoked pursuant to this Section 2.11 with respect to shares of Company Common
Stock and when elections and revocations were received by it. If the Exchange
Agent determines that any Cash Election was not properly made with respect to
shares of Company Common Stock, such shares of Company Common Stock shall be
treated by the Exchange Agent as shares of Company Common Stock which were not
Cash Election Shares at the Effective Time, and such shares of Company Common
Stock shall be exchanged in the Merger for Stock Consideration pursuant to
Section 2.06. The Exchange Agent shall also make all computations as to the
allocation and the proration contemplated by Section 2.06, and any such
computation shall be conclusive and binding on the holders of shares of Company
Common Stock. The Exchange Agent may, with the mutual agreement of IHK and
Merger Sub, make such rules as are consistent with this Section 2.11 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
SECTION 2.12 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock which are held by stockholders who did not vote in favor of the Merger and
who comply with all of the relevant provisions of Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into or be exchanged for the right
to receive the Merger Consideration (but instead shall be converted into the
right to receive payment from the Surviving Corporation with respect to such
Dissenting Shares in accordance with the DGCL), unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the DGCL. If any such holder shall have failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
shares of Company Common Stock shall be entitled to receive either (i) the Stock
Consideration or (ii) the Cash Consideration in accordance with Section 2.06.
The Company shall give prompt notice to
13
Merger Sub and IHK of any demands received by the Company for appraisal of
shares of Company Common Stock, and Merger Sub and IHK shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Merger
Sub and IHK, make any payment with respect to, or settle or offer to settle, any
such demands. IHK agrees to invest in, or lend to, the Surviving Corporation
sufficient funds to permit any payment with respect to Dissenting Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), the
Company hereby represents and warrants to IHK and the Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Company Subsidiary") is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined below). The
Company and each Company Subsidiary are duly qualified or licensed as a foreign
corporation to do business, and are in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by the Company and the
respective Company Subsidiaries or the nature of their respective businesses
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "Company
Material Adverse Effect" means any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes, circumstances
and effects, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities (including, without limitation,
contingent liabilities), financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole. Section 3.01 of the
Company Disclosure Schedule sets forth, as of the date of this Agreement, a true
and complete list of all of the Company Subsidiaries, together with the
jurisdiction of incorporation of each Company Subsidiary and the percentage of
each Company Subsidiary's outstanding capital stock or other equity interests
owned by the Company and the Company Subsidiaries, as the case may be, and the
name of each other holder of any such outstanding capital stock or other equity
interests and the percentage so held with respect to each such Company
Subsidiary. There are no partnerships or joint venture arrangements or other
business entities in which the Company or any Company Subsidiary owns an equity
interest that are material to the business of the Company and the Company
Subsidiaries taken as a whole.
14
SECTION 3.02 Certificate of Incorporation and By-Laws. The Company has
made available to IHK complete and correct copies of its Certificate of
Incorporation and By-Laws and the certificates of incorporation and by-laws or
other comparable charter or organizational documents of the Company
Subsidiaries, in each case as amended to the date of this Agreement. The Company
is not in violation of any of the provisions of its Certificate of Incorporation
or By-Laws. Except as would not have a Company Material Adverse Effect, no
Company Subsidiary is in violation of any of the provisions of its Certificate
of Incorporation or By-Laws or other comparable charter or organizational
documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 64,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock ("Company Preferred Stock"). As of September 1, 1997,
(i) 28,738,196 shares of Company Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable and 2,500,000 of which
are held by Wachovia Bank, N.A. (formerly Wachovia Bank of North Carolina N.A.),
as trustee of the trust created pursuant to the Savannah Foods & Industries,
Inc. Benefit Trust Agreement (the "Benefit Trust"; shares held by the trustee of
the Benefit Trust immediately prior to the Effective Time being referred to
herein as the "Benefit Trust Shares"); (ii) 2,568,604 shares of Company Common
Stock are held in the treasury of the Company; (iii) 1,250,000 shares of Company
Common Stock are reserved for future issuance pursuant to Company Options and
(iv) 1,000,000 shares of Company Preferred Stock are reserved for issuance
pursuant to the Rights Agreement, dated as of March 31, 1989, between the
Company and Citizens and Southern Trust Company, as Rights Agent (as amended,
the "Company Rights Agreement"). Except for Company Options heretofore granted
pursuant to the Company Stock Option Plan or pursuant to agreements or
arrangements described in Section 3.03 of the Company Disclosure Schedule and
the Preferred Stock Purchase Rights (the "Company Rights") issued pursuant to
the Company Rights Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company Subsidiary.
All shares of Company Common Stock and Company Preferred Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or Company
Preferred Stock or any capital stock of any Company Subsidiary. Each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. Neither
the Company nor any Company Subsidiary directly or indirectly owns, or has
agreed to purchase or otherwise acquire, 5% or more of the capital stock of any
corporation, partnership, joint venture or other business association or entity,
assuming for such purpose the conversion of all securities convertible into such
capital stock held by the Company or any Company Subsidiary and the
15
exercise of all warrants, options and other rights of the Company or any Company
Subsidiary to purchase such capital stock (other than the Company Subsidiaries
set forth in Section 3.01 of the Company Disclosure Schedule). There are no
material outstanding contractual obligations of the Company or any Company
Subsidiary to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any other
Person. There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of capital stock of the Company or any Company Subsidiary.
SECTION 3.04 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding shares of Company Common Stock, and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by IHK and Merger Sub, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or principles governing the
availability of equitable remedies).
(b) The Company's Board of Directors has approved the Offer, the Merger and
this Agreement, and such approval is sufficient to render inapplicable to the
Offer, the Merger and this Agreement and the transactions contemplated by this
Agreement the provisions of Section 203 of the DGCL. To the Knowledge of the
Company, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Company or any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and other actions
described in Section 3.05(b) have been obtained and all filings and obligations
described in Section 3.05(b) have been made, conflict with or violate any
foreign or domestic Law applicable to the Company or any Company Subsidiary or
by which any property or asset of the Company or any Company Subsidiary is bound
or affected, or (iii) result in any breach
16
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" Laws ("Blue Sky Laws"), the NYSE,
the Listing Market and state takeover Laws, the pre-merger notification
requirements of the HSR Act, and filing and recordation of appropriate merger
documents as required by the DGCL and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.06 Permits; Compliance. Each of the Company and the Company
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
Company Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not, individually or in the aggregate, have a Company Material
Adverse Effect, and, as of the date hereof, no suspension or cancellation of any
of the Company Permits is pending or, to the Knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits would not, individually or in the aggregate, have
a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or affected
or (iii) any Company Permits, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since October 1, 1995 (collectively, the "Company SEC
Reports"). The Company SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act, or the
17
Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Company Subsidiary is required to file any form, report or other
document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Reports (the "Company Financial
Statements"), (i) was prepared from the books of account and other financial
records of the Company and the consolidated Company Subsidiaries, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) presented
fairly, in all material respects, the consolidated financial position of the
Company and the consolidated Company Subsidiaries as at the respective dates
thereof and the results of their operations and their cash flows for the
respective periods indicated therein except as otherwise noted therein (subject,
in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect and the omission of
footnotes).
(c) The books of account and other financial records of the Company and the
Company Subsidiaries from which the Company Financial Statements were prepared:
(i) reflect all items of income and expense and all assets and liabilities
required to be reflected therein in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Company, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.
(d) Except for liabilities and obligations reflected on the September 29,
1996 consolidated balance sheet of the Company (including the notes thereto),
liabilities and obligations disclosed in the Company SEC Reports filed prior to
the date of this Agreement and other liabilities and obligations incurred in the
ordinary course of business consistent with past practice since September 29,
1996, neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which, individually or in the aggregate, are or are reasonably likely to be
material to the Company and the Company Subsidiaries taken as a whole.
(e) The Company has heretofore furnished to IHK complete and correct copies
of (i) all agreements, documents and other instruments not yet filed by the
Company with the SEC but that are currently in effect and that the Company
expects to file with the SEC after the date of this Agreement and (ii) all
amendments and modifications that have not been filed by the Company with the
SEC to all agreements, documents and other instruments that previously have been
filed by the Company with the SEC and are currently in effect.
18
SECTION 3.08 Absence of Certain Changes or Events. Since September
29, 1996, except as contemplated by this Agreement or as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, the Company and
the Company Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (a) any Company Material Adverse Effect, (b) any change by the
Company in its accounting methods, principles or practices, except as may be
required by U.S. GAAP, (c) any damage, destruction or loss (whether or not
covered by insurance) with respect to properties or assets of the Company or any
Company Subsidiary that, individually or in the aggregate, would result in a
Company Material Adverse Effect, (d) any declaration, setting aside or payment
of any dividend or distribution in respect of shares of Company Common Stock or
any redemption, purchase or other acquisition of any of its securities other
than the previously declared regular quarterly dividend of $0.0375 per share of
Company Common Stock, (e) any revaluation by the Company and the Company
Subsidiaries of any asset (including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts receivable), other
than in the ordinary course of business consistent with past practice, (f) any
entry by the Company or any Company Subsidiary into any commitment or
transaction material to the Company and the Company Subsidiaries taken as a
whole, except in the ordinary course of business consistent with past practice,
(g) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
the Company or any Company Subsidiary, except in the ordinary course of business
consistent with past practice, (h) any acquisition or disposition by the Company
or any Company Subsidiary of any material asset, except in the ordinary course
of business consistent with past practice, (i) any incurrence, assumption or
guarantee of any indebtedness or obligation relating to any lending or borrowing
except current liabilities and commitments incurred in the ordinary course of
business consistent with past practice, or (j) any amendment, modification or
termination of any existing, or entering into any new, material contract, or any
material plan, lease, license, permit or franchise, except in the ordinary
course of business consistent with past practice.
SECTION 3.09 Absence of Litigation.
(a) Except as set forth in Section 3.09 of the Company Disclosure Schedule,
there is no litigation, suit, claim, action, proceeding or investigation pending
or, to the Knowledge of the Company, threatened against or affecting the Company
or any Company Subsidiary, or any property or asset of the Company or any
Company Subsidiary, before any court, arbitrator or Governmental Entity, which
(i) individually or in the aggregate has had or is reasonably likely to have a
Company Material Adverse Effect or (ii) seeks to delay or prevent the
consummation of the Offer or the Merger.
(b) Neither the Company nor any Company Subsidiary nor any property or
asset of the Company or any Company Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of the Company,
19
continuing investigation by, any Governmental Entity, or any Order,
determination or award of any Governmental Entity or arbitrator having or
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 3.10 Employee Benefit Plans; Labor Matters.
(a) Section 3.10(a) of the Company Disclosure Schedule contains a true and
complete list of (i) all "employee benefit plans" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements to which the Company or any Company Subsidiary is a party, by which
the Company or any Company Subsidiary is bound, with respect to which the
Company or any Company Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Company Subsidiary and (ii) each employee benefit plan for which the Company
or any Company Subsidiary could incur liability under Section 4069 of ERISA, in
the event such plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company or any Company Subsidiary remains secondarily
liable under Section 4204 of ERISA (collectively, the "Company Plans"). Each
Company Plan is in writing and the Company has previously made available to IHK
a true and complete copy of each Company Plan and a true and complete copy of
(1) each trust or other funding arrangement, (2) each summary plan description
and summary of material modifications, (3) the most recently filed Internal
Revenue Service ("IRS") Form 5500, (4) the most recently received IRS
determination letter for each such Company Plan, and (5) the most recently
prepared actuarial report and financial statement in connection with each such
Company Plan. Neither the Company nor any Company Subsidiary has any express or
implied commitment (I) to create, to incur liability with respect to, or to
cause to exist any other employee benefit plan, program or arrangement, (II) to
enter into any contract or agreement to provide compensation or benefits to any
individual or (III) to modify, change or terminate any Company Plan (other than
with respect to a modification, change or termination required by ERISA or the
Code).
(b) None of the Company Plans is a multiemployer plan, within the meaning
of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Company Subsidiary could incur liability under Section
4063 or 4064 of ERISA (a "Multiple Employer Plan"). With respect to each Company
Plan, neither the Company nor any Company Subsidiary nor any trade or business,
whether or not incorporated (a "Company ERISA Affiliate") that together with the
Company or any Company Subsidiary would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA has made or suffered a "complete withdrawal"
or a "partial withdrawal" as such terms are respectively defined in Sections
4203 and 4205 of ERISA (or any liability resulting therefrom has been satisfied
in full). None of the Company Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any Person, (ii)
20
obligates the Company or any Company Subsidiary to pay separation, severance,
termination or other benefits as a result of the Merger or (iii) obligates the
Company or any Company Subsidiary to make any payment or provide any benefit
that would be subject to a tax under Section 4999 of the Code. None of the
Company Plans provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary.
(c) Each Company Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS
that such Company Plan is so qualified and each trust established in connection
with any Company Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that such trust is so exempt. To the Company's Knowledge, no fact
or event has occurred since the date of any such determination letter from the
IRS that would adversely affect the qualified status of any such Company Plan or
the exempt status of any such trust. Each trust maintained or contributed to by
the Company or any Company Subsidiary which is intended to be qualified as a
voluntary employees' beneficiary association exempt from federal income taxation
under Sections 501(a) and 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and, to
the Company's Knowledge, no fact or event has occurred since the date of such
determination by the IRS that would adversely affect such qualified or exempt
status.
(d) To the Company's Knowledge, there has been no non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Company Plan. Neither the Company nor any Company
Subsidiary is currently liable or has previously incurred any liability for any
tax or penalty (other than any tax or penalty that would not have a Company
Material Adverse Effect) arising under Section 4971, 4972, 4979, 4980 or 4980B
of the Code or Section 502(c) of ERISA, and to the Company's Knowledge, no fact
or event exists which would give rise to any such liability. Neither the
Company nor any Company Subsidiary has incurred any liability (other than any
liability that would not have a Company Material Adverse Effect) under, arising
out of or by operation of Title IV of ERISA that has not been satisfied in full
(other than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee pension
benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any
Multiemployer Plan or Multiple Employer Plan, and, to the Company's Knowledge,
no fact or event exists which would give rise to any such liability. No
complete or partial termination has occurred within the five years preceding the
date hereof with respect to any Company Plan. No reportable event (within the
meaning of Section 4043 of ERISA) for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation has not been waived has occurred or is
expected to occur with respect to any Company Plan subject to Title IV of ERISA.
No asset of the Company or any Company Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code; neither the
Company nor any Company Subsidiary has been required to post any security under
Section 307 of ERISA or Section 401(a)(29) of the
21
Code; and no fact or event exists which would give rise to any such lien or
requirement to post any such security.
(e) Each Company Plan is now and has been operated in all respects in
accordance with the requirements of all applicable Laws, including, without
limitation, ERISA and the Code, except where any failure to so operate would not
have a Company Material Adverse Effect. No Company Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived. The Company's September 29,
1996 balance sheet reflects an accrual of all amounts of employer contributions
and premiums accrued but unpaid with respect to the Company Plans. With respect
to each Company Plan subject to Title IV of ERISA, the accumulated benefit
obligations of such Company Plan are set forth in the footnotes to the Company's
September 29, 1996 balance sheet.
(f) The Company and the Company Subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker Adjustment
and Retraining Notification Act and the regulations promulgated thereunder
("WARN") and do not reasonably expect to incur any such liability as a result of
actions taken or not taken prior to the Effective Time. Section 3.10(f) of the
Company Disclosure Schedule lists all notices given by the Company and the
Company Subsidiaries in connection with WARN.
(g) (i) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
Persons employed by the Company or any Company Subsidiary, nor, to the Knowledge
of the Company, are there any activities or proceedings of any labor union to
organize any such employees; (ii) except as would not have a Company Material
Adverse Effect, neither the Company nor any Company Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Company
Subsidiary under any such agreement or contract; (iii) there are no unfair labor
practice complaints pending against the Company or any Company Subsidiary before
the National Labor Relations Board or any current union representation questions
involving employees of the Company or any Company Subsidiary; and (iv) there is
no strike, slowdown, work stoppage or lockout, or, to the Knowledge of the
Company, threat thereof, by or with respect to any employees of the Company or
any Company Subsidiary. The consent of the labor unions which are parties to the
collective bargaining agreements listed in Section 3.10(g) of the Company
Disclosure Schedule is not required to consummate the Merger.
(h) The Board of Directors of the Company has, prior to its execution of
this Agreement, amended each of (i) the Company's Supplemental Executive
Retirement Plan, (ii) the Deferred Compensation Plan for Key Employees of
Michigan Sugar Company, (iii) the Deferred Compensation Plan for Key Employees
of the Company, as amended and restated as of August 12, 1983, and (iv) the
Deferred Compensation Plan for Key Employees of the Company, as amended and
restated as of August 1, 1990 (collectively, the "Company Executive Deferred
Compensation Plans"), to provide that neither the execution of this Agreement,
nor the consummation of the transactions contemplated by this Agreement, shall
constitute a "change in control" for purposes of
22
such Company Executive Deferred Compensation Plans or otherwise will result in
the acceleration of vesting or payment of any benefit, or the triggering of any
ancillary or supplemental benefit or subsidy, under such plan. The Company has
the authority and power to amend the Company Executive Deferred Compensation
Plans as described in this Section 3.10(h) without limitation or restriction
with respect to any current participants or beneficiaries, and none of such
participants or beneficiaries shall have a valid claim in law or equity that
such amendment was not effective against them, or otherwise that they are
entitled to rights or benefits that would have accrued to them under such plans
had they not been so amended.
SECTION 3.11 Intellectual Property. "Intellectual Property Rights"
means trademarks, trademark rights, trade names, trade name rights, patents,
patent rights, industrial models, inventions, copyrights, service marks, trade
secrets, applications for trademarks and for service marks, know-how and other
proprietary rights and information. The Company and the Company Subsidiaries
own, or possess adequate licenses or other valid rights to use, all Intellectual
Property Rights used or held for use in connection with the business of the
Company and the Company Subsidiaries as currently conducted. The conduct of the
business of the Company and the Company Subsidiaries as currently conducted does
not and will not conflict in any way with any Intellectual Property Rights of
any third party that, individually or in the aggregate, would have a Company
Material Adverse Effect. To the Knowledge of the Company, there are no
infringements of an Intellectual Property Right owned by or licensed by or to
the Company or any Company Subsidiary that, individually or in the aggregate,
would have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary has licensed or otherwise permitted the use by any third
party of any Intellectual Property Rights on terms or in a manner which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is in breach of any agreements
pursuant to which the Company or any Company Subsidiary has a license to use
Intellectual Property Rights, which breach has had or is reasonably likely to
have a Company Material Adverse Effect, and the Merger will not constitute such
a breach or otherwise reduce or impair, in any material respect, the rights of
the Company or any Company Subsidiary under such license agreements. No claims
are pending or, to the Knowledge of the Company, threatened by any Person with
respect to the ownership, validity or enforceability of any Intellectual
Property Rights owned by or licensed to or by the Company or any Company
Subsidiary or challenging or questioning the right of the Company or any Company
Subsidiary to use any Intellectual Property Rights, except claims that would
not, if determined adversely to the Company or any Company Subsidiary,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.12 Taxes. The Company and each of the Company Subsidiaries
have (a) filed all federal, state, local and foreign tax returns required to be
filed by them prior to the date of this Agreement (taking into account
extensions), (b) paid or accrued all taxes shown to be due on such returns and
have paid all applicable ad valorem and value added taxes as are due, and (c)
paid or accrued all taxes for which a notice of assessment or collection has
been received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of any failure to file such returns or to pay
or accrue such taxes which would not individually or in the aggregate,
23
have a Company Material Adverse Effect. The Company has open years for federal
income tax returns and state income and franchise tax returns only as set forth
in the Section 3.12 of the Company Disclosure Schedule. The Company and each
Company Subsidiary have withheld or collected and paid over to the appropriate
Governmental Entity (or are properly holding for such payment) all taxes
required by Law to be withheld or collected. Neither the Company nor any
Company Subsidiary has made an election under Section 341(f) of the Code.
Except as set forth in Section 3.12 of the Company Disclosure Schedule, no
requests for waivers of the time to assess any taxes against the Company or any
Company Subsidiary have been granted or are pending, except for requests with
respect to such taxes that have been adequately reserved for in the most recent
financial statements contained in the Company SEC Reports, or, to the extent not
adequately reserved, the assessment of which would not, in the aggregate, have a
Company Material Adverse Effect. Except as set forth in Section 3.12 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary 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 Section 280G of the Code. As used in
this Agreement the term "taxes" includes all federal, state, local and foreign
income, franchise, property, sales, use, excise and other taxes, including
without limitation obligations for withholding taxes from payments due or made
to any other person and any interest, penalties or additions to tax.
SECTION 3.13 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) those substances
defined in or regulated under the following federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Clean Air Act; (B) petroleum and petroleum products including crude
oil and any fractions thereof; (C) natural gas, synthetic gas and any mixtures
thereof; (D) radon; (E) any other pollutant or contaminant; and (F) any
substance with respect to which a federal, state or local agency requires
environmental investigation, monitoring, reporting or remediation; and (ii)
"Environmental Laws" means any Law relating to (A) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(B) the manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (C)
otherwise relating to pollution of the environment or the protection of human
health and safety and natural resources.
(b) Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect: (i) neither the Company nor any Company Subsidiary has
violated or is in violation of any Environmental Law; (ii) none of the
properties owned or leased by the Company or any
24
Company Subsidiary (including, without limitation, soils and surface and ground
waters) are contaminated with any Hazardous Substance; (iii) neither the Company
nor any Company Subsidiary is actually or potentially or, to the Knowledge of
the Company, allegedly liable for any off-site contamination; (iv) neither the
Company nor any Company Subsidiary is actually or potentially or, to the
Knowledge of the Company, allegedly liable under any Environmental Law
(including, without limitation, pending or threatened liens); (v) each of the
Company and each Company Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law ("Company Environmental
Permits"); and (vi) each of the Company and each Company Subsidiary has always
been and is in compliance with its Company Environmental Permits.
SECTION 3.14 Products. Except as would not have a Company Material
Adverse Effect, (a) there have been no written notices, citations or decisions
by any Governmental Entity that any product produced, manufactured, marketed or
distributed by the Company or any Company Subsidiary (the "Company Products") is
defective or fails to meet any applicable standards promulgated by such
Governmental Entity, (b) the Company and the Company Subsidiaries have complied
with all Laws applicable to design, manufacture, labeling, testing and
inspection of Company Products, and (c) there have been no recalls ordered or,
to the knowledge of the Company, threatened by any Governmental Entity with
respect to any of the Company Products. Neither the Company nor any Company
Subsidiary has entered into any agreement or arrangement that limits or
otherwise restricts the Company or any Company Subsidiary or any successor
thereto, or that would limit IHK or any subsidiary thereof or any successor
thereto, from engaging or competing in any line of business or in any geographic
area.
SECTION 3.15 Properties and Assets; Real Property and Leases.
(a) The Company and the Company Subsidiaries have sufficient title to all
their respective properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) Set forth in Section 3.15(b) of the Company's Disclosure Schedule is a
true, correct and complete list (including a general description of the uses for
such real property) of all real property owned or leased by the Company and each
of the Company Subsidiaries.
(c) Except as would not have a Company Material Adverse Effect, each parcel
of real property owned or leased by the Company or any Company Subsidiary (i) is
owned or leased free and clear of all mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties of any kind (collectively, "Liens"), other than
(A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Company Subsidiary consistent with past
practices and (D) all matters of record, Liens and other imperfections of title
and encumbrances (including, without limitation, (l) reservations
25
specified in instruments of conveyance such as deeds and indentures, reserving
in favor of the grantor under such instrument ("Deed Reservations"), the right
to make or construct canals, cuts, sluice-ways, dikes and other works ("Waterway
Works") for the drainage or reclamation of any lands, (2) Deed Reservations for
the exclusive possession of a portion of the land on either side of such
Waterway Works, (3) Deed Reservations reserving an interest in mineral rights,
including without limitation, petroleum, petroleum products, phosphate minerals,
oil and gas, (4) any covenant or restriction pursuant to any deed or recorded
plat affecting the Property and (5) any other Deed Reservation) which,
individually or in the aggregate, would not adversely affect the use of the
property for its intended purpose (Liens described in clauses (A) through (D)
being referred to herein as "Permitted Liens"), and (ii) is neither subject to
any governmental decree or order to be sold nor is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the Knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(d) All leases of real property leased for the use or benefit of the
Company or any Company Subsidiary to which the Company or any Company Subsidiary
is a party or by which the Company or any Company Subsidiary is bound, and all
amendments and modifications thereto are in full force and effect and have not
been modified or amended, and there exists no default under any such lease by
the Company or any Company Subsidiary or any other party thereto, nor any event
which with notice or lapse of time or both would constitute a default thereunder
by the Company or any Company Subsidiary or any other party thereto, except as,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
SECTION 3.16 Insurance. The Company and the Company Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms,
with such deductibles, and covering such risks, including fire and other risks
insured against by extended coverage, as is customarily carried by reasonably
prudent Persons conducting businesses or owning assets similar to those of the
Company and the Company Subsidiaries, and each has maintained in full force and
effect liability insurance against claims for personal injury or death or
property damage occurring in connection with the activities of the Company and
the Company Subsidiaries or any properties owned, occupied or controlled by the
Company or any Company Subsidiary in such amount as is customarily carried by
reasonably prudent Persons conducting businesses or owning assets similar to
those of the Company and the Company Subsidiaries. The Company and each of the
Company Subsidiaries may terminate each of its insurance policies or binders at
or after the Closing and will incur no penalties or other costs in doing so that
would, individually or in the aggregate, have a Company Material Adverse Effect.
None of such policies or binders was obtained through the use of false or
misleading information or the failure to provide the insurer with all
information requested in order to evaluate the liabilities and risks. There is
no material default with respect to any provision contained in any such policy
or binder, nor has the Company or any of the Company Subsidiaries failed to give
any material notice or present any material claim under any such policy or
binders in due and timely fashion. There are no billed but unpaid premiums past
due under any such policy or binder, the failure of which to be paid would
result in the cancellation of such policy or binder. Except as
26
otherwise set forth in the Company SEC Reports or in Section 3.16 of the Company
Disclosure Schedule, (a) there are no outstanding claims in excess of normal
retentions that are not covered under any such policies or binders and, to the
Knowledge of the Company, there has not occurred any event that might
reasonably form the basis of any claim in excess of normal retentions that is
not covered against or relating to the Company or any of the Company
Subsidiaries that is not covered by any of such policies or binders; (b) no
notice of cancellation or non-renewal of any such policies or binders has been
received; and (c), except as set forth in Section 3.16 of the Company Disclosure
Schedule, there are no performance bonds outstanding with respect to the Company
or any of the Company Subsidiaries.
SECTION 3.17 Opinion of Financial Advisor. The Company has received a
fairness opinion of DLJ on the date of this Agreement and the Company will
promptly, upon the execution of this Agreement, deliver a copy of such opinion
to IHK.
SECTION 3.18 Vote Required. The only vote of the holders of any class
or series of capital stock of the Company necessary to approve this Agreement
and the transactions contemplated hereby is the affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock.
SECTION 3.19 Brokers. Except as set forth in Section 3.19 of the
Company's Disclosure Schedule, other than DLJ and The Xxxxxxxx-Xxxxxxxx Company,
Inc. ("Xxxxxxxx-Xxxxxxxx"), no broker, finder or investment banker is entitled
to a brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore made available to IHK a complete and correct copy of all
agreements between the Company and either DLJ or Xxxxxxxx-Xxxxxxxx pursuant to
which such firms would be entitled to any payment relating to the Transactions.
SECTION 3.20 Company Rights Agreement. The Company Rights Agreement
has been amended (the "Company Rights Agreement Amendment") so as to provide
that neither IHK nor Merger Sub will become an "Acquiring Person" and that no
"Stock Acquisition Date" or "Distribution Date" (as such terms are defined in
the Company Rights Agreement) will occur as a result of the approval, execution
or delivery of this Agreement or the consummation of the transactions
contemplated hereby. In addition, the Company Rights Agreement contains no
exception from the definition of "Acquiring Person" for Flo-Sun Incorporated and
its Affiliates.
SECTION 3.21 Information Supplied. The Schedule 14D-9 and any other
documents to be filed by the Company with the SEC or any other governmental or
regulatory authority in connection with the Offer and the other transactions
contemplated hereby will not, on the date of its filing or, with respect to the
Schedule 14D-9, on the date it is filed with the SEC and first published, sent
or given to stockholders, 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, except that no representation is made by the
Company with respect to information supplied in writing by or on behalf of IHK
or
27
Merger Sub expressly for inclusion therein and information incorporated by
reference therein from documents filed by IHK or Merger Sub with the SEC. The
Schedule 14D-9 and any such other documents filed by the Company with the SEC
under the Exchange Act or with any other Governmental Entity under applicable
law will comply as to form in all material respects with the requirements of the
Exchange Act or other applicable law, as the case may be. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Registration Statement
on Form S-4 (together with all amendments thereto, the "Registration Statement")
to be filed with the SEC by IHK in connection with the issuance of shares of IHK
Common Stock in the Merger and as contemplated by Section 2.06 will at the time
the Registration Statement becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and none of the information supplied or to be
supplied by the Company and included or incorporated by reference in the Proxy
Statement (as defined in Section 6.02), as supplemented if necessary, will, at
the date mailed to stockholders of the Company, or at the time of the Company
Stockholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the time of such meeting, any
event with respect to the Company or any Company Subsidiary, or with respect to
other information supplied by the Company for inclusion in the Proxy Statement
or the Registration Statement, shall occur which is required to be described in
an amendment of, or a supplement to, the Proxy Statement or the Registration
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC. The Proxy Statement, insofar as it
relates to other information supplied by the Company for inclusion therein, will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
SECTION 3.22 Termination of Existing Merger Agreement. The Company
has terminated the Agreement and Plan of Merger dated as of July 14, 1997 among
XSF Holdings, Inc., DXE Merger Corp., the Company and Flo-Sun Incorporated (the
"Flo-Sun Agreement"), in accordance with the provisions thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IHK AND
MERGER SUB
Except as set forth in the Disclosure Schedule delivered by IHK and Merger
Sub concurrently with the execution of this Agreement (the "IHK Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), IHK
and Merger Sub, jointly and severally, hereby represent and warrant to the
Company that:
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SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Each of IHK and each subsidiary of IHK (an "IHK Subsidiary") is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have an IHK Material Adverse Effect (as defined below). IHK and
each IHK Subsidiary are duly qualified or licensed as a foreign corporation to
do business, and are in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by IHK and the respective IHK
Subsidiaries or the nature of their respective businesses makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have an IHK Material Adverse Effect. The term "IHK Material
Adverse Effect" means any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes, circumstances
and effects, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities (including, without limitation,
contingent liabilities), financial condition or results of operations of IHK and
the IHK Subsidiaries taken as a whole. Section 4.01 of the IHK Disclosure
Schedule sets forth, as of the date of this Agreement, a true and complete list
of all of the IHK Subsidiaries, together with the jurisdiction of incorporation
of each IHK Subsidiary and the percentage of each IHK Subsidiary's outstanding
capital stock or other equity interests owned by IHK and the IHK Subsidiaries,
as the case may be, and the name of each other holder of any such outstanding
capital stock or other equity interests and the percentage so held with respect
to each such IHK Subsidiary. Except as set forth in Schedule 4.01 of the IHK
Disclosure Schedule, there are no partnerships or joint venture arrangements or
other business entities in which IHK or any IHK Subsidiary owns an equity
interest that are material to the business of IHK and the IHK Subsidiaries taken
as a whole.
(b) Merger Sub is a corporation duly incorporated, validly existing and in
good standing under the Laws of Delaware. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries. Except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger Sub has
not incurred, directly or indirectly, through any Subsidiary or Affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
From the date of this Agreement until the Effective Time, all of the outstanding
capital stock of Merger Sub will be owned directly by IHK.
29
SECTION 4.02 Certificate of Incorporation and By-Laws. IHK has made
available to the Company complete and correct copies of its Articles of
Incorporation and By-Laws and the certificates of incorporation and by-laws or
other comparable charter or organizational documents of the IHK Subsidiaries, in
each case as amended to the date of this Agreement. IHK is not in violation of
any of the provisions of its Articles of Incorporation or By-Laws. Except as
would not have an IHK Material Adverse Effect, no IHK Subsidiary is in violation
of any of the provisions of its Certificate of Incorporation or By-Laws or other
comparable charter or organizational documents.
SECTION 4.03 Capitalization. The authorized capital stock of IHK
consists of 50,000,000 shares of IHK Common Stock and 5,000,000 shares of
preferred stock ("IHK Preferred Stock"). As of September 1, 1997, (i)
14,282,728 shares of IHK Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable; (ii) no shares of IHK Common
Stock are held in the treasury of IHK; (iii) 773,860 shares of IHK Common Stock
are reserved for future issuance pursuant to IHK Options and (iv) 333,334 shares
of IHK Preferred Stock are reserved for issuance pursuant to the IHK Rights
Agreement. Except for IHK Options heretofore granted pursuant to the IHK
Stock Option Plan as set forth in Section 4.03 of the IHK Disclosure Schedule or
pursuant to agreements or arrangements described in Section 4.03 of the IHK
Disclosure Schedule and the IHK Purchase Rights, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of IHK or any IHK Subsidiary or
obligating IHK or any IHK Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, IHK or any IHK Subsidiary. All shares
of IHK Common Stock and IHK Preferred Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding contractual obligations of IHK or
any IHK Subsidiary to repurchase, redeem or otherwise acquire any shares of IHK
Common Stock or IHK Preferred Stock or any capital stock of any IHK Subsidiary.
Each outstanding share of capital stock of each IHK Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and except as set forth
in Section 4.03 of the IHK Disclosure Schedule each such share owned by IHK or
another IHK Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
IHK's or such other IHK Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. Neither IHK nor any IHK Subsidiary
directly or indirectly owns, or has agreed to purchase or otherwise acquire, 5%
or more of the capital stock of any corporation, partnership, joint venture or
other business association or entity, assuming for such purpose the conversion
of all securities convertible into such capital stock held by IHK or any IHK
Subsidiary and the exercise of all warrants, options and other rights of IHK or
any IHK Subsidiary to purchase such capital stock (other than the IHK
Subsidiaries set forth in Section 4.01 of the IHK Disclosure Schedule). Except
as set forth in Section 4.03 of the IHK Disclosure Schedule, there are no
material outstanding contractual obligations of IHK or any IHK Subsidiary to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any IHK Subsidiary or any other Person. Except
for the Investor Agreement dated August 27, 1996, among IHK, Greencore Group plc
and Earlsfort Holdings B.V., there are no voting trusts or other agreements or
understandings to which IHK or any IHK Subsidiary is a party with respect to the
voting of capital stock of IHK or any IHK Subsidiary.
30
SECTION 4.04 Authority Relative to this Agreement. IHK and Merger Sub
have all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by IHK and Merger Sub and the consummation by IHK and Merger Sub of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
IHK or Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of the issuance of the Stock Consideration by the holders of a majority
of the shares of IHK Common Stock voted at the IHK Shareholders' Meeting (as
defined in Section 6.01(b)), and the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly and
validly executed and delivered by IHK and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of IHK and Merger Sub, enforceable against them in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or principles governing the availability
of equitable remedies).
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by IHK and Merger Sub will
not, (i) conflict with or violate the Articles of Incorporation or By-laws or
equivalent organizational documents of IHK, Merger Sub or any other IHK
Subsidiary, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 4.05(b) have been obtained and all filings and
obligations described in Section 4.05(b) have been made, conflict with or
violate any foreign or domestic Law applicable to IHK, Merger Sub or any other
IHK Subsidiary or by which any property or asset of IHK, Merger Sub or any other
IHK Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of IHK, Merger Sub or any other
IHK Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have an IHK Material Adverse Effect.
(b) The execution and delivery of this Agreement by IHK and Merger Sub do
not, and the performance of this Agreement by IHK and Merger Sub will not
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws, the Listing Market and
state takeover Laws, the pre-merger notification requirements of the HSR Act,
and filing and recordation of appropriate merger documents as required by the
DGCL and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent IHK or Merger Sub from
31
performing their respective obligations under this Agreement, and would not,
individually or in the aggregate, have an IHK Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of IHK and the IHK Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for IHK or any IHK Subsidiary to own, lease
and operate its properties or to carry on its business as it is now being
conducted (the "IHK Permits"), except where the failure to have, or the
suspension or cancellation of, any of the IHK Permits would not, individually or
in the aggregate, have an IHK Material Adverse Effect, and, as of the date
hereof, no suspension or cancellation of any of the IHK Permits is pending or,
to the Knowledge of IHK, threatened, except where the failure to have, or the
suspension or cancellation of, any of the IHK Permits would not, individually or
in the aggregate, have an IHK Material Adverse Effect. Neither IHK nor any IHK
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to IHK or any IHK Subsidiary or by which any property or asset of IHK
or any IHK Subsidiary is bound or affected, (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which IHK or any IHK Subsidiary is a party or by
which IHK or any IHK Subsidiary or any property or asset of IHK or any IHK
Subsidiary is bound or affected or (iii) any IHK Permits, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have an IHK Material Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements.
(a) IHK has filed all forms, reports and documents required to be filed by
it with the SEC since March 31, 1995 (collectively, the "IHK SEC Reports"). The
IHK SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. No IHK Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the IHK SEC Reports (the "IHK Financial
Statements"), (i) was prepared from the books of account and other financial
records of IHK and the consolidated IHK Subsidiaries, (ii) was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) presented
fairly, in all material respects, the consolidated financial position of IHK and
the consolidated IHK Subsidiaries as at the respective dates thereof and the
results of their operations and their cash flows for the respective periods
indicated therein except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have an IHK
Material Adverse Effect and the omission of footnotes).
32
(c) The books of account and other financial records of IHK and the IHK
Subsidiaries from which the IHK Financial Statements were prepared: (i) reflect
all items of income and expense and all assets and liabilities required to be
reflected therein in accordance with U.S. GAAP applied on a basis consistent
with the past practices of IHK, (ii) are in all material respects complete and
correct, and do not contain or reflect any material inaccuracies or
discrepancies and (iii) have been maintained in accordance with good business
and accounting practices.
(d) Except for liabilities and obligations reflected on the March 31, 1997
consolidated balance sheet of IHK (including the notes thereto), liabilities and
obligations disclosed in the IHK SEC Reports filed prior to the date of this
Agreement and other liabilities and obligations incurred in the ordinary course
of business consistent with past practice since March 31, 1997, neither IHK nor
any IHK Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, are or are reasonably likely to be material to IHK and the IHK
Subsidiaries taken as a whole.
(e) IHK has heretofore furnished to the Company complete and correct copies
of (i) all agreements, documents and other instruments not yet filed by IHK with
the SEC but that are currently in effect and that IHK expects to file with the
SEC after the date of this Agreement and (ii) all amendments and modifications
that have not been filed by IHK with the SEC to all agreements, documents and
other instruments that previously have been filed by IHK with the SEC and are
currently in effect.
SECTION 4.08 Absence of Certain Changes or Events. Since March 31,
1997, except as contemplated by this Agreement or as disclosed in the IHK SEC
Reports filed prior to the date of this Agreement, IHK and the IHK Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (a) any
IHK Material Adverse Effect, (b) any change by IHK in its accounting methods,
principles or practices, except as may be required by U.S. GAAP, (c) any damage,
destruction or loss (whether or not covered by insurance) with respect to
properties or assets of IHK or any IHK Subsidiary that, individually or in the
aggregate, would result in an IHK Material Adverse Effect, (d) any declaration,
setting aside or payment of any dividend or distribution in respect of shares of
IHK Common Stock or any redemption, purchase or other acquisition of any of its
securities other than the previously declared regular quarterly dividend of
$0.03 per share of IHK Common Stock, (e) any revaluation by IHK and the IHK
Subsidiaries of any asset (including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts receivable), other
than in the ordinary course of business consistent with past practice, (f) any
entry by IHK or any IHK Subsidiary into any commitment or transaction material
to IHK and the IHK Subsidiaries taken as a whole, except in the ordinary course
of business consistent with past practice, (g) any increase in or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of IHK or any IHK Subsidiary, except in the ordinary course of business
consistent with past practice,
33
(h) any acquisition or disposition by IHK or any IHK Subsidiary of any material
asset, except in the ordinary course of business consistent with past practice,
(i) any incurrence, assumption or guarantee of any indebtedness or obligation
relating to any lending or borrowing except current liabilities and commitments
incurred in the ordinary course of business consistent with past practice, or
(j) any amendment, modification or termination of any existing, or entering into
any new, material contract, or any material plan, lease, license, permit or
franchise, except in the ordinary course of business consistent with past
practice.
SECTION 4.09 Absence of Litigation.
(a) Except as set forth in Section 4.09 of the IHK Disclosure Schedule,
there is no litigation, suit, claim, action, proceeding or investigation pending
or, to the Knowledge of IHK, threatened against or affecting IHK or any IHK
Subsidiary, or any property or asset of IHK or any IHK Subsidiary, before any
court, arbitrator or Governmental Entity, which (i) individually or in the
aggregate has had or is reasonably likely to have an IHK Material Adverse Effect
or (ii) seeks to delay or prevent the consummation of the Merger.
(b) Neither IHK nor any IHK Subsidiary nor any property or asset of IHK or
any IHK Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
Knowledge of IHK, continuing investigation by, any Governmental Entity, or any
Order, determination or award of any Governmental Entity or arbitrator having or
reasonably likely to have, individually or in the aggregate, an IHK Material
Adverse Effect.
SECTION 4.10 Employee Benefit Plans; Labor Matters.
(a) Section 4.10(a) of the IHK Disclosure Schedule contains a true and
complete list of (i) all "employee benefit plans" (within the meaning of Section
3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements to which IHK or any IHK Subsidiary is a party, by which IHK or any
IHK Subsidiary is bound, with respect to which IHK or any IHK Subsidiary has any
obligation or which are maintained, contributed to or sponsored by IHK or any
IHK Subsidiary for the benefit of any current or former employee, officer or
director of IHK or any IHK Subsidiary and (ii) each employee benefit plan for
which IHK or any IHK Subsidiary could incur liability under Section 4069 of
ERISA, in the event such plan were terminated, or under Section 4212(c) of
ERISA, or in respect of which IHK or any IHK Subsidiary remains secondarily
liable under Section 4204 of ERISA (collectively, the "IHK Plans"). Each IHK
Plan is in writing and IHK has previously made available to the Company a true
and complete copy of each IHK Plan and a true and complete copy of (1) each
trust or other funding arrangement, (2) each summary plan description and
summary of material modifications, (3) the most recently filed IRS Form 5500,
(4) the most recently received IRS determination letter for each such IHK Plan,
and (5) the most recently prepared actuarial report and financial statement in
connection with each such IHK Plan.
34
Neither IHK nor any IHK Subsidiary has any express or implied commitment (I) to
create, to incur liability with respect to, or to cause to exist any other
employee benefit plan, program or arrangement, (II) to enter into any contract
or agreement to provide compensation or benefits to any individual or (III) to
modify, change or terminate any IHK Plan (other than with respect to a
modification, change or termination required by ERISA or the Code).
(b) Each of the IHK Plans that is a Multiemployer Plan or a Multiple
Employer Plan is designated as such on Section 4.10(b) of the IHK Disclosure
Schedule and, with respect to each IHK Plan so designated, except as would not
have an IHK Material Adverse Effect: (i) neither IHK nor any IHK Subsidiary nor
any trade or business, whether or not incorporated (an "ERISA Affiliate") that
together with IHK or any IHK Subsidiary would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
Sections 4203 and 4205 of ERISA (or any liability resulting therefrom has been
satisfied in full), (ii) no event has occurred that presents a risk of a partial
withdrawal, (iii) neither IHK, nor any IHK Subsidiary, nor any ERISA Affiliate
has any contingent liability under Section 4204 of ERISA, and (iv) no
circumstances exist that present a risk that any such plan will go into
reorganization. With respect to Multiemployer Plans and Multiple Employer
Plans, except as would not have an IHK Material Adverse Effect, neither IHK nor
any IHK Subsidiary would incur withdrawal liability in the event of a complete
withdrawal within the meaning of Title IV of ERISA from any such Plan. None of
the IHK Plans (i) provides for the payment of separation, severance, termination
or similar-type benefits to any Person, (ii) obligates IHK or any IHK Subsidiary
to pay separation, severance, termination or other benefits as a result of the
Merger or (iii) obligates IHK or any IHK Subsidiary to make any payment or
provide any benefit that would be subject to a tax under Section 4999 of the
Code. None of the IHK Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of IHK or any IHK Subsidiary.
(c) Each IHK Plan which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS that such
IHK Plan is so qualified and each trust established in connection with any IHK
Plan which is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that such
trust is so exempt. To IHK's Knowledge, no fact or event has occurred since the
date of any such determination letter from the IRS that would adversely affect
the qualified status of any such IHK Plan or the exempt status of any such
trust. Each trust maintained or contributed to by the IHK or any IHK Subsidiary
which is intended to be qualified as a voluntary employees' beneficiary
association exempt from federal income taxation under Sections 501(a) and
501(c)(9) of the Code has received a favorable determination letter from the IRS
that it is so qualified and so exempt, and, to IHK's Knowledge, no fact or event
has occurred since the date of such determination by the IRS that would
adversely affect such qualified or exempt status.
(d) To IHK's Knowledge, there has been no non-exempt prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any IHK Plan. Neither IHK nor any IHK Subsidiary is currently liable
or has previously incurred any liability for
35
any tax or penalty (other than any tax or penalty that would not have an IHK
Material Adverse Effect) arising under Section 4971, 4972, 4979, 4980 or 4980B
of the Code or Section 502(c) of ERISA, and to IHK's Knowledge, no fact or event
exists which would give rise to any such liability. Neither IHK nor any IHK
Subsidiary has incurred any liability (other than any liability that would not
have an IHK Material Adverse Effect) under, arising out of or by operation of
Title IV of ERISA that has not been satisfied in full (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and, to IHK's Knowledge, no fact or event exists which would give
rise to any such liability. No complete or partial termination has occurred
within the five years preceding the date hereof with respect to any IHK Plan.
No reportable event (within the meaning of Section 4043 of ERISA) for which the
30-day notice requirement to the Pension Benefit Guaranty Corporation has not
been waived has occurred or is expected to occur with respect to any IHK Plan
subject to Title IV of ERISA. No asset of IHK or any IHK Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither IHK nor any IHK Subsidiary has been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code; and no
fact or event exists which would give rise to any such lien or requirement to
post any such security.
(e) Each IHK Plan is now and has been operated in all respects in
accordance with the requirements of all applicable Laws, including, without
limitation, ERISA and the Code, except where any failure to so operate would not
have an IHK Material Adverse Effect. No IHK Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived. IHK's March 31, 1997 balance sheet
reflects an accrual of all amounts of employer contributions and premiums
accrued but unpaid with respect to the IHK Plans. With respect to each IHK Plan
subject to Title IV of ERISA, the accumulated benefit obligations of such IHK
Plan are set forth in the footnotes to IHK's March 31, 1997 balance sheet.
(f) IHK and the IHK Subsidiaries have not incurred any liability under, and
have complied in all respects with, WARN and do not reasonably expect to incur
any such liability as a result of actions taken or not taken prior to the
Effective Time.
(g) (i) Except as set forth in Section 4.10(g) of the IHK Disclosure
Schedule, neither IHK nor any IHK Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to Persons
employed by IHK or any IHK Subsidiary, nor, to the Knowledge of IHK, are there
any activities or proceedings of any labor union to organize any such employees;
(ii) except as would not have an IHK Material Adverse Effect, neither IHK nor
any IHK Subsidiary has breached or otherwise failed to comply with any provision
of any such agreement or contract and there are no grievances outstanding
against IHK or any IHK Subsidiary under any such agreement or contract; (iii)
there are no unfair labor practice complaints pending against IHK or any IHK
Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of IHK or any IHK Subsidiary; and
(iv) there is no strike, slowdown, work stoppage or lockout, or, to the
Knowledge of IHK, threat thereof, by or with respect to any
36
employees of IHK or any IHK Subsidiary. The consent of the labor unions which
are parties to the collective bargaining agreements listed in Section 4.10(g) of
the IHK Disclosure Schedule is not required to consummate the Merger.
SECTION 4.11 Intellectual Property. IHK and the IHK Subsidiaries own,
or possess adequate licenses or other valid rights to use, all Intellectual
Property Rights used or held for use in connection with the business of IHK and
the IHK Subsidiaries as currently conducted. The conduct of the business of IHK
and the IHK Subsidiaries as currently conducted does not and will not conflict
in any way with any Intellectual Property Rights of any third party that,
individually or in the aggregate, would have an IHK Material Adverse Effect. To
the Knowledge of IHK, there are no infringements of an Intellectual Property
Right owned by or licensed by or to IHK or any IHK Subsidiary that, individually
or in the aggregate, would have an IHK Material Adverse Effect. Neither IHK nor
any IHK Subsidiary has licensed or otherwise permitted the use by any third
party of any Intellectual Property Rights on terms or in a manner which,
individually or in the aggregate, would have an IHK Material Adverse Effect.
Neither IHK nor any IHK Subsidiary is in breach of any agreements pursuant to
which IHK or any IHK Subsidiary has a license to use Intellectual Property
Rights, which breach has had or is reasonably likely to have an IHK Material
Adverse Effect, and the Merger will not constitute such a breach or otherwise
reduce or impair, in any material respect, the rights of IHK or any IHK
Subsidiary under such license agreements. No claims are pending or, to the
Knowledge of IHK, threatened by any Person with respect to the ownership,
validity or enforceability of any Intellectual Property Rights owned by or
licensed to or by IHK or any IHK Subsidiary or challenging or questioning the
right of IHK or any IHK Subsidiary to use any Intellectual Property Rights,
except claims that would not, if determined adversely to IHK or any IHK
Subsidiary, individually or in the aggregate, have an IHK Material Adverse
Effect.
SECTION 4.12 Taxes. IHK and each of the IHK Subsidiaries have (a)
filed all federal, state, local and foreign tax returns required to be filed by
them prior to the date of this Agreement (taking into account extensions), (b)
paid or accrued all taxes shown to be due on such returns and have paid all
applicable ad valorem and value added taxes as are due, and (c) paid or accrued
all taxes for which a notice of assessment or collection has been received
(other than amounts being contested in good faith by appropriate proceedings),
except in the case of any failure to file such returns or to pay or accrue such
taxes which would not individually or in the aggregate, have an IHK Material
Adverse Effect. IHK has open years for federal income tax returns and state
income and franchise tax returns only as set forth in the Section 4.12 of the
IHK Disclosure Schedule. IHK and each IHK Subsidiary have withheld or collected
and paid over to the appropriate Governmental Entity (or are properly holding
for such payment) all taxes required by Law to be withheld or collected.
Neither IHK nor any IHK Subsidiary has made an election under Section 341(f) of
the Code. No requests for waivers of the time to assess any taxes against IHK
or any IHK Subsidiary have been granted or are pending, except for requests with
respect to such taxes that have been adequately reserved for in the most recent
financial statements contained in the IHK SEC Reports, or, to the extent not
adequately reserved, the assessment of which would not, in the aggregate, have
an IHK Material Adverse Effect. Except as set forth in Section 4.12 of the IHK
Disclosure Schedule, neither IHK nor any IHK Subsidiary has made any payments,
is obligated to make any payments,
37
or is a party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Section 280G of the
Code. As used in this Agreement the term "taxes" includes all federal, state,
local and foreign income, franchise, property, sales, use, excise and other
taxes, including without limitation obligations for withholding taxes from
payments due or made to any other person and any interest, penalties or
additions to tax.
SECTION 4.13 Environmental Matters. Except as would not, individually
or in the aggregate, have an IHK Material Adverse Effect: (i) neither IHK nor
any IHK Subsidiary has violated or is in violation of any Environmental Law;
(ii) none of the properties owned or leased by IHK or any IHK Subsidiary
(including, without limitation, soils and surface and ground waters) are
contaminated with any Hazardous Substance; (iii) neither IHK nor any IHK
Subsidiary is actually or potentially or, to the Knowledge of IHK, allegedly
liable for any off-site contamination; (iv) neither IHK nor any IHK Subsidiary
is actually or potentially or, to the Knowledge of IHK, allegedly liable under
any Environmental Law (including, without limitation, pending or threatened
liens); (v) each of IHK and each IHK Subsidiary has all permits, licenses and
other authorizations required under any Environmental Law ("IHK Environmental
Permits"); and (vi) each of IHK and each IHK Subsidiary has always been and is
in compliance with its IHK Environmental Permits.
SECTION 4.14 Products. Except as would not have an IHK Material
Adverse Effect, (a) there have been no written notices, citations or decisions
by any Governmental Entity that any product produced, manufactured, marketed or
distributed by IHK or any IHK Subsidiary (the "IHK Products") is defective or
fails to meet any applicable standards promulgated by such Governmental Entity,
(b) IHK and the IHK Subsidiaries have complied with all Laws applicable to
design, manufacture, labeling, testing and inspection of IHK Products, and (c)
there have been no recalls ordered or, to the knowledge of IHK, threatened by
any Governmental Entity with respect to any of the IHK Products. Neither IHK
nor any IHK Subsidiary has entered into any agreement or arrangement that limits
or otherwise restricts IHK or any IHK Subsidiary or any successor thereto, or
that would limit IHK or any subsidiary thereof or any successor thereto, from
engaging or competing in any line of business or in any geographic area.
SECTION 4.15 Properties and Assets; Real Property and Leases.
(a) IHK and the IHK Subsidiaries have sufficient title to all their
respective properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have an IHK Material
Adverse Effect.
(b) Set forth in Section 4.15(b) of IHK's Disclosure Schedule is a true,
correct and complete list (including a general description of the uses for such
real property) of all real property owned or leased by IHK and each of the IHK
Subsidiaries.
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(c) Except as would not have an IHK Material Adverse Effect, each parcel of
real property owned or leased by IHK or any IHK Subsidiary (i) is owned or
leased free and clear of all Liens, other than (A) Liens for current taxes and
assessments not yet past due, (B) inchoate mechanics' and materialmen's Liens
for construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of IHK or such IHK
Subsidiary consistent with past practices and (D) all matters of record, Liens
and other imperfections of title and encumbrances (including, without
limitation, Deed Reservations), (2) Deed Reservations reserving an interest in
mineral rights, including without limitation, petroleum, petroleum products,
phosphate minerals, oil and gas, (3) any covenant or restriction pursuant to any
deed or recorded plat affecting the Property and (4) any other Deed Reservation)
which, individually or in the aggregate, would not adversely affect the use of
the property for its intended purpose, and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the Knowledge of IHK, has any such condemnation,
expropriation or taking been proposed.
(d) All leases of real property leased for the use or benefit of IHK or any
IHK Subsidiary to which IHK or any IHK Subsidiary is a party or by which IHK or
any IHK Subsidiary is bound, and all amendments and modifications thereto are in
full force and effect and have not been modified or amended, and there exists no
default under any such lease by IHK or any IHK Subsidiary or any other party
thereto, nor any event which with notice or lapse of time or both would
constitute a default thereunder by IHK or any IHK Subsidiary or any other party
thereto, except as, individually or in the aggregate, would not have an IHK
Material Adverse Effect.
SECTION 4.16 Insurance. IHK and the IHK Subsidiaries have obtained and
maintained in full force and effect insurance with responsible and reputable
insurance companies or associations in such amounts, on such terms, with such
deductibles, and covering such risks, including fire and other risks insured
against by extended coverage, as is customarily carried by reasonably prudent
Persons conducting businesses or owning assets similar to those of IHK and the
IHK Subsidiaries, and each has maintained in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with the activities of IHK and the IHK
Subsidiaries or any properties owned, occupied or controlled by IHK or any IHK
Subsidiary in such amount as is customarily carried by reasonably prudent
Persons conducting businesses or owning assets similar to those of IHK and the
IHK Subsidiaries. IHK and each of the IHK Subsidiaries may terminate each of
its insurance policies or binders at or after the Closing and will incur no
material penalties or other material costs in doing so. None of such policies
or binders was obtained through the use of false or misleading information or
the failure to provide the insurer with all information requested in order to
evaluate the liabilities and risks. There is no material default with respect
to any provision contained in any such policy or binder, nor has IHK or any of
the IHK Subsidiaries failed to give any material notice or present any material
claim under any such policy or binders in due and timely fashion. There are no
billed but unpaid premiums past due under any such policy or binder, the failure
of which to be paid would result in the cancellation of such policy or binder.
Except as otherwise set forth in the IHK SEC Reports or in Schedule 4.16 of
39
the IHK Disclosure Schedule, (a) there are no outstanding claims in excess of
normal retentions that are not covered under any such policies or binders and,
to the Knowledge of IHK, there has not occurred any event that might reasonably
form the basis of any claim in excess of normal retentions that is not covered
against or relating to IHK or any of the IHK Subsidiaries that is not covered by
any of such policies or binders; (b) no notice of cancellation or non-renewal of
any such policies or binders has been received; and (c) there are no performance
bonds outstanding with respect to IHK or any of the IHK Subsidiaries.
SECTION 4.17 Opinion of Financial Advisor. IHK has received a
fairness opinion of Xxxxxx Brothers Inc. ("Xxxxxx Brothers") on the date of this
Agreement and IHK will promptly, upon the execution of this Agreement by the
Company, deliver a copy of such opinion to the Company.
SECTION 4.18 Vote Required. The only vote of the holders of any class
or series of capital stock of IHK necessary to approve the transactions
contemplated by this Agreement is the approval of the issuance of the Stock
Consideration by the affirmative vote of the holders of a majority of the shares
of IHK Common Stock voted at the IHK Shareholders' Meeting (as defined in
Section 6.01(b)).
SECTION 4.19 Brokers. Except as set forth in Section 4.19 of the IHK
Disclosure Schedule, other than Xxxxxx Brothers, no broker, finder or investment
banker is entitled to a brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of IHK.
IHK has heretofore made available to the Company a complete and correct copy of
all agreements between IHK and Xxxxxx Brothers pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 4.20 Information Supplied.
(a) The Offer Documents and any other documents to be filed by IHK and
Merger Sub with the SEC or any other governmental or regulatory authority in
connection with the Offer and the other transactions contemplated hereby will
not, on the date of its filing or, with respect to the Offer Documents, on the
date they are filed with the SEC and first published, sent or given to
stockholders of the Company and the date shares of Company Common Stock are
purchased pursuant to the Offer, as the case may be, 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, except that no
representation is made by IHK or Merger Sub with respect to information supplied
in writing by or on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed by the
Company or any of the Company Subsidiaries with the SEC. The Offer Documents
and any other such documents filed by IHK or Merger Sub with the SEC under the
Exchange Act or with any other governmental or regulatory authority under
applicable law will comply as to form in all material respects with the
requirements of the Exchange Act or applicable law, as the case may be.
40
(b) Neither the information supplied or to be supplied in writing by or on
behalf of IHK or Merger Sub for inclusion, nor the information incorporated by
reference from documents filed by IHK or any of the IHK Subsidiaries including
Merger Sub, with the SEC, in the Schedule 14D-9, or any other documents to be
filed by IHK or Merger Sub or the Company with the SEC or any other governmental
or regulatory authority in connection with the Offer and the other transactions
contemplated hereby will on the date of its filing or, with respect to the
Schedule 14D-9, on the date it is filed with the SEC and first published, sent
or given to stockholders of the Company, contains any untrue statement of a
material fact or omit to state any material fact required to be stated therein,
in light of the circumstances under which they are made, not misleading.
(c) None of the information supplied or to be supplied by IHK for inclusion
or incorporation by reference in the Registration Statement will at the time the
Registration Statement becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and none of the information supplied or to be
supplied by IHK and included or incorporated by reference in the Proxy
Statement, as supplemented if necessary, will, at the date mailed to
shareholders of IHK, or at the time of the IHK Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the time of such meeting, any event with respect to IHK or any IHK
Subsidiary, or with respect to other information supplied by IHK for inclusion
in the Proxy Statement or the Registration Statement, shall occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the Registration Statement, such event shall be so described, and
such amendment or supplement shall be promptly filed with the SEC. The Proxy
Statement, insofar as it relates to other information supplied by IHK for
inclusion therein, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 4.21 Financing. In connection with the transactions
contemplated by this Agreement, Xxxxxx Brothers Commercial Paper Inc. ("LBCPI")
has issued a commitment letter (the "Xxxxxx Brothers Commitment") to IHK, a true
and correct copy of which has been delivered to the Company, for funds which,
together with cash available to IHK, will enable IHK (or cause Merger Sub) to
(a) pay the Offer Price pursuant to the Offer, (b) pay the Cash Consideration
pursuant to the Merger, (c) refinance such of its existing indebtedness as shall
be necessary to consummate the Offer and the Merger and the financing therefor
and provide working capital prior to the Effective Time and (d) pay related fees
and expenses. Upon consummation of the Offer, IHK will provide funds obtained
from the Xxxxxx Brothers Commitment to Merger Sub sufficient to pay for all
amounts described above.
41
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, except as set forth in Section 5.01 of the Company
Disclosure Schedule or as specifically contemplated by any other provision of
this Agreement, unless IHK shall otherwise agree in writing:
(a) the Company and the Company Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and shall
use commercially reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however, that no action by the
Company or any Company Subsidiary specifically permitted by any other provision
of this Section 5.01 shall be deemed a breach of this Section 5.01(a);
(b) neither the Company nor any Company Subsidiary shall amend or otherwise
change its Certificate of Incorporation or By-Laws or equivalent organizational
documents;
(c) neither the Company nor any Company Subsidiary shall issue, sell,
pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of, (i) any shares of capital stock of the
Company or any Company Subsidiary of any class or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Company Subsidiary (except for (A)
the issuance of a maximum of 200,000 shares of Company Common Stock issuable
pursuant to Company Options outstanding on the date hereof in accordance with
the terms thereof and (B) issuances by a direct or indirect wholly owned
subsidiary of the Company of capital stock to such subsidiary's parent) or (ii)
any assets of the Company or any Company Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
(d) neither the Company nor any Company Subsidiary shall declare, set
aside, make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock, other than (i)
any regular quarterly dividends declared and paid in accordance with past
practice and not in excess of $0.0375 per share of Company Common Stock and (ii)
dividends by a direct or indirect wholly owned subsidiary of the Company to such
subsidiary's parent;
(e) neither the Company nor any Company Subsidiary shall reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock,
42
except for any such transaction by a wholly owned subsidiary of the Company
that remains a wholly owned subsidiary of the Company after the consummation of
such transaction;
(f) neither the Company nor any Company Subsidiary shall (i) acquire or
dispose of (including, without limitation, by merger, consolidation,
acquisition or disposition of stock or assets, or by liquidation or dissolution)
any interest in any corporation, partnership, other business organization or any
division thereof or any assets, other than the acquisition or disposition of
assets in the ordinary course of business consistent with past practice and any
other acquisitions for consideration which is not, in the aggregate, in excess
of $10,000,000 and any other dispositions for consideration which is not, in the
aggregate, in excess of $10,000,000; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except for (A) indebtedness incurred in the ordinary
course of business and consistent with past practice, (B) indebtedness of the
Company to a direct or indirect wholly owned Company Subsidiary or indebtedness
of a direct or indirect wholly owned Company Subsidiary to the Company or
another direct or indirect wholly owned Company Subsidiary and (C) other
indebtedness with a maturity of not more than one year incurred in the ordinary
course of business consistent with past practice; (iii) enter into, amend or
terminate any contract or agreement material to the business, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole other than in the ordinary course of business, consistent with
past practice; (iv) authorize any capital expenditure, other than capital
expenditures for the Company and the Company Subsidiaries as a whole, in an
aggregate amount not exceeding the sum of (A) the amount provided in the capital
expenditure budget for the fiscal year ending September 28, 1997 previously
provided to IHK and (B) $5,000,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this subsection (f);
(g) neither the Company nor any Company Subsidiary shall (i) increase the
compensation payable or to become payable to its officers or employees, except
for increases in accordance with past practices in salaries or wages of
employees of the Company or any Company Subsidiary who are not officers of the
Company, or (ii) except pursuant to existing policies and agreements, grant any
severance or termination pay to any director, officer or other employee of the
Company or any Company Subsidiary, or (iii) enter into or amend any employment
or severance agreement with any director, officer or other employee of the
Company or any Company Subsidiary or (iv) establish, adopt, enter into, extend,
amend or terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee;
(h) neither the Company nor any Company Subsidiary shall take any action,
other than as required by the SEC or by U.S. GAAP, with respect to accounting
policies or procedures (including, without limitation, procedures with respect
to the payment of accounts payable and collection of accounts receivable);
43
(i) neither the Company nor any Company Subsidiary shall make any tax
election or settle or compromise any material federal, state, local or foreign
income tax liability;
(j) neither the Company nor any Company Subsidiary shall take any action
that would prevent or impede any party to this Agreement from obtaining any
consent or approval the receipt of which is a condition to the consummation of
the Offer or the Merger;
(k) neither the Company nor any Company Subsidiary shall enter into any
agreement or arrangement that would limit or otherwise restrict the Company or
any Company Subsidiary or any successor thereto or, after consummation of the
Merger, IHK or any subsidiary thereof or any successor thereto, from engaging or
competing in any line of business or in any geographic area;
(l) neither the Company nor any Company Subsidiary shall pay, discharge or
satisfy any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course business and consistent with past practice,
of liabilities reflected or reserved against in the September 29, 1996
consolidated balance sheet of the Company (including the notes thereto) or
subsequently incurred in the ordinary course of business and consistent with
past practice;
(m) neither the Company nor any Company Subsidiary shall take any action
that would result in (i) any of the representations or warranties of the Company
set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that are not so qualified
becoming untrue in any material respect or (iii) except as otherwise permitted
by Section 6.05, any of the conditions to the Offer set forth in Annex A or the
conditions to the Merger set forth in Article VII not being satisfied; and
(n) neither the Company nor any Company Subsidiary shall authorize or enter
into an agreement to do anything prohibited by Sections 5.01(b) through (m).
SECTION 5.02 Conduct of Business by IHK and the IHK Subsidiaries
Pending the Merger. Except with respect to any action taken to incur
indebtedness to fund the Offer, the Cash Consideration and any expenses incurred
in connection therewith and to fund working capital requirements in the ordinary
course of business prior to the Effective Time, IHK covenants and agrees that,
between the date of this Agreement and the Effective Time, except as set forth
in Section 5.02 of the IHK Disclosure Schedule or as specifically contemplated
by any other provision of this Agreement, unless the Company shall otherwise
agree in writing:
(a) IHK and the IHK Subsidiaries shall carry on their respective businesses
in the usual, regular and ordinary course in all material respects, in
substantially the same manner as heretofore conducted, and shall use
commercially reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however,
44
that no action by IHK or any IHK Subsidiary specifically permitted by any other
provision of this Section 5.02 shall be deemed a breach of is Section 5.02(a);
(b) Neither IHK nor any IHK Subsidiary shall amend or otherwise change its
Articles of Incorporation or By-Laws or equivalent organizational documents;
(c) Neither IHK nor any IHK Subsidiary shall issue, sell, pledge, dispose
of, grant or encumber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, (i) any shares of capital stock of IHK or any IHK
Subsidiary of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest),
of IHK or any IHK Subsidiary (except for (A) the issuance of a maximum of
590,870 shares of IHK Common Stock pursuant to the IHK Option Plan, (B) pursuant
to the IHK Employee Stock Purchase Plan and (C) issuances by a direct or
indirect wholly owned subsidiary of IHK of capital stock to such subsidiary's
parent or (ii) any assets of IHK or any IHK Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
(d) Neither IHK nor any IHK Subsidiary shall declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, other than (i) any
quarterly dividends declared and paid in accordance with past practice and not
in excess of $0.03 per share of IHK Common Stock and (ii) such dividends by a
direct or indirect wholly owned subsidiary of IHK to such subsidiary's parent;
(e) Neither IHK nor any IHK Subsidiary shall reclassify, combine, split,
subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any
of its capital stock, except for any such transaction by a direct or indirect
wholly owned subsidiary of IHK that remains a wholly-owned subsidiary of IHK
after the consummation of such transaction;
(f) Neither IHK nor any IHK Subsidiary shall (i) acquire or dispose of
(including, without limitation, by merger, consolidation, or acquisition or
disposition of stock or assets, or by liquidation or dissolution) any interest
in any corporation, partnership, other business organization or any division
thereof or any assets, other than the acquisition or disposition of assets in
the ordinary course of business consistent with past practice and any other
acquisitions for consideration which is not, in the aggregate, in excess of
$10,000,000 and any other dispositions for consideration which is not, in the
aggregate, in excess of $10,000,000; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except for (A) indebtedness incurred in the ordinary
course of business and consistent with past practice, (B) indebtedness of IHK to
a direct or indirect wholly owned IHK Subsidiary or indebtedness of IHK or a
direct or indirect wholly owned IHK Subsidiary to another direct or indirect
wholly owned IHK Subsidiary, (C) other indebtedness with a maturity of not more
than one year incurred in the ordinary course of business consistent with past
practice and (D) indebtedness to fund the Offer and the Cash Consideration and
the expenses incurred in connection therewith and
45
to refinance the Company's and IHK's existing indebtedness; (iii) enter into,
amend or terminate any contract or agreement material to the business, results
of operations or financial condition of IHK and the IHK Subsidiaries taken as a
whole other than in the ordinary course of business, consistent with past
practice; (iv) authorize any capital expenditure, other than capital
expenditures for IHK and the IHK Subsidiaries as a whole, in an aggregate ate
amount not exceeding the sum of (A) the amount provided in the capital
expenditure budget for the fiscal year ending March 31, 1998 previously provided
to the Company and (B) $5,000,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this subsection (f);
(g) Neither IHK nor any IHK Subsidiary shall (i) increase the compensation
payable or to become payable to its officers or employees, except for increases
in accordance with past practices in salaries or wages of employees of IHK or
any IHK Subsidiary who are not officers of IHK, or (ii) except pursuant to
existing policies and agreements, grant any severance or termination pay to any
director, officer or other employee of IHK or any IHK Subsidiary, or (iii)
except for change of control agreements specified in Section 5.02(g) of the IHK
Disclosure Schedule enter into or amend any employment or severance agreement
with any director, officer or other employee of IHK or any IHK Subsidiary or
(iv) establish, adopt enter into, extend, amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(h) Neither IHK nor any IHK Subsidiary shall take any action, other than as
required by the SEC or U.S. GAAP, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable);
(i) Neither IHK nor any IHK Subsidiary shall make any tax election or
settle or compromise any material federal, state, local or foreign income tax
liability;
(j) Neither IHK nor any IHK Subsidiary shall take any action that would
prevent or impede any party to this Agreement from obtaining any consent or
approval the receipt of which is a condition to the consummation of the Offer or
the Merger;
(k) Neither IHK nor any IHK Subsidiary shall enter into any agreement or
arrangement that would limit or otherwise restrict IHK or any IHK Subsidiary or
any successor thereto, after the consummation of the Merger, from engaging or
competing in any line of business or in any geographic area;
(l) Neither IHK nor any IHK Subsidiary shall pay, discharge or satisfy any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past
46
practice, of liabilities reflected or reserved against in the March 31, 1997
consolidated balance sheet of IHK or subsequently incurred in the ordinary
course of business and consistent with past practice;
(m) Neither IHK nor any IHK Subsidiary shall take any action that would
result in (i) any of the representations or warranties of IHK and the Merger Sub
set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions to the
Offer set forth in Annex A or the conditions to the Merger set forth in Article
VII not being satisfied; and
(n) Neither IHK nor any IHK Subsidiary shall authorize or enter into an
agreement to do anything prohibited by Sections 5.02(b) through (m).
SECTION 5.03 Government Filings.
(a) The Company shall use commercially reasonable efforts to promptly file
and shall cause the Company Subsidiaries to promptly file all reports required
to be filed by any of them with any Governmental Entities between the date of
this Agreement and the Effective Time and shall (to the extent permitted by Law
or regulation or any applicable confidentiality agreement) deliver to IHK copies
of all such reports promptly after the same are filed.
(b) IHK shall use commercially reasonable efforts to promptly file and
shall cause each IHK Subsidiary to promptly file all reports required to be
filed by any of them with any Governmental Entities between the date of this
Agreement and the Effective Time and shall (to the extent permitted by Law or
regulation or any applicable confidentiality agreement) deliver to the Company
copies of all such reports promptly after the same are filed.
(c) Subject to applicable Laws, IHK shall have the right to review in
advance, and to the extent practicable to consult with the Company, with respect
to all the information relating to IHK or any IHK Subsidiary or the Merger which
appears in any Company or Company Subsidiary filings made with, or written
materials submitted to, any Governmental Entity.
(d) Subject to applicable Laws, the Company shall have the right to review
in advance, and to the extent practicable to consult with IHK, with respect to
all the information relating to the Company or any Company Subsidiary or the
Merger which appears in any IHK or IHK Subsidiary filings made with, or written
materials submitted to, any Governmental Entity.
(e) In exercising the rights provided by Sections 5.03(c) and 5.03(d), each
of the parties hereto agrees to act reasonably and as promptly as practicable.
47
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meetings.
(a) Unless otherwise required pursuant to the applicable fiduciary duties
of the Company's Board of Directors to the stockholders of the Company (as
determined in good faith by the Company's Board of Directors based upon the
advice of outside counsel), (i) the Company shall call and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") as promptly as practicable to
consider and vote upon the approval of this Agreement and the Merger, and the
Company shall use commercially reasonable efforts to hold the Company
Stockholders' Meeting as soon as practicable after the date on which shares of
Company Common Stock are purchased in the Offer and the Registration Statement
becomes effective, (ii) the Company's Board of Directors shall recommend such
approval (as well as acceptance of the Offer), and (iii) the Company shall take
all lawful action to solicit such approval, including, without limitation,
timely mailing the Proxy Statement.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of IHK's Board of Directors to the shareholders of IHK (as determined in good
faith by IHK's Board of Directors based upon the advice of outside counsel), (i)
IHK shall call and hold a meeting of its shareholders (the "IHK Shareholders'
Meeting") as promptly as practicable to consider and vote upon the approval of
the issuance of the Stock Consideration, and IHK shall use commercially
reasonable efforts to hold the IHK Shareholders' Meeting as soon as practicable
after the date on which shares of Company Common Stock are purchased in the
Offer and the Registration Statement becomes effective, (ii) the IHK's Board of
Directors shall recommend such approval, and (iii) IHK shall take all lawful
action to solicit such approval, including, without limitation, timely mailing
the Proxy Statement.
SECTION 6.02 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement (i)
IHK and the Company shall prepare and IHK shall file with the SEC the
Registration Statement in connection with the registration under the Securities
Act of the shares of IHK Common Stock to be issued to the stockholders of the
Company in the Merger, a portion of which Registration Statement shall also
serve as the joint proxy statement/prospectus (together with any amendments
thereof or supplements thereto, the "Proxy Statement") relating to the
Stockholders' Meetings. The Registration Statement shall also register the
resale of IHK Common Stock received in the Offer and the Merger by Affiliates of
the Company by such Affiliates and IHK shall maintain the effectiveness of the
Registration Statement with respect to such resales of such IHK Common Stock for
a period of one year after the Effective Time. At any time during such one year
period, upon IHK's request, any such Affiliates shall not be allowed to sell IHK
Common Stock pursuant to such Registration
48
Statement for a period of 45 days if (i) IHK or any IHK Subsidiary is engaged in
confidential negotiations or other confidential business activities, disclosure
of which would be required in such registration statement (but would not be
required if such sales were not made), and IHK determines in good faith that
such disclosure would be materially detrimental to IHK and its stockholders, or
(ii) IHK determines to effect a registered underwritten public offering of IHK's
equity securities or of securities convertible to IHK's equity securities for
IHK's account and IHK takes substantial steps (including, but not limited to,
selecting the managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering; provided, however, that IHK may
only make such a request twice during such one year period. A deferral of such
sales shall be lifted, if, in the case of a deferral pursuant to clause (i) of
the preceding sentence, the negotiations or other activities are disclosed or
terminated, or, in the case of a deferral pursuant to clause (ii) of the
preceding sentence, the proposed registration for IHK's account is abandoned.
The Company and such Affiliates shall furnish all information concerning the
Company and such Affiliates as IHK may reasonably request in connection with
such actions and the preparation of the Registration Statement and the Proxy
Statement. IHK shall use commercially reasonable efforts, and the Company and
such Affiliates will cooperate with IHK, to cause the Registration Statement to
become effective as promptly as practicable and to keep the Registration
Statement effective as long as is necessary to consummate the Merger. Prior to
the effective date of the Registration Statement, IHK shall take all action
required under any applicable federal or state securities Laws in connection
with the issuance of shares of IHK Common Stock pursuant to the Merger. IHK
shall, as promptly as practicable, provide copies of any written comments
received from the SEC with respect to the Registration Statement to the Company
and advise the Company of any verbal comments with respect to the Registration
Statement received from the SEC. IHK and the Company shall each give the other
and its counsel the opportunity to review the Registration Statement and each
document to be incorporated by reference therein and all responses to requests
for additional information by and replies to comments of the SEC before their
being filed with, or sent to, the SEC. IHK and the Company shall each use
commercially reasonable efforts, after consultation with the other party, to
respond promptly to all such comments of and requests by the SEC. Unless
otherwise required by the applicable fiduciary duties of the respective Boards
of Directors to their respective stockholders (as determined in good faith by
each respective Board of Directors based upon the advice of its outside
counsel), as promptly as practicable after the Registration Statement shall have
become effective, the Company and IHK shall mail the Proxy Statement to their
respective stockholders.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of the respective Boards of Directors to their respective stockholders (as
determined in good faith by each respective Board of Directors based upon the
advice of its outside counsel), no amendment or supplement to the Proxy
Statement or the Registration Statement will be made by IHK or the Company
without the approval of the other party, which approval shall not be
unreasonably withheld. IHK will advise the Company, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of IHK Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement.
49
(c) Notwithstanding anything to the contrary in this Agreement, (i) IHK
shall have no obligation to mail the Proxy Statement to its shareholders unless
and until IHK shall have received the "comfort letter" referred to in Section
6.10(a) and (ii) the Company shall have no obligation to mail the Proxy
Statement to its stockholders unless and until the Company shall have received
the "comfort letter" referred to in Section 6.10(b).
(d) The information supplied by IHK for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the Registration
Statement is declared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to its shareholders
and (iii) the time of the IHK Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the time of the IHK Shareholders' Meeting,
any event or circumstance relating to IHK or any IHK Subsidiary, or their
respective officers or directors, should be discovered by IHK which should be
set forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, IHK shall promptly inform the Company.
(e) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company and (iii) the time of the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the time of the
Company Stockholders' Meeting any event or circumstance relating to the Company
or any Company Subsidiary, or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform IHK.
(f) All documents that IHK is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(g) All documents that the Company is responsible for filing with the SEC
in connection with the transactions contemplated herein will comply as to form
and substance in all material aspects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
SECTION 6.03 Access to Information; Confidentiality.
(a) To the fullest extent possible, consistent with applicable Law, the
Company shall afford to IHK and its officers, employees, accountants, counsel,
financial advisors and other representatives ("Representatives") reasonable
access during normal business hours during the
50
period prior to the Effective Time to all the officers, employees, agents,
properties, books, contracts, commitments and records of the Company and the
Company Subsidiaries, and will cooperate in furnishing and cause its officers,
employees and agents to furnish information regarding the Company and the
Company Subsidiaries reasonably required in connection with the indebtedness
contemplated by the Xxxxxx Brothers Commitment and during such period, the
Company shall furnish promptly to IHK and its Representatives all information
concerning the businesses, properties and personnel of the Company and the
Company Subsidiaries as IHK may reasonably request.
(b) Until the Effective Time, IHK and the Company will be bound by, and
will hold any information received pursuant to this Agreement in confidence in
accordance with the terms of, the confidentiality agreement between the Company
and IHK dated August 26, 1997 (the "Confidentiality Agreement").
(c) To the fullest extent possible, consistent with applicable Law, IHK
shall, and shall cause the IHK Subsidiaries to, afford to the Company and its
Representatives reasonable access during normal business hours during the period
prior to the Effective Time to all the officers, employees, agents, properties,
books, contracts, commitments and records of IHK and the IHK Subsidiaries, and
during such period, IHK shall furnish promptly to the Company and its
Representatives all information concerning the businesses, properties and
personnel of IHK and the IHK Subsidiaries as the Company may reasonably request.
(d) No investigation by either the Company or IHK shall affect the
representations and warranties of the other.
SECTION 6.04 Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties (i) shall make promptly its filings, and
thereafter make any other required submissions, under the HSR Act with respect
to the Offer and the Merger and (ii) shall use all commercially reasonable
efforts to obtain as promptly as practicable (A) all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities,
including opposing any attempt by any Governmental Entity to obtain a
preliminary or permanent injunction, or to affirm on appeal any such injunction,
from the Federal Trade Commission or a federal or state court to enjoin the
consummation of the Offer and the Merger under any antitrust Law, and provided
that IHK shall consider in good faith but shall not be required to agree to any
proposal to make any material modification to the business transaction
contemplated by this Agreement in order to obtain the agreement of any
Governmental Entity to permit the Offer and Merger to be consummated, and (B)
all necessary consents, approvals or waivers from third parties and (iii) shall
execute and deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
51
(b) The Company and IHK each agrees that it will consult with the other
party with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of matters relating to
completion of the transactions contemplated by this Agreement.
SECTION 6.05 No Solicitation of Transactions.
(a) The Company agrees that neither it nor any Company Subsidiary shall,
and that it shall cause its and each Company Subsidiary's Representatives not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal, or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or 20% or more of the equity securities of,
the Company or any Company Subsidiary that, in any such case, could reasonably
be expected to interfere with the completion of the Merger or the other
transactions contemplated by this Agreement (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any Company Subsidiary shall, and that it shall cause
its and each Company Subsidiary's Representatives not to, directly or
indirectly, have any discussion with or provide any confidential information or
data to any Person relating to an Acquisition Proposal or engage in any
negotiations concerning an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal or accept an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or the Company's Board of Directors from (i)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal; (ii) engaging in any discussions or negotiations with, or
providing any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person; or (iii) recommending such an
unsolicited bona fide written Acquisition Proposal to the holders of Company
Common Stock if and only to the extent that, in any such case as is referred to
in clause (ii) or (iii), (A) the Company's Board of Directors concludes in good
faith (after consultation with its legal counsel and financial advisors) that
such Acquisition Proposal is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of the Acquisition
Proposal and the Person making the Acquisition Proposal, and would, if
consummated, result in a transaction more favorable to holders of Company Common
Stock than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being hereinafter referred to as a "Superior
Proposal"), (B) the Company's Board of Directors determines in good faith after
consultation with legal counsel that such action is necessary for it to act in a
manner consistent with its fiduciary duties under applicable law, (C) prior to
providing any information or data to any Person in connection with a Superior
Proposal by any such Person, the Company's Board of Directors receives from such
Person an executed confidentiality agreement on terms substantially similar to
those contained in the Confidentiality Agreement and (D) prior to providing any
information or data to any Person or entering into discussions or negotiations
with any Person, the Company's Board of Directors notifies IHK promptly of such
inquiries, proposals or offers received by, any such information requested
52
from, or any such discussions or negotiations sought to be initiated or
continued with, the Company, any Company Subsidiary or any of their
Representatives indicating, in connection with such notice, the name of such
Person and the terms and conditions of any proposals or offers. The Company
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. The Company agrees that it shall keep
IHK informed, on a current basis, of the status and terms of any such proposals
or offers and the status of any such discussions or negotiations.
(b) The Company agrees that it will take the necessary steps to promptly
inform each Company Subsidiary and each Representative of the Company or any
Company Subsidiary of the obligations undertaken in this Section 6.05.
SECTION 6.06 Employee Benefits Matters. Annex B hereto sets forth
certain agreements among the parties hereto with respect to employee benefits
matters and is incorporated herein by this reference.
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, IHK shall, and shall cause the
Surviving Corporation to, indemnify and hold harmless, each present and former
director, officer, employee and fiduciary the Company and each Company
Subsidiary and each Person who served at the request of the Company or any
Company Subsidiary as a director, officer, trustee, partner, fiduciary or
employee of another corporation, partnership, joint venture, trust pension or
other employee benefit plan or enterprise (collectively, the "Indemnified
Parties"), to the fullest extent permitted under applicable Law, against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee or fiduciary, whether occurring
before or after the Effective Time, including, without limitation, the
transactions contemplated by this Agreement (and shall also advance, or cause to
be advanced, expenses as incurred to the fullest extent permitted under the
DGCL, provided that the Person to whom expenses are advanced provides the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL).
IHK and Merger Sub agree that all rights to indemnification existing in favor of
the Indemnified Parties as provided in the Company's By-Laws, as in effect as of
the date hereof, with respect to matters occurring through the Effective Time,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time.
(b) Without limiting the foregoing, in the event any claim, action, suit,
proceeding or investigation (a "Claim") is brought against any Indemnified Party
(whether arising before or after the Effective Time) after the Effective Time
(i) the Indemnified Parties may retain counsel satisfactory to them and
reasonably satisfactory to IHK and the Surviving Corporation, (ii) IHK and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the
53
Indemnified Parties promptly as statements therefor are received and (iii) IHK
and the Surviving Corporation will use commercially reasonable efforts to assist
in the vigorous defense of any such matter, provided that neither IHK nor the
Surviving Corporation shall be liable for any settlement of any Claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 6.07, upon learning of any such Claim, shall notify IHK (but the failure
so to notify IHK shall not relieve IHK from any liability that IHK may have
under this Section 6.07 except to the extent such failure materially prejudices
IHK), and shall deliver to IHK the undertaking contemplated by Section 145(e) of
the DGCL. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) For a period of six years after the Effective Time, IHK shall cause to
be maintained in effect the current directors' and officers' liability insurance
policies maintained by the Company (provided that IHK may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous) with respect to claims arising from facts or events that
occurred prior to the Effective Time; provided, however, that in no event shall
IHK be required to expend pursuant to this Section 6.07(c) more than an amount
per year equal to 200% of current annual premiums paid by the Company for such
insurance (which premiums the Company represents and warrants to be
approximately $260,000 per year in the aggregate).
SECTION 6.08 Obligations of IHK and Merger Sub. IHK shall take all
action necessary to perform, and shall cause Merger Sub to perform, its
obligations under this Agreement and to consummate the Merger on the terms and
subject to conditions set forth in this Agreement.
SECTION 6.09 Affiliates' Letters. No later than 5 days from the date
of this Agreement, the Company shall deliver to IHK a list of names and
addresses of those persons who were, in the Company's reasonable judgment, on
such date, affiliates within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act of the Company (each such
person being a "Company Affiliate"). The Company shall provide IHK with such
information and documents as IHK shall reasonably request for purposes of
reviewing such list. The Company shall use its reasonable efforts to deliver or
cause to be delivered to IHK, prior to the Effective Time, a letter
substantially in the form attached hereto as Exhibit 6.09, executed by each of
the Company Affiliates identified in the foregoing list and of any person who
shall have become a Company Affiliate subsequent to the delivery of such list.
SECTION 6.10 Letters of Accountants.
(a) The Company shall use commercially reasonable efforts to cause to be
delivered to IHK a "comfort" letter of Price Waterhouse LLP or Xxxxxx Xxxxxxxx
LLP, the Company's independent public accountants, dated and delivered the date
on which the Registration Statement shall become effective and addressed to IHK,
in the form, scope and content contemplated by Statement on Auditing Standards
No. 72, as amended issued by the American Institute of Certified
54
Public Accountants, Inc. ("SAS 72"), relating to the financial statements and
other financial data with respect to the Company and its consolidated
subsidiaries included or incorporated by reference in the Proxy Statement and
such other matters as may be reasonably required by IHK, and based upon
procedures carried out to a specified date not earlier than five days prior to
the date thereof.
(b) IHK shall use commercially reasonable efforts to cause to be delivered
to the Company a "comfort letter" of Deloitte & Touche LLP, IHK's independent
public accountants, dated the date on which the Registration Statement shall
become effective, and addressed to the Company, in the form, scope and content
contemplated by SAS 72, relating to the financial statements and other financial
data with respect to IHK and the IHK Subsidiaries included in or incorporated by
reference in the Proxy Statement and such other matters as may be reasonably
required by the Company, and based upon procedures carried out to a specified
date not earlier than five days prior to the date thereof.
SECTION 6.11 Listing Market. IHK shall promptly prepare and submit to
the American Stock Exchange or such other stock exchange or market as the
parties reasonably agree (the "Listing Market") a listing application covering
the shares of IHK Common Stock to be issued in the Merger and pursuant to
Substitute Options, and shall use commercially reasonable efforts to obtain,
prior to the Effective Time, approval for the listing of such IHK Common Stock,
subject to official notice to the Listing Market of issuance, and the Company
shall cooperate with IHK with respect to such listing.
SECTION 6.12 IHK Board Representation. Prior to the Effective Time,
IHK shall cause two nominees of the Company ("Company Nominees"), subject to the
reasonable approval of IHK, to be elected as directors of IHK (and to be in
office immediately prior to the Effective Time). For a period of one or two
years after the Effective Time, depending on the class to which such Company
Nominee is initially elected, IHK shall cause each such Company Nominee to be
nominated for re-election to an additional three year term at the expiration of
his initial term in office.
SECTION 6.13 Company Rights Plan. The Company's Board of Directors
shall take all further action (in addition to that described in Section 3.20)
necessary in order to render the Company Rights inapplicable to the Offer, the
Merger and the other transactions contemplated by this Agreement, to terminate
the Company Rights Agreement as of the Effective Time and to ensure that IHK and
Merger Sub will not have any obligations in connection with the Rights Agreement
or the Company Rights (including by redeeming the Company Rights immediately
prior to the Effective Time or by amending the Company Rights Agreement).
Except as otherwise provided in this Section 6.13 and Section 3.20, the Company
shall not, prior to the Effective Time, redeem the Company Rights or amend or
terminate the Company Rights Agreement unless (a) required to do so by order of
a court of competent jurisdiction or (b) required by the applicable fiduciary
duties of the Company's Board of Directors to the stockholders of the Company
(as determined in good faith by the Company's Board or Directors based upon the
advice of outside counsel).
55
SECTION 6.14 Public Announcements. Unless otherwise required by
applicable Law or stock exchange requirements, IHK and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
thereby and shall not issue any such press release or make any such public
statement prior to such consultation.
SECTION 6.15 Subsequent Financial Statements.
(a) As soon as practicable following filing, the Company shall deliver to
IHK a copy of each periodic report on Forms 10-Q or 10-K, so filed prior to the
Effective Time. The financial statements contained therein are referred to as
the "Company Subsequent Financial Statements." The Company Subsequent Financial
Statements (i) will be prepared from the books of account and other financial
records of the Company and the consolidated Company Subsidiaries, (ii) will be
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes thereto) and
(iii) will present fairly, in all material respects, the consolidated financial
position of the Company and the consolidated Company Subsidiaries as at the
respective dates thereof and the results of their operations and cash flows for
the respective periods indicated therein except as otherwise noted therein
(subject in the case of unaudited statements, to normal and recurring year-end
adjustments which shall not be expected, individually or in the aggregate, to
have a Company Material Adverse Effect and the omission of footnotes).
(b) As soon as practicable following filing, IHK shall deliver to the
Company a copy of each periodic report on Forms 10-Q or 10-K, so filed prior to
the Effective Time. The financial statements contained therein are referred to
as the "IHK Subsequent Financial Statements." The IHK Subsequent Financial
Statements (i) will be prepared from the books of account and other financial
records of IHK and the consolidated IHK Subsidiaries, (ii) will be prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) will
present fairly, in all material respects, the consolidated financial position of
IHK and the consolidated IHK Subsidiaries as at the respective dates thereof and
the results of their operations and cash flows for the respective periods
indicated therein except as otherwise noted therein (subject in the case of
unaudited statements, to normal and recurring year-end adjustments which shall
not be expected, individually or in the aggregate, to have an IHK Material
Adverse Effect and the omission of footnotes).
ARTICLE VII
CONDITIONS TO THE MERGER
56
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The obligations of the Company, IHK and Merger Sub to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
in accordance with the DGCL and the Company's Certificate of Incorporation and
the issuance of the IHK Common Stock pursuant to the Merger shall have been
approved by the affirmative vote of the shareholders of IHK in accordance with
the applicable rules and regulations of the Listing Market;
(b) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) no Governmental Entity (as defined in Section 9.12(g)) or court of
competent jurisdiction located or having jurisdiction in the United States shall
have enacted, issued, promulgated, enforced or entered any Law, rule,
regulation, executive order or Order which is then in effect and has the effect
of restraining or making the Merger illegal or otherwise prohibiting
consummation of the Merger;
(d) the Registration Statement shall have been declared effective, and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect;
(e) the shares of IHK Common Stock to be issued in the Merger and pursuant
to Substitute Options shall have been authorized for listing on the Listing
Market, subject to official notice of issuance; and
(f) Merger Sub shall have purchased shares of Company Common Stock pursuant
to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the transactions
contemplated hereby, as follows:
(a) by mutual written consent of IHK and the Company;
(b) by either IHK or the Company, if the Effective Time shall not have
occurred on or before May 31, 1998 (the "Termination Date"); provided, however,
that the right to terminate this Agreement under this Section 8.01(b) shall not
be available to any party whose failure to fulfill any
57
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(c) by either IHK or the Company, if any court of competent jurisdiction in
the United States or other Governmental Entity, based otherwise than on any
antitrust Law, (i) shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have become
final and nonappealable or (ii) shall have failed to issue an Order or to take
any other action necessary to fulfill the conditions to the Closing of the
Merger and such denial of a request to issue such Order or take such other
action shall have become final and nonappealable;
(d) (x) by either IHK or the Company, if this Agreement and the
transactions contemplated hereby shall fail to receive the requisite vote for
approval and adoption at the Company Stockholders' Meeting or (y) by the
Company, if the issuance of the IHK Common Stock as part of the Merger shall
fail to receive the requisite vote for approval at the IHK Shareholders'
Meeting;
(e) by IHK, if prior to the payment for shares of Company Common Stock
pursuant to the Offer (i) the Company's Board of Directors withdraws, modifies
or changes its approval or recommendation (including by amendment of the
Schedule 14D-9) of this Agreement, the Offer or the Merger in a manner adverse
to IHK or Merger Sub, (ii) the Company's Board of Directors shall, at a time
when there is an Acquisition Proposal with respect to the Company, fail to
reaffirm such approval or recommendation of this Agreement, the Offer or the
Merger upon the reasonable request of IHK and Merger Sub, (iii) the Company's
Board of Directors shall approve or recommend any acquisition of the Company or
a material portion of its assets or any tender offer for shares of its capital
stock, in each case, other than by the other parties hereto or an affiliate
thereof; (iv) a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of the Company is commenced, and the
Company's Board of Directors fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders); or (v) the Company's Board of Directors shall resolve to
take any of the actions specified in clauses (i) through (iv) of this Section
8.01(e);
(f) by the Company, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon five Business Days' prior notice to IHK and Merger
Sub (which notice shall be revocable by the Company), if, as a result of a
Superior Proposal received by the Company from a Person other than a party to
this Agreement or any of its affiliates, the Company's Board of Directors
determines in good faith that their fiduciary obligations under applicable Law
require that such Superior Proposal be accepted; provided, however, that (i) the
Company's Board of Directors shall have concluded in good faith, after
considering applicable provisions of Law and after giving effect to all
concessions which may be offered by IHK and Merger Sub pursuant to clause (ii)
below, on the basis of advice of counsel, that such action is necessary for the
Company's Board of Directors to act in a manner consistent with its fiduciary
duties under applicable laws and (ii) prior to the effective date of any such
termination, the Company shall provide IHK and Merger Sub with
58
an opportunity to make such adjustments in the terms and conditions of this
Agreement, the Offer or the Merger as would enable the Company to proceed with
the transactions contemplated hereby; provided, however, that it shall be a
condition to the effectiveness of termination by the Company pursuant to this
Section 8.01(f) that the Company shall have made the payment of the Termination
Fee (as defined below) to IHK required by Section 8.05(b);
(g) by IHK, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions to the Offer set forth in clauses (c) or (d) of
Annex A would be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is curable by the Company and for so
long as the Company continues to exercise all reasonable efforts to cure such
Terminating Company Breach, IHK may not terminate this Agreement under this
Section 8.01(g);
(h) by the Company, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon breach of any representation, warranty, covenant or
agreement on the part of IHK or Merger Sub set forth in this Agreement, or if
any representation or warranty of IHK and Merger Sub shall have become untrue,
in either case except for such breaches or failures (i) which, individually or
in the aggregate, would not have an IHK Material Adverse Effect and (ii) which,
individually or in the aggregate, would not materially impair or delay the
ability of Merger Sub to consummate the Offer or the ability of IHK, Merger Sub
and the Company to effect the Merger ("Terminating IHK Breach"); provided,
however, that, if such Terminating IHK Breach is curable by IHK and Merger Sub
and for so long as IHK and Merger Sub continue to exercise all reasonable
efforts to cure such Terminating IHK Breach, the Company may not terminate this
Agreement under this Section 8.01(h);
(i) by IHK, if the Offer is terminated or expires without the purchase of
any shares of Company Common Stock thereunder, unless such termination or
expiration has been caused by or resulted from the failure in any material
respect of IHK or Merger Sub to perform any of its covenants and agreements
contained in this Agreement or in the Offer;
(j) by the Company, if all of the conditions to the Offer set forth in
Annex A except for clause (2) have been satisfied and IHK fails to accept and
pay for shares of Company Common Stock in the Offer solely because of the
failure of LBCPI to fund its loan commitment contained in the Xxxxxx Brothers
Commitment; and
(k) by the Company, if on May 29, 1998, the Effective Time shall not have
occurred because IHK and Merger Sub have not been permitted to consummate the
Offer and the Merger by reason of any antitrust Law.
59
SECTION 8.02 Effect of Termination. In the event of termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and, except as provided in Section 8.05, there shall be no liability under
this Agreement on the part of IHK, Merger Sub or the Company or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease, provided that nothing herein shall relieve any party from
liability for any breach of this Agreement (it being understood that IHK and
Merger Sub shall have no liability for failure to obtain financing of the Offer
and the Merger or to obtain expiration of all waiting periods under the HSR Act
or to avoid the entry or affirmation of any injunction under any antitrust Law
in respect of the Offer or the Merger, unless the Company elects to terminate
this Agreement under Section 8.01(j) or (k), respectively, and then only to the
extent provided in Section 8.05(c)).
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the stockholders of the Company, no amendment may be made which would reduce
the amount or change the type of consideration into which each share of Company
Common Stock shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.05 Fees and Expenses.
(a) Except as set forth in this Section 8.05, all expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated, except that the Company and
IHK each shall pay one-half of all Expenses (as defined below) relating to
printing, filing and mailing the Registration Statement and the Proxy Statement
and all SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement. "Expenses" as used in this
Agreement shall include all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of stockholder approvals and all other matters
related to the closing of the Merger.
(b) The Company and IHK agree that
60
(i) if IHK shall terminate this Agreement pursuant to Section 8.01(e) or
(ii) if the Company shall terminate this Agreement pursuant to Section
8.01(f) or
(iii) if (A) IHK or the Company shall terminate this Agreement pursuant
to Section 8.01(d) due to the failure of the Company's stockholders to approve
and adopt this Agreement and (B) at the time of such failure to so approve and
adopt this Agreement there shall exist an Acquisition Proposal with respect to
the Company and, within 12 months of the termination of this Agreement, the
Company enters into a definitive agreement with any third party with respect to
an Acquisition Proposal with respect to the Company,
then the Company shall pay to IHK an amount equal to $8,000,000 (the "Company
Termination Fee").
(c) The Company and IHK agree that if the Company shall terminate this
Agreement pursuant to Section 8.01(j) or (k), then IHK shall pay to the Company
an amount equal to $8,000,000 (the "IHK Termination Fee").
(d) The Company Termination Fee required to be paid pursuant to Section
8.05(b)(ii) shall be paid prior to, and shall be a pre-condition to
effectiveness of termination of this Agreement pursuant to Section 8.01(f) and
the Company Termination Fee required to be paid pursuant to Section 8.05(b)(iii)
shall be paid to IHK on the next Business Day after a definitive agreement is
entered into with a third party with respect to an Acquisition Proposal with
respect to the Company. Any payment of a Company Termination Fee otherwise
required to be made pursuant to Section 8.05(b) or an IHK Termination Fee
required to be made pursuant to Section 8.05(c) shall be made not later than two
Business Days after termination of this Agreement. All payments under this
Section 8.05 shall be made by wire transfer of immediately available funds to an
account designated by the payee.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that representations,
warranties and agreements set forth in Articles I and II and Sections 6.06, 6.07
and 6.12 and Article IX shall survive the Effective Time for the respective
periods set forth in such sections or, if no such period is specified,
indefinitely and those set forth in Sections 3.19, 4.19, 6.03(b), 8.02 and 8.05
and Article IX shall survive termination for the respective periods set forth in
such sections or, if no such period is specified, indefinitely.
61
SECTION 9.02 Notices.
(a) All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be sent by an overnight courier service
that provides proof of receipt, mailed by registered or certified mail (postage
prepaid, return receipt requested) or telecopied to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Company:
Savannah Foods & Industries, Inc.
Xxx Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X Xxxxxx
if to IHK or Merger Sub:
Imperial Xxxxx Corporation
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 0
Xxxxx Xxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(b) If this Agreement provides for a designated period after a notice
within which to perform an act, such period shall commence on the date of
receipt or refusal of the notice.
62
(c) If this Agreement requires the exercise of a right by notice on or
before a certain date or within a designated period, such right shall be deemed
exercised on the date of delivery to the courier service, telecopying or mailing
of the notice pursuant to which such right is exercised.
(d) Notices of changes of address shall be effective only upon receipt.
SECTION 9.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Merger be consummated as originally contemplated to the fullest extent possible.
SECTION 9.04 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties.
SECTION 9.05 Interpretation.
(a) When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents, glossary of
defined terms and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The phrases "the date of this Agreement" and "the date
hereof" shall be deemed to refer to the date in the first paragraph of this
Agreement.
(b) The Parties hereto acknowledge that certain matters set forth in the
applicable Disclosure Schedule are included for informational purposes only,
notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they would not be required to be set forth
therein by the terms of this Agreement and that disclosure of such matters shall
not be taken as an admission by the Company or IHK that such disclosure is
required to be made under the terms or any provision of this Agreement and in no
event shall the disclosure of such matters be deemed or interpreted to broaden
or otherwise amplify the representations and warranties contained in this
Agreement. Notwithstanding anything to the contrary in Articles III and IV,
each section of the Disclosure Schedule that includes an asterisk in its heading
is intended to be responsive to statements in the correspondingly numbered
representation or warranty requesting a listing of specified matters and does
not list exceptions to the correspondingly numbered representation and warranty.
63
SECTION 9.06 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.07 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the state of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Delaware state or federal court.
SECTION 9.08 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Article II (which may be enforced by the
beneficiaries thereof), Sections 6.06 and 6.07 (which are intended to be for the
benefit of the persons covered thereby and may be enforced by such persons) and
Section 6.13.
SECTION 9.09 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.10 Waiver of Jury Trial. Each of IHK, the Company and Merger
Sub hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise),
arising out of or relating to this Agreement or the actions of IHK, the Company
or Merger Sub in the negotiation, administration, performance and enforcement
thereof.
SECTION 9.11 Entire Agreement. This Agreement (including the Annexes,
the Exhibits, the Company Disclosure Schedule and the IHK Disclosure Schedule)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and, except for the Confidentiality Agreements, supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
SECTION 9.12 Certain Definitions.
For purposes of this Agreement:
(a) "Affiliate" of a specified Person means a Person who directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, such specified Person;
64
(b) "Beneficial Owner" with respect to any shares of Company Common Stock
means a Person who shall be deemed to be the beneficial owner of such shares (i)
which such Person or any of its Affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such Person or any of its Affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly, by any other Persons
with whom such Person or any of its Affiliates or associates or Person with whom
such Person or any of its Affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
(c) "Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in New York, New York are authorized or
required by law or executive order to close;
(d) "Closing Price" means the volume weighted average of the trading prices
of IHK Common Stock, rounded to three decimal places, as reported by Bloomberg
Financial Markets, for each of the first 15 consecutive Trading Days in the
period commencing 20 Trading Days prior to the date of the Closing;
(e) "Company Specified Stockholders" means substantially all of the
directors and executive officers of the Company.
(f) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended or
in effect from time to time;
(h) "Governmental Entity" means any United States (federal, state or local)
or foreign government or governmental, regulatory or administrative authority,
agency or commission;
(i) "IHK Specified Stockholders" means P. C. Xxxxxxxxxx, Xxxx X. Xxxxxx, X.
X. Xxxxxxxxxx, X. X. Xxxxxxx, Xxxxxx Xxxxxxxxxx, Xxx X. Xxxxxxxx, X. X.
Xxxxxxxx, R. E. Xxxxxxxxx, Xxxxx X. Xxxx, X. X. Xxxxx, Xxxxxx X. Xxxxxxx, Xx.,
X. X. Xxxxxxx, Xxxxx X. Xxxxxxx, X. X. Xxxxxx, A. K. Xxxxxxx, H. E. Xxxxx,
Xxxxxx X. X. Xxxxx, H. P. Xxxxxxx, X. X. Xxxxxx, X. X. Xxxxxxxx, Xxxxx Xxxxxxx,
X. X. Xxxxxx, X. X. Xxxxxxxxxx, Xxxxxx X. Xxxxxx (individually, and as trustee
for certain trusts), Xxxxxx Xxxxxx (individually, and as trustee for certain
trusts), Greencore
65
Group plc, X. Xxxxxxx Trust Association, Xxxxxx and Xxxxx Xxxxxxx Fund and U. S.
National Bank (as trustee for certain trusts).
(j) "Knowledge" or "Known" means, with respect to any matter in question,
in the case of IHK or the Company, as the case may be, if any of the executive
officers of IHK or the Company has actual knowledge of such matter after making
due inquiry of all Persons who directly report to such executive officers;
(k) "Law" means any United States (federal, state or local) or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree;
(l) "Order" means any decree, judgment, injunction, ruling, writ or other
order (whether temporary, preliminary or permanent);
(m) "Person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
(n) "Securities Act" means the Securities Act of 1933, as amended and in
effect from time to time;
(o) "Stock Consideration" is (i) if the Closing Price of IHK Common Stock
is $13.25 or lower, a number of shares of IHK Common Stock equal to the quotient
of the Offer Price divided by $13.25, together with a corresponding number of
IHK Purchase Rights (as defined in Section 2.06(a)); (ii) if the Closing Price
of IHK Common Stock is $17.25 or greater, a number of shares of IHK Common Stock
equal to the quotient of the Offer Price divided by $17.25, together with a
corresponding number of IHK Purchase Rights; or (iii) if the Closing Price of
the IHK Common Stock is greater than $13.25 but less than $17.25, that portion
of a share of IHK Common Stock equal to the quotient of the Offer Price divided
by the Closing Price of the IHK Common Stock, together with a corresponding
number of IHK Purchase Rights;
(p) "Subsidiary" or "Subsidiaries" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity;
(q) "Trading Day" means a day on which the New York Stock Exchange, Inc.
(the "NYSE") and the American Stock Exchange (the "AMEX") are both open for
trading.
66
IN WITNESS WHEREOF, IHK, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
IMPERIAL XXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------------
Name: XXXXX X. XXXXXXX
--------------------
Title: President and Chief Executive Officer
-------------------------------------
IHK MERGER SUB CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------------
Name: XXXXX X. XXXXXXX
--------------------
Title: President and Chief Executive Officer
-------------------------------------
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx III
---------------------------------------------------
Name: XXXXXXX X. XXXXXXX III
--------------------------
Title: President and CEO
-----------------
67
ANNEX A TO THE
AGREEMENT AND PLAN OF MERGER
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex A shall have the meanings assigned to
them in the Agreement to which it is attached (the "Merger Agreement").
Merger Sub shall not be required to accept for payment, purchase or,
subject to any applicable rules and regulations of the SEC, including Rule 14e-
l(c) under the Exchange Act, to pay for, any shares of Company Common Stock
tendered pursuant to the Offer until the expiration of any applicable waiting
period under the HSR Act and Merger Sub may, subject to the terms and conditions
of the Merger Agreement, terminate or amend the Offer as to any shares of
Company Common Stock not then accepted for payment, or may delay the acceptance
for payment of or (subject to such Merger Agreement, rules or regulations)
payment for shares of Company Common Stock tendered, if (1) at the expiration of
the Offer, the number of shares of Company Common Stock validly tendered and not
withdrawn, together with any other shares of Company Common Stock owned by IHK
or Merger Sub or their affiliates, shall not constitute at least 50.1% of the
outstanding shares of Company Common Stock on a fully diluted basis, (2) IHK
shall not have obtained financing sufficient to enable IHK (or cause Merger Sub)
to pay the amounts set forth in clauses (a), (b) and (c) of Section 4.21 of the
Merger Agreement or (3) at any time on or after the date of the Merger Agreement
and prior to the acceptance for payment of shares of Company Common Stock, any
of the following events shall have occurred and be continuing:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, Order or injunction
enacted, promulgated, entered, enforced or deemed applicable to the
Offer or the Merger (other than the application of the waiting period
provisions of the HSR Act) by any court of competent jurisdiction in the
United States or other Governmental Entity, which would (i) restrain,
prohibit or make illegal or otherwise prohibit (A) the acceptance for
payment of, or payment for or purchase of at least 50.1% of the shares
of Company Common Stock or (B) the consummation of the Merger, or (ii)
prohibiting IHK or any of its affiliates to exercise full rights of
ownership of the shares of Company Common Stock, including without
limitation the right to vote any shares of Company Common Stock
purchased by them on all matters properly presented to the stockholders
of the Company, including without limitation the adoption and approval
of this Agreement and the Merger;
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii)
the declaration of any banking moratorium or any suspension of payments
in respect of banks or any material limitation (whether or not
mandatory) on the extension of credit by lending institutions in the
United States, (iii) the commencement of a war, material armed
hostilities or any other material international or national calamity
A-1
involving the United States having a significant adverse effect on the
functioning of the financial markets in the United States, or (iv) in
the case of any of the foregoing existing at the time of the execution
of the Merger Agreement, a material acceleration or worsening thereof;
(c) the Company shall have breached or failed to comply with any of
its obligations under the Merger Agreement (other than as a result of a
breach by IHK or Merger Sub of any of their obligations under the Merger
Agreement) and such breach or failure shall continue unremedied for ten
(10) business days after the Company has received written notice from
IHK or Merger Sub of the occurrence of such breach or failure, except
such breaches or failures (i) which, individually and in the aggregate,
would not have a Company Material Adverse Effect and (ii) which,
individually and in the aggregate, would not materially impair or delay
the ability of Merger Sub to consummate the Offer or the ability of IHK,
Merger Sub and the Company to effect the Merger;
(d) any representation or warranty of the Company contained in the
Merger Agreement shall fail to be true and correct as of such expiration
or proposed termination of the Offer except for such failures (i) which,
individually and in the aggregate, would not have a Company Material
Adverse Effect and (ii) which, individually and in the aggregate, would
not materially impair or delay the ability of Merger Sub to consummate
the Offer or the ability of IHK, Merger Sub and the Company to effect
the Merger, provided that IHK shall have notified the Company promptly
upon learning of such failure;
(e) the Merger Agreement shall have been terminated pursuant to its
terms or amended pursuant to its terms to provide for such termination
or amendment of the Offer; or
(f) the Company's Board of Directors shall have (i) (including by
amendment of the Schedule 14D-9) withdrawn or modified in any manner
adverse to IHK or Merger Sub its approval or recommendation of the
Offer, the Merger or this Agreement or (ii) resolved to do any of the
foregoing;
which, in the good faith reasonable judgment of IHK and Merger Sub, makes it
inadvisable to proceed with acceptance for payment or payment for shares of
Company Common Stock.
Except as set forth in the Merger Agreement, the foregoing conditions are
for the sole benefit of IHK and Merger Sub and may be asserted regardless of the
circumstances (including any action or inaction by IHK or Merger Sub other than
a breach by IHK or Merger Sub of the Merger Agreement) giving rise to any such
condition or waived by IHK or Merger Sub, in whole or in part, at any time or
from time to time, in its discretion. The failure of IHK or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-2
ANNEX B TO THE
AGREEMENT AND PLAN OF MERGER
AGREEMENTS RESPECTING PLANS AND
OTHER EMPLOYEE BENEFIT MATTERS
1. (a) For a period of one year immediately following the Closing
Date, IHK shall provide or cause the Surviving Corporation to provide all
employees of the Company who continue to be employed by IHK or the Surviving
Corporation or any of their respective Affiliates as of the Effective Time
("Continuing Employees") with compensation and benefits on terms which are, in
the aggregate, not substantially less favorable than those provided to the
Continuing Employees immediately prior to the date hereof.
(b) IHK further agrees that, for purposes of all employee benefit
plans of IHK or the Surviving Corporation or any of their respective Affiliates
in which Continuing Employees participate from and after the Effective Time and
under which an employee's benefit depends, in whole or in part, on length of
service, credit will be given to Continuing Employees for service previously
credited with the Company or any Company Subsidiary prior to the Effective Time
to the extent that such crediting of service does not result in duplication of
benefits.
(c) IHK shall cause each employee benefit plan in which
Continuing Employees participate from and after the Effective Time to waive (i)
any preexisting condition restriction which was waived under the terms of any
analogous Company plan prior to the Effective Time and (ii) any waiting period
limitation which would otherwise be applicable to a Continuing Employee on or
after the Effective Time to the extent the Continuing Employee had satisfied any
similar waiting period under an analogous Company plan prior to the Effective
Time. IHK further agrees that it shall guarantee all obligations of the Company
under any Company Plan.
2. IHK and the Company acknowledge that the consummation of the
Offer shall constitute a "Change in Control" for purposes of the Company Stock
Option Plan.
3. (a) IHK will consent to the Company's entering into a new or
amended employment agreement with Xxxxxxx X. Xxxxxxx III on the terms agreed to
by IHK, Merger Sub and the Company.
(b) IHK intends to consent to the Company's entering into new or
amended employment agreements as soon as practicable following the date hereof
with the Continuing Employees agreed to by IHK and the Company.
4. The Company will cause the following actions with respect to the
Company's Benefit Trust Agreement dated March 14, 1996 as amended (the "Benefit
Trust Agreement") to occur prior to the execution of this Agreement:
B-1
(a) The Company will amend the Benefit Trust Agreement in the
following respects:
(i) provide for the corpus of the trust to be invested in IHK
Common Stock, rather than Company Common Stock;
(ii) provide for prepayment of the Note, at the Company's
direction, with corpus (cash or IHK Common Stock as directed);
(iii) clarify Section 3.2 of the Trust Agreement to ensure that a
release of pledged stock is not distributed to participants on release,
but held in trust to pay benefits when due;
(iv) provide that the Offer and the Merger will not constitute a
Proposed Change in Control under the Trust Agreement;
(v) provide that the Trustee can only sell IHK Common Stock after
giving IHK a right of first refusal;
(vi) provide that shares of IHK Common Stock held by the Trust will
be voted in proportion to all other outstanding IHK Common Stock; and
(vii) provide that the Trustee will tender or exchange of IHK
Common Stock held by the Trust as directed by the Company's Board of
Directors.
(b) The cash received by the Benefit Trust in the Offer and the Merger
will be used to repay the existing Note of the Benefit Trust to the Company and
to purchase additional shares of IHK Common Stock.
B-2
EXHIBIT 6.09 TO THE
AGREEMENT AND PLAN OF MERGER
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[DATE]
IMPERIAL XXXXX CORPORATION
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Savannah Foods & Industries, Inc., a Delaware
corporation (the "Company"), as the term "Affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules And
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms
of the Agreement and Plan of Merger dated as of September , 1997 (the "Merger
Agreement") among Imperial Xxxxx Corporation, a Texas corporation ("IHK"), IHK
Merger Sub Corporation, a Delaware corporation ("Merger Sub"), and the Company,
Merger Sub will be merged with and into the Company (the "Merger"). Capitalized
terms used in this letter without definition shall have the meanings assigned to
them in the Merger Agreement.
As a result of the Merger, I may receive shares of common stock, no
par value, of IHK ("IHK Common Stock"). I would receive such IHK Common Stock
(the "Shares") in exchange for shares (or upon exercise of options for shares)
owned by me of common stock, par value $.25 per share, of the Company ("Company
Common Stock").
1. I represent, warrant and covenant to IHK that in the event I receive
any Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Shares, to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Shares to me
pursuant to the Merger has been registered with the Commission under the Act on
a Registration Statement on Form
1
S-4. However, I have also been advised that, because at the time the Merger is
submitted for a vote of the stockholders of the Company, (a) I may be deemed to
be an affiliate of the Company and (b) distribution by me of the IHK Common
Stock has not been registered under the Act, I may not sell, transfer or
otherwise dispose of the IHK Common Stock issued to me in the Merger unless (i)
such sale, transfer or other disposition is made in conformity with the volume
and other limitations of Rule 145 promulgated by the Commission under the Act,
(ii) such sale, transfer or other disposition has been registered under the Act,
the Company shall include the Shares in the Registration Statement and to
maintain the effectiveness of the Registration statement for a period of 100
days after the effective date hereof or (iii) in the opinion of counsel
reasonably acceptable to IHK, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. Except as provided in paragraph C, I understand that IHK is under
no obligation to register the sale, transfer or other disposition of the Shares
by me or on my behalf under the Act or, except as provided in paragraph 2(A)
below, to take any other action necessary in order to make compliance with an
exemption from such registration available.
E. I understand that there will be placed on the certificates for
the Shares issued to me, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED , 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND IMPERIAL XXXXX CORPORATION, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICES OF IMPERIAL XXXXX CORPORATION."
F. I understand that unless a sale or transfer is made in conformity
with the provisions of Rule 145, or pursuant to a registration statement, IHK
reserves the right to put the following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO,
OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
2
G. Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
2. By IHK's acceptance of this letter, IHK hereby agrees with me as
follows:
A. For so long as and to the extent necessary to permit me to sell
the Shares pursuant to Rule 145 and, to the extent applicable, Rule 144 under
the Act, IHK shall (a) use its reasonable efforts to (i) file, on a timely
basis, all reports and data required to be filed with the Commission by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) furnish to me upon request a written statement as to
whether IHK has complied with such reporting requirements during the 12 months
preceding any proposed sale of the IHK Common Stock by me under Rule 145, and (
b) otherwise use its reasonable efforts to permit such sales pursuant to Rule
145 and Rule 144. IHK hereby represents to me that it has filed all reports
required to be filed with the Commission under Section 13 of the 1934 Act during
the preceding 12 months.
B. It is understood and agreed that certificates with the legends
set forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the IHK Common Stock received in the Merger and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the IHK Common
Stock received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) IHK has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to IHK, or a
"no action" letter obtained by the undersigned from the staff of the Commission,
to the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Very truly yours,
-------------------------------------
Name:
Agreed and accepted this ____ day of
[_______________], 1997, by
IMPERIAL XXXXX CORPORATION
By:
--------------------------------
Name:
Title:
3
