EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AMONG
▇▇▇▇▇▇ & ▇▇▇▇▇ CORPORATION,
OCAL ACQUISITION CORP.,
OCAL, INC.
AND
CERTAIN STOCKHOLDERS OF
OCAL, INC.
OCTOBER 6, 1998
TABLE OF CONTENTS
Page No.
-------
ARTICLE I DEFINITIONS............................................................. 2
Section 1.1 Certain Matters of Construction......................................... 2
Section 1.2 Cross Reference Table................................................... 3
Section 1.3 Certain Definitions..................................................... 4
ARTICLE II THE MERGER.............................................................. 12
Section 2.1 Constituent Corporations, Surviving Corporation
and Name of Surviving Corporation....................................... 12
Section 2.2 The Merger.............................................................. 12
Section 2.3 Charter and By-Laws..................................................... 12
Section 2.4 Directors and Officers.................................................. 12
Section 2.5 Effective Time.......................................................... 13
ARTICLE III CONVERSION OF OCAL SHARES............................................... 13
Section 3.1 Manner of Converting Ocal Shares........................................ 13
Section 3.2 Exchange of Certificates for Cash....................................... 14
Section 3.3 Dissenting Shares....................................................... 15
ARTICLE IV THE CLOSING............................................................. 15
Section 4.1 Time and Place of Closing............................................... 15
Section 4.2 Deliveries.............................................................. 16
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE MAJOR SECURITYHOLDERS............................................ 18
Section 5.1 Authority of Such Major Securityholder.................................. 18
Section 5.2 Enforceability.......................................................... 18
Section 5.3 Non-Contravention....................................................... 18
Section 5.4 Title................................................................... 19
Section 5.5 Brokers................................................................. 19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF OCAL.................................. 19
Section 6.1 Corporate Matters, etc.................................................. 19
Section 6.2 Ocal Reports............................................................ 21
Section 6.3 Liabilities............................................................. 22
Section 6.4 Assets.................................................................. 22
Section 6.5 Intellectual Property Rights............................................ 25
Section 6.6 Accounts................................................................ 25
Section 6.7 Certain Contractual Obligations......................................... 25
Section 6.8 Insurance................................................................ 27
Section 6.9 Transactions with Affiliates............................................. 27
Section 6.10 Compliance with Laws..................................................... 28
Section 6.11 Tax Matters.............................................................. 28
Section 6.12 No Illegal Payments...................................................... 30
Section 6.13 Employee Benefit Plans................................................... 31
Section 6.14 Environmental Matters.................................................... 32
Section 6.15 Employment Relations..................................................... 34
Section 6.16 Litigation............................................................... 34
Section 6.17 Customers and Suppliers.................................................. 34
Section 6.18 Warranties and Returns................................................... 35
Section 6.19 Disclosure............................................................... 35
Section 6.20 Brokers.................................................................. 35
ARTICLE VII REPRESENTATIONS AND WARRANTIES
OF THE BUYING PARTIES.................................................... 36
Section 7.1 Corporate Matters........................................................ 36
Section 7.2 Authorization and Enforceability......................................... 37
Section 7.3 Non-Contravention........................................................ 37
Section 7.4 Litigation............................................................... 37
Section 7.5 Sufficient Funds......................................................... 37
Section 7.6 Brokers.................................................................. 38
Section 7.7 Disclosure............................................................... 38
ARTICLE VIII CERTAIN AGREEMENTS OF THE PARTIES........................................ 38
Section 8.1 No Solicitation of Other Offers.......................................... 38
Section 8.2 Access to Premises and Information....................................... 39
Section 8.3 Confidentiality Covenant of the Buying Parties........................... 39
Section 8.4 Operation of Business in the Ordinary Course............................. 40
Section 8.5 Certain Notices.......................................................... 41
Section 8.6 Preparation for Closing.................................................. 41
Section 8.7 SEC Filings.............................................................. 43
Section 8.8 Preparation of Transaction Balance Sheet................................. 44
Section 8.9 Directors' and Officers' Insurance and Indemnification................... 44
Section 8.10 Expenses of Transaction.................................................. 45
Section 8.11 Further Assurances....................................................... 45
ARTICLE IX CONDITIONS TO THE OBLIGATION TO CLOSE
OF THE BUYING PARTIES.................................................... 46
Section 9.1 Representations, Warranties and Covenants of
Major Securityholders.................................................... 46
Section 9.2 Representations, Warranties and Covenants of Company..................... 46
Section 9.3 Dissenting Shares........................................................ 47
Section 9.4 Closing Agreements....................................................... 47
Section 9.5 Legality................................................................. 47
ii
Section 9.6 Consents................................................................. 48
Section 9.7 Preparation of Transaction Balance Sheet................................. 48
Section 9.8 Merger................................................................... 48
Section 9.9 Opinion of Counsel....................................................... 48
Section 9.10 Regulatory Consents...................................................... 48
Section 9.11 General.................................................................. 48
ARTICLE X CONDITIONS TO THE OBLIGATION TO CLOSE
OF THE COMPANY AND THE MAJOR SECURITYHOLDERS............................. 49
Section 10.1 Representations, Warranties and Covenants................................ 49
Section 10.2 Closing Agreements....................................................... 49
Section 10.3 Legality................................................................. 50
Section 10.4 Consents................................................................. 50
Section 10.5 Preparation of Transaction Balance Sheet................................. 50
Section 10.6 Merger................................................................... 50
Section 10.7 Opinion of Counsel....................................................... 50
Section 10.8 Guaranty................................................................. 50
Section 10.9 Regulatory Consents...................................................... 50
Section 10.10 General.................................................................. 51
ARTICLE XI CONSENT TO JURISDICTION; JURY TRIAL WAIVER............................... 51
Section 11.1 Consent to Jurisdiction.................................................. 51
Section 11.2 Waiver of Jury Trial..................................................... 51
ARTICLE XII TERMINATION.............................................................. 52
Section 12.1 Termination of Agreement................................................. 52
Section 12.2 Break-up Fee............................................................. 53
Section 12.3 Effect of Termination.................................................... 54
ARTICLE XIII MISCELLANEOUS............................................................ 54
Section 13.1 Entire Agreement; Waivers................................................ 54
Section 13.2 Amendment or Modification................................................ 54
Section 13.3 Nonsurvival of Representations and Warranties............................ 54
Section 13.4 Independence of Representations and Warranties........................... 54
Section 13.5 Schedules; Listed Documents.............................................. 55
Section 13.6 Severability............................................................. 55
Section 13.7 Successors and Assigns................................................... 55
Section 13.8 Notices.................................................................. 55
Section 13.9 Public Announcements..................................................... 57
Section 13.10 Headings................................................................. 57
Section 13.11 Third Party Beneficiaries................................................ 57
Section 13.12 Counterparts............................................................. 57
Section 13.13 Governing Law............................................................ 57
iii
Exhibits
--------
Exhibit A - List of Major Securityholders
Exhibit B - Securityholders Agreement
Exhibit C - Opinion of Counsel to Ocal and Major Securityholders
Exhibit D - Opinion of Counsel to T&B
Exhibit E - Consulting Agreement
Exhibit F - Guaranty
iv
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made as of the 6th
day of October, 1998, among Ocal Acquisition Corp., a Delaware corporation
("ACQUISITION SUBSIDIARY"), ▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation, a Tennessee corporation
("T&B"; each of T&B and Acquisition Subsidiary being sometimes referred to
herein as a "BUYING PARTY" and collectively as the "BUYING PARTIES"), Ocal,
Inc., a Delaware corporation ("OCAL"), and each of the holders of securities
issued by Ocal signatory hereto and identified in EXHIBIT A hereto (each such
---------
holder being sometimes referred to herein as a "MAJOR SECURITYHOLDER" and
collectively as the "MAJOR SECURITYHOLDERS").
RECITALS
--------
A. The Boards of Directors of T&B and Ocal have approved, and deem it
advisable and in the best interests of their respective shareholders to
consummate, a strategic combination between Ocal and T&B upon the terms and
subject to the conditions set forth in this Agreement and in the Certificate of
Merger (as hereinafter defined).
B. It is intended that the strategic combination be accomplished by a
merger of the Acquisition Subsidiary with and into Ocal (the "MERGER"), with
Ocal being the surviving corporation.
C. Each Major Securityholder is the record and beneficial owner of the
securities of Ocal indicated opposite such Major Securityholder's name in
EXHIBIT A hereto. Such Major Securityholder has agreed to vote the shares of
---------
Ocal Common Stock (as hereinafter defined) beneficially owned by it in favor of
the adoption of this Agreement and the Merger, subject to the terms and
conditions provided for herein.
AGREEMENT
---------
Therefore, in consideration of the foregoing and the mutual agreements and
covenants set forth below, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1. CERTAIN MATTERS OF CONSTRUCTION. In addition to the
------- --- -------------------------------
definitions referred to as set forth below in this SECTION 1:
---------
(a) The words "hereof", "herein", "hereunder" and words of
similar import shall refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof.
(b) The word "PARTIES" shall refer to Ocal, the Major
Securityholders and the Buying Parties, collectively.
(c) Definitions shall be equally applicable to both the singular
and plural forms of the terms defined, and references to the masculine, feminine
or neuter gender shall include each other gender.
(d) Accounting terms used herein and not otherwise defined
herein are used herein as defined by Generally Accepted Accounting Principles
(as hereinafter defined).
(e) All references in this Agreement to any Section shall,
unless the context otherwise requires, be deemed to be a reference to a Section
of this Agreement.
(f) All references in this Agreement to any Exhibit or Schedule
shall, unless the context otherwise requires, be deemed to be a reference to an
Exhibit or Schedule, as the case may be, to this Agreement, all of which are
made a part of this Agreement.
(g) Unless otherwise specified, all references to "dollars" or
"$" shall be deemed to be a reference to currency of the United States of
America.
(h) Whenever a representation or warranty is stated to be based
on the "knowledge of Ocal", "knowledge of the Company", "Ocal's knowledge", "the
Company's knowledge" or a similar qualification, such phrase refers to whether
the chief executive officer, the chief financial officer, or the vice presidents
of manufacturing, marketing or research and development of Ocal have actual
knowledge of the matters involved, after conducting reasonable investigation in
light of the circumstances; provided however; the knowledge of the vice
president of marketing is limited to Section 6.17 and only as it relates to
------------
customers.
2
SECTION 1.2. CROSS REFERENCE TABLE. The following terms defined
------- --- ---------------------
elsewhere in this Agreement in the Sections set forth below shall have the
respective meanings therein defined:
DEFINED TERM SECTION REF.
------------ ------------
Acquisition Subsidiary Preamble
Affiliate Relationships 6.9
Agreement Preamble
Assets 6.4(a)
Audit Date 6.2(a)
Audited Balance Sheet 6.4(a)
Break-up Fee 12.2(a)
Business Combination 8.1
Business Combination Proposal 8.1
Buying Party Preamble
CERCLA 1.3 (Hazardous Substances)
Certificate 3.1(a)
Certificate of Merger 2.5
Closing 4.1
Closing Agreements 9.4
Closing Date 4.1
Constituent Corporations 2.1
Contracts 6.7
Deficit Amount 8.8(c)
Dissenting Shares 3.3
DGCL 2.2
DOL 6.13(a)
Effective Time 2.5
Eligible Date 4.1
Employee Plan 6.13(a)
EPCRA 1.3 (Environmental Laws)
Equipment 6.4(b)
Existing Plans 6.13(a)
Exchange Act 6.1(b)
Exchange Agent 3.2(a)
Exchange Fund 3.2(a)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 6.1(b)
HMTA 1.3 (Hazardous Substances)
Indemnified Liabilities 8.9
Indemnified Party(ies) 8.9
Insurance Policies 6.8
Interim Balance Sheet 6.3
Internal Revenue Service 6.11(a)
Leases 6.4(b)
Licenses 6.5
3
Major Securityholder Preamble
Merger Recitals
Merger Consideration 3.1(e)
Ocal Preamble
Ocal Reports 6.2(a)
Option Pay-out 3.1(b)
Party (ties) 1.1(b)
Pension Plan 6.13(a)
Permits 6.10
Per Share Merger Consideration 3.1(a)
Plan 6.13(a)
Proxy Statement 8.7(a)
RCRA 1.3 (Hazardous Substances)
SEC 6.2(a)
Surviving Corporation 2.1
T&B Preamble
Transaction Balance Sheet 8.8(a)
Transaction Costs 8.8(a)
Welfare Plan 6.13(a)
Section 1.3. CERTAIN DEFINITIONS. The following terms shall have
------------ -------------------
the following meanings:
"ACTION" shall mean any claim, action, cause of action or suit (in
contract or tort or otherwise), arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"AFFILIATE" shall mean, as to Ocal (or, if another Person is
specified, as to such other specified Person), (i) each Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with Ocal (or such specified Person), including without limitation, in the case
of Ocal, and each Major Securityholder, (ii) any Person who is an officer,
director or direct or indirect beneficial holder of at least 10% of any class of
the outstanding capital stock of any Person referred to in clause (i) above and
the members of the immediate family of each such officer, director or holder
(and, if such specified Person is a natural person, of such specified Person),
and (iii) each Person of which Ocal (or such specified Person) shall, directly
or indirectly, beneficially own at least 10 % of any class of outstanding
capital stock or other evidence of beneficial interest.
"AFFILIATE DEBT" shall mean all Debt of the Company to any Affiliate
of the Company.
"AREA(S) OF ENVIRONMENTAL CONCERN" shall mean any area(s) on, in,
under, beneath, or proximately about any Site which has (have) been impacted in
any way by any Hazardous Substances so as to give rise to actual or potential
Environmental Liabilities.
4
"BANK CREDIT AGREEMENT" means the revolving line of credit agreement
dated July 28, 1992, as amended, pursuant to which Southtrust Bank, N.A., has
established a revolving line of credit in favor of the Company.
"BUSINESS" shall mean the business of the Company as such business is
currently conducted.
"BUSINESS DAY" shall mean any day on which banking institutions in
Memphis, Tennessee are customarily open for the purpose of transacting business.
"BY-LAWS" shall mean all written rules, regulations and by-laws, and
all other documents (other than the Charter), relating to the management,
governance or internal regulation of a Person (other than an individual) or
interpretative of the Charter of such Person, each as from time to time in
effect.
"CHARTER" shall mean the certificate or articles of incorporation or
organization, statute, constitution, joint venture or partnership agreement or
articles or other charter documents of any Person (other than an individual),
each as from time to time in effect.
"CODE" shall mean the federal Internal Revenue Code of 1986, as
amended, or any successor statute, and the rules and regulations thereunder, and
in the case of any referenced section of any such statute, rule or regulation,
any successor section thereto, collectively and as from time to time amended and
in effect.
"COMPANY" shall mean Ocal, and its wholly-owned Subsidiaries, Ocal
Incorporated, Occidental Coating Company, Ocal Data Co., and Ocal Transport Co.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean a Material Adverse Effect
with respect to the Company.
"COMPENSATION", as applied to any Person, shall mean all salaries,
compensation, remuneration or bonuses of any character, and medical, surgical,
dental, hospital, disability, unemployment, retirement, pension, vacation,
insurance or fringe benefits of any kind, or other payments or benefits of any
kind whatsoever in respect of such Person's employment made or provided directly
or indirectly by or on behalf of the Company to such Person or members of the
immediate family of such Person.
"CONSULTING AGREEMENT" shall mean the Agreement dated on or prior to
the Closing Date substantially in the form of EXHIBIT E.
---------
"CONTRACTUAL OBLIGATION" shall mean, with respect to any Person, any
contract, agreement, deed, mortgage, lease, license, indenture, commitment,
undertaking, arrangement or understanding, written or oral, including, without
limitation, any document or instrument evidencing or otherwise relating to any
indebtedness but excluding the
5
Charter and By-laws of such Person, to which or by which such Person is a party
or otherwise subject or bound or to which or by which any property or right of
such Person is subject or bound.
"CONTROLLED GROUP", with respect to any Person, shall mean any Person
which is a member of the same "controlled group", or under "common control",
within the meaning of Section 414(b), (c), (m) or (o) of the Code, or Section
4001(a)(14) or Section 4001(b) of ERISA, with such Person.
"DEBT" of any Person shall mean all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred and paid in the Ordinary Course of
Business, but only to the extent that such payables or accruals are not
interest-bearing and all applicable discounts for prompt payment are taken),
(iv) under capital leases and (v) in the nature of Guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"DISTRIBUTION" shall mean, with respect to the any Equity Security
issued by any Person, (i) the declaration or payment of any dividend on or in
respect of any Equity Security; (ii) the purchase, redemption or other
retirement of any Equity Security, directly, or indirectly through an Affiliate
or otherwise; (iii) any other distribution on or in respect of any shares of any
class of such capital stock or beneficial interest or other Equity Security; and
(iv) any payment or other distribution on or in respect of the principal of,
interest on, or otherwise relating to, directly or indirectly, any Affiliate
Debt other than scheduled payments of principal and interest.
"ENFORCEABLE" shall mean, with respect to any Contractual Obligation,
that such Contractual Obligation is the legal, valid and binding obligation of
the Person in question, enforceable against such Person in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies).
"ENVIRONMENTAL LAWS" shall mean any and all Legal Requirements
relating to the protection of the environment, including, without limitation,
provisions pertaining to or regulating air pollution, water pollution, noise
control, wetlands, water courses, natural resources, wildlife, Hazardous
Substances, or any other activities or conditions which impact or relate to the
environment or nature, and shall include, without limitation, CERCLA, RCRA, the
Clean Air Act, the Federal Water Pollution Control Act, the Emergency Planning
and Community Right to Know Act ("EPCRA"), the Oil Pollution Act, and the Toxic
Substances Control Act, all as in effect from time to time, and shall include,
without limitation, Legal Requirements relating to strict liability, nuisance or
with respect to conducting abnormally dangerous activities.
6
"ENVIRONMENTAL LIABILITIES" shall mean any and all Losses arising out of,
relating to, or resulting from, directly or indirectly, in whole or in part, the
presence, generation, use, handling, transport, recycling, reclamation,
disposal, treatment, storage, or Release of any Hazardous Substances or the
failure or alleged failure to comply with any Environmental Law. Environmental
Liabilities include any cost of investigating, remediating, removing or
disposing of any Hazardous Substances, any costs incurred by either Buying Party
or the Company to bring existing operations into compliance with Environmental
Laws, any required medical monitoring of persons exposed to such Hazardous
Substances and any other related costs or expenses, including, without
limitation, reasonable attorneys', accountants', engineers', and consultants'
fees and disbursements.
"EQUITY SECURITIES" shall mean, with respect to any Person which is not a
natural person, all shares of capital stock or other equity or beneficial
interests issued by or created in or by such Person, all stock appreciation or
similar rights or grants of, or other Contractual Obligation for, any right to
share in the equity, income, revenues or cash flow of such Person, and all
securities or other rights, warrants or other Contractual Obligations to acquire
any of the foregoing, whether by conversion, exchange, exercise or otherwise.
"ERISA" shall mean the federal Employee Retirement Income Security Act of
1974 or any successor statute, and the rules and regulations thereunder, and in
the case of any referenced section of any such statute, rule or regulation, any
successor section thereto, collectively and as from time to time amended and in
effect.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean generally accepted
accounting principles, as defined by the United States Financial Accounting
Standards Board from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any U.S. federal, state or local or any
foreign government, governmental authority, regulatory or administrative agency,
governmental commission, court or tribunal (or any department, bureau or
division thereof) or any arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"GUARANTEE" shall mean (i) any guarantee of the payment or performance of,
or any contingent obligation in respect of, any Debt or other obligation of any
other Person, (ii) any other arrangement whereby credit is extended to one
obligor on the basis of any promise or undertaking of another Person (A) to pay
the Debt of such obligor, (B) to purchase any obligation owed by such obligor,
(C) to purchase or lease assets (other than inventory in the ordinary course of
business) under circumstances that would enable such obligor to discharge one or
more of its obligations, or (D) to maintain the capital,
7
working capital, solvency or general financial condition of such obligor, and
(iii) any liability as a general partner of a partnership or as a venturer in a
joint venture in respect of Debt or other obligations of such partnership or
venture.
"HAZARDOUS SUBSTANCES" shall mean (i) substances which contain substances
defined in or regulated under the following Legal Requirements and their state
counterparts, as well as these statutes' implementing regulations as amended
from time to time and as interpreted by administering Governmental Authorities:
the Hazardous Materials Transportation Act ("HMTA"), the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Clean Water Act, the Safe
Drinking Water Act, the Asbestos Hazard Emergency Response Act, the Atomic
Energy Act, the Toxic Substances Control Act, the Oil Pollution Act, the Federal
Insecticide, Fungicide, and Rodenticide Act, and the Clean Air Act, all as from
time to time in effect; (ii) petroleum and petroleum products, including crude
oil and any fractions thereof; (iii) natural gas, synthetic gas and any mixtures
thereof; (iv) radon; (v) PCBs; (vi) asbestos; (vii) any substance with respect
to which a Governmental Authority requires environmental investigation,
monitoring, reporting or remediation; and (viii) any other hazardous, noxious,
radioactive or toxic materials, products, commodities or substances.
"INTANGIBLES" shall mean all trade and product names; patents; patent
applications, and unpatented developmental records; trademarks; service marks,
logos and copyrights (including registrations and applications); trade secrets;
know-how and other proprietary or confidential information; computer software,
and all intellectual or intangible property and rights; in each case that are
directly or indirectly owned, licensed or otherwise used by the Company in the
conduct of the Business or otherwise.
"LEASED PROPERTIES" shall mean the Mobile Facility and the Van Nuys
Offices.
"LEGAL REQUIREMENT" shall mean any U.S. federal, state or local or any
foreign law, statute, standard, ordinance, code, order, rule, regulation,
resolution or promulgation, or any Governmental Order, or any license,
franchise, consent, approval, permit or similar right granted under any of the
foregoing, or any similar provision having the force and effect of law, all as
from time to time in effect.
"LIABILITIES" shall mean any and all debts, liabilities and obligations,
whether accrued, fixed, absolute or contingent, asserted or unasserted, matured
or unmatured or determined or not determinable, or otherwise including, without
limitation, those arising under any Legal Requirement, Action or Governmental
Order, those arising under any Contractual Obligation, those arising under or
otherwise out of or resulting from products manufactured or sold and all Debt
and Guarantees.
"LIEN" shall mean any mortgage, pledge, lien, security interest, charge,
claim, attachment, equity, encumbrance, restriction on transfer (or, in the case
of capital stock,
8
restrictions on the transfer or voting of such securities), conditional sale or
other title retention device or arrangement (including, without limitation, a
capital lease), transfer for the purpose of subjection to the payment of any
Debt, or restriction on the creation of any of the foregoing, whether relating
to any property or right or the income or profits therefrom; provided, however,
that the term "Lien" shall not include (i) statutory liens for Taxes to the
extent that the payment thereof is not in arrears or otherwise due, (ii)
encumbrances in the nature of zoning restrictions, easements, rights or
restrictions of record on the use of real property if the same do not detract
from the value of the property encumbered thereby or impair the use of such
property in the Business as currently conducted or proposed to be conducted,
(iii) statutory or common law liens to secure landlords, lessors or renters
under leases or rental agreements confirmed to the premises rented to the extent
that no payment or performance under any such lease or rental agreement is in
arrears or is otherwise due, (iv) deposits or pledges made in connection with,
or to secure payment of, worker's compensation, unemployment insurance, old age
pension programs mandated under applicable Legal Requirements or other social
security, (v) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, statutory or common law liens to secure claims for
labor, materials or supplies and other like liens, which secure obligations to
the extent that (A) payment of such obligations is not in arrears or otherwise
due and (B) such liens do not and will not, individually or in the aggregate,
have a Company Material Adverse Effect, and (vi) restrictions on transfer of
securities imposed by applicable state and federal securities laws.
"LOSSES" shall mean any and all losses, damages (including, without
limitation, diminution in value, but excluding consequential damages), injuries,
deficiencies, demands, obligations, Liabilities, causes of action, accusations,
allegations, claims, awards (including, without limitation, awards of punitive
or treble damages or interest), assessments, amounts paid in settlement,
judgments, orders, decrees, fines, penalties, and other sanctions, costs and
expenses (including, without limitation, reasonable legal costs and expenses and
costs and expenses of collection).
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any
adverse change in or effect on the business, operations, assets or condition,
financial or otherwise, of such Person (on a combined basis with such Person's
Subsidiaries, if such Person has Subsidiaries) which, when considered either
singly or together with all other adverse changes and effects with respect to
which such phrase is used in this Agreement with respect to such Person, is
material to such Person (on a combined basis with such Person's Subsidiaries, if
such Person has Subsidiaries), other than any such adverse change or effect
which results from economic conditions which have generally affected the
industry in which the Person operates; provided however, the Parties agree that
with respect to a change or an effect which can be reasonably quantified, any
change(s) or effect(s) of less than $750,000 shall not be considered material
for purposes of this definition.
9
"MOBILE FACILITY" shall mean the real estate (including the land and all
buildings and improvements therein) located at Addsco Road, Mobile, Alabama.
"MOBILE FACILITY LEASE" shall mean the lease dated June 11, 1988, as
amended, between Addsco Industries, Inc. as lessor and O Port Mobiles Services,
Inc., as lessee, for the Mobile Facility.
"OCAL COMMON STOCK" shall mean the common stock of Ocal, $.001 par value
per share.
"OCAL OPTION PLAN" shall mean the Ocal, Inc. 1995 Stock Option Plan.
"OCAL OPTIONS" shall mean all options issued to purchase the Ocal Common
Stock identified on SCHEDULE 6.1(D).
---------------
"OPERATOR" shall mean each current and each prior operator of each Site.
"ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of the
Business consistent with past custom and practice (including, without
limitation, with respect to quantity, pricing, discounts and customer
concessions, payment terms, collection practices and frequency).
"PERSON" shall mean any individual, partnership, corporation, association,
trust, joint venture, unincorporated organization or other entity, and any
Governmental Authority.
"PROPERTY LEASES" shall mean the Mobile Facility Lease and the Van Nuys
Lease.
"RELEASE" shall mean any and all releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, dumping, and any other means by which any Hazardous Substances are
introduced into or travel through the environment.
"REPRESENTATIVES' WARRANTS" shall mean the Representatives' Warrants to
purchase up to an aggregate of 220,000 shares of Ocal Common Stock, issued
pursuant to that certain Underwriting Agreement dated March 12, 1996, between
Ocal, on the one hand, and Hampshire Securities Corporation and Americorp
Securities, Inc., as the representatives of the several underwriters, on the
other hand.
"SECURITYHOLDERS AGREEMENT" shall mean the agreement dated on or prior to
the Closing Date substantially in the form of EXHIBIT B.
---------
10
"SITE" shall mean the Leased Properties and each other area of real
property at any time owned or leased by the Company or any predecessor entity or
with respect to which the Company or any predecessor entity was the Operator.
"SPECIAL MEETING" shall mean the special meeting of holders of Ocal Common
Stock called (as contemplated by SECTION 8.6) to approve this Agreement and the
-----------
Merger in accordance with the General Corporation Law of the State of Delaware,
including any adjournments or postponements thereof.
"SUBSIDIARY" shall mean any Person of which Ocal (or other specified
Person) shall own directly or indirectly through a Subsidiary, a nominee
arrangement or otherwise at least a majority of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally or at least
a majority of the partnership, joint venture or similar interests, or in which
Ocal (or other specified Person) is a general partner or joint venturer without
limited liability.
"TAX" shall mean any (and in the plural "TAXES" shall mean all) federal,
state, local or foreign income, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, registration, value
added, excise, natural resources, severance, stamp, occupation, premium, profit,
windfall profit, environmental (including Code Section 59A), customs, duties,
real property, personal property, capital stock, intangibles, social security,
employment, unemployment, disability, payroll, license, employee, and other tax,
withholding taxes, assessments, imposts, levies, and other charges of every kind
and nature arising under or imposed by any Legal Requirement, including, without
limitation, all interest, penalties and additions with respect to any of the
foregoing.
"TAX RETURN" shall mean all federal, state, local, and foreign Tax returns,
Tax reports, claims for refund of Tax, and declarations of estimated Tax, or
other statement relating to Taxes and any schedule or attachments to any of the
foregoing or amendments thereto, including (where permitted or required)
consolidated, combined or unitary returns for any group of entities.
"VAN NUYS OFFICES" mean the Company's administrative and sales offices
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"VAN NUYS LEASE" means the lease agreement dated as of August 8, 1995,
between Lull Company, as lessor, and Ocal, as lessee, relating to the Van Nuys
Offices.
11
ARTICLE II
THE MERGER
----------
SECTION 2.1. CONSTITUENT CORPORATIONS, SURVIVING CORPORATION AND
----------- ---------------------------------------------------
NAME OF SURVIVING CORPORATION. Ocal and the Acquisition Subsidiary are
-----------------------------
sometimes collectively referred to herein as the "CONSTITUENT CORPORATIONS".
Ocal shall be the surviving corporation of the Merger, and is sometimes referred
to herein as the "SURVIVING CORPORATION". The name of the Surviving Corporation
shall be "Ocal, Inc.".
SECTION 2.2. THE MERGER. The Merger shall be pursuant to the
----------- ----------
provisions of and with the effect provided in Section 251 of the Delaware
General Corporation Law ("DGCL"). At the Effective Time, the Acquisition
Subsidiary shall be merged with and into Ocal, and the separate corporate
existence of the Acquisition Subsidiary shall thereupon cease. From and after
the Effective Time, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of Ocal shall continue unaffected
and unimpaired by the Merger, and the corporate franchises, existence and rights
of the Acquisition Subsidiary shall be merged into Ocal and Ocal shall, as the
Surviving Corporation, be fully vested therewith. Moreover, upon the Merger
becoming effective, all of the estate, property, rights, privileges, powers and
franchises of the Constituent Corporations, and all their property, real,
personal and mixed, and all the debts on whatever account to any of them, as
well as all stock subscriptions and other chooses in action, belonging to any of
them, shall be transferred to, and shall be vested in, the Surviving Corporation
without further act or deed; but the Surviving Corporation shall be deemed to
have assumed, and shall be liable for, all liabilities and obligations of each
of the Constituent Corporations in the same manner and to the same extent as if
the Surviving Corporation had itself incurred such liabilities and obligations.
Section 2.3. CHARTER AND BY-LAWS. At the Effective Time, the
----------- -------------------
Charter of Ocal, as in effect immediately prior to the Effective Time, shall
continue to be the Charter of the Surviving Corporation, until duly amended in
accordance with law, except that Article IV of the Charter shall be amended to
provide for 1,000 shares of Common Stock, $.10 par value. At the Effective
Time, the By-laws of Ocal, as in effect immediately prior to the Effective Time
of the Merger, shall continue to be the By-laws of the Surviving Corporation
until duly amended in accordance with the law.
Section 2.4. DIRECTORS AND OFFICERS. At the Effective Time, the
----------- ----------------------
persons who are directors and officers of the Acquisition Subsidiary immediately
prior to the Effective Time shall become the directors and officers,
respectively, of the Surviving Corporation, holding the same offices in the
Surviving Corporation as they held in the Acquisition Subsidiary immediately
prior to the Effective Time, until their successors shall be elected and
qualified in accordance with law and the Charter and By-laws of the Surviving
Corporation.
12
SECTION 2.5. EFFECTIVE TIME. T&B and Ocal will cause a
----------- --------------
certificate of merger with respect to the Merger (the "CERTIFICATE OF MERGER")
to be executed and filed on the date of the Closing (or on such other date as
T&B and Ocal may agree) with the Secretary of State of the State of Delaware as
provided in the DGCL. The Merger will become effective on the date on which the
Certificate of Merger has been duly filed with the Secretary of State or at such
other time as may be agreed upon by the parties and specified in the Certificate
of Merger, and such time is referred to herein as the "EFFECTIVE TIME".
ARTICLE III
CONVERSION OF OCAL SHARES
-------------------------
Section 3.1. MANNER OF CONVERTING OCAL SHARES. At the Effective
----------- --------------------------------
Time, by virtue of the Merger and without any action on the part of the holders
thereof, the outstanding shares of Ocal Common Stock (other than Dissenting
Shares) shall be canceled and converted in the manner set forth below.
(a) OCAL COMMON STOCK. At the Effective Time, each outstanding
share of Ocal Common Stock (other than Dissenting Shares) shall be converted
into the right to receive from T&B (i) the Merger Consideration divided by (ii)
the total number of shares of Ocal Common Stock outstanding immediately prior to
the Effective Time ("PER SHARE MERGER CONSIDERATION"). Each Certificate (a
"CERTIFICATE") formerly representing any of such shares of Ocal Common Stock
shall thereafter represent only the right to the Per Share Merger Consideration,
multiplied by the number of shares of Ocal Common Stock represented by that
Certificate.
(b) OCAL OPTIONS. Each Ocal Option outstanding at the Effective
Time shall be converted into the right to receive from T&B cash equal to (x) the
number of shares of Ocal Common Stock receivable upon exercise of such option
multiplied by (y) the excess of the Per Share Merger Consideration over the
consideration payable upon such exercise per share of Ocal Common Stock to be
received (such sum in the aggregate, the "OPTION PAY-OUT").
(c) TREASURY STOCK. Each share of Ocal Common Stock that is
held in the Ocal treasury immediately prior to the Effective Time (if any) shall
be canceled and retired and all rights in respect thereof shall cease to exist,
without any conversion thereof or payment of any consideration therefor.
(d) ACQUISITION SUBSIDIARY. At the Effective Time, each share
of Common Stock, $.10 par value, of the Acquisition Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of Common Stock of the Surviving Corporation.
13
(e) MERGER CONSIDERATION. The "MERGER CONSIDERATION" shall mean
(i) $20,300,000, (ii) less the Option Pay-Out, and (iii) less the Deficit Amount
as reflected on the Transaction Balance Sheet, if any.
SECTION 3.2. EXCHANGE OF CERTIFICATES FOR CASH.
----------- ---------------------------------
(a) EXCHANGE AGENT. At the Effective Time, T&B shall deposit,
or shall cause to be deposited, with an exchange agent selected by T&B with
Ocal's prior written approval, which shall not be unreasonably withheld (the
"EXCHANGE AGENT"), for the benefit of the holders of Ocal Common Stock, the
Merger Consideration in exchange for outstanding shares of Ocal Common Stock
upon due surrender of the Certificates (or affidavits of loss in lieu thereof)
pursuant to the provisions of this ARTICLE III (the "EXCHANGE FUND").
-----------
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time (but
in no event more than five (5) business days thereafter), the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record of
shares of Ocal Common Stock (other than holders of Dissenting Shares) (i) a
letter of transmittal specifying that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, such
letter of transmittal to be in such form and have such other provisions as T&B
and Ocal may reasonably agree, and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Per Share Merger
Consideration. Subject to SECTION 3.3, upon surrender of a Certificate for
-----------
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall receive in exchange therefor
the Per Share Merger Consideration. No interest will be paid or accrued on any
amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of shares of Ocal Common Stock that is not registered in
the transfer records of Ocal, a check for the Per Share Merger Consideration
upon due surrender of the Certificate may be issued and/or paid to such a
transferee of the Certificate formerly representing such shares of Ocal Common
Stock if presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of Ocal of the shares of Ocal Common Stock
that were outstanding immediately prior to the Effective Time.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains unclaimed by the holders of Ocal Common Stock for 180 days
after the Effective Time shall be paid to T&B. Any holders of Ocal Common Stock
who have
14
not theretofore complied with this ARTICLE III shall thereafter look only to
-----------
T&B for payment of the Per Share Merger Consideration issuable pursuant to
SECTION 3.1 and SECTION 3.2 upon due surrender of their Certificates (or
----------- -----------
affidavits of loss in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of T&B, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any former holder of
shares of Ocal Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by T&B, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Per Share Merger
Consideration upon due surrender of and deliverable in respect of the Shares
represented by such Certificate pursuant to this Agreement.
SECTION 3.3. DISSENTING SHARES. Notwithstanding anything to the
----------- -----------------
contrary in this Agreement, shares of Ocal Common Stock outstanding immediately
prior to the Effective Date and held by a stockholder who has not voted in favor
of the Merger or consented thereto in writing and who has demanded appraisal
rights for such shares of Ocal Common Stock in accordance with the provisions of
(S)262 of the DGCL ("DISSENTING SHARES") shall not be converted into the right
to receive any consideration that may be distributable in the Merger, unless
such stockholder fails to perfect or withdraws or otherwise loses his or her
right to appraisal. If, after the Effective Time, such holder fails to perfect
or withdraws or loses his or her right to appraisal, such shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Per Share Merger Consideration provided herein with respect to his
or her shares of Ocal Common Stock, without interest thereon.
ARTICLE IV
THE CLOSING
-----------
SECTION 4.1. TIME AND PLACE OF CLOSING. The closing of the Merger
----------- -------------------------
and the other transactions contemplated by this Agreement (the "CLOSING") shall
take place (a) at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ in Chicago, Illinois at
9:00 a.m. (local time) on the first Eligible Date (as hereinafter defined)
following the last to occur of (i) the Special Meeting or (ii) if all of the
conditions to the Closing set forth herein have not been satisfied as of the
date of the Special Meeting, the date on which all of the conditions set forth
in ARTICLES IX AND X hereof have been satisfied or waived as herein provided, or
-----------------
(b) at such other time, date or place as is agreed to in writing by the parties
hereto. For purposes of this Agreement, "ELIGIBLE DATE" shall mean any Business
Day
15
between and including the fifth through tenth days of each calendar month and
"CLOSING DATE" shall mean the date on which the Closing occurs. Subject to such
satisfaction or waiver of such conditions, Ocal and the Buying Parties shall
execute and deliver the Certificate of Merger on or before the Closing Date, and
shall cause the Certificate of Merger to be filed in accordance with SECTION
-------
2.5.
----
SECTION 4.2. DELIVERIES.
----------- ----------
(a) DELIVERIES BY OCAL. At the Closing, Ocal shall deliver or
cause to be delivered to the Buying Parties all of the following:
(i) a copy of Ocal's Charter, certified as of a recent
date by the Secretary of the State of Delaware;
(ii) a certificate of good standing of Ocal, issued as of
a recent date by the Secretary of the State of Delaware;
(iii) a certificate of the secretary or an assistant
secretary of Ocal, dated the Closing Date, in form and substance reasonably
satisfactory to T&B and the Acquisition Subsidiary as to (A) no amendments
to Ocal's Charter or By-Laws, (B) the corporate actions (including copies
of relevant votes) taken by Ocal and its board of directors and
stockholders to authorize the transactions contemplated hereby and (C) the
incumbency and signatures of the officers of Ocal executing this Agreement
and the other agreements, instruments and other documents executed by or on
behalf of Ocal pursuant to this Agreement or otherwise in connection with
the transactions contemplated hereby;
(iv) the certificate contemplated by SECTION 9.2(d), duly
--------------
executed by an authorized officer of Ocal;
(v) an opinion of Irell & ▇▇▇▇▇▇▇ LLP, counsel to Ocal,
substantially in the form attached hereto as EXHIBIT C; and
---------
(vi) such other instruments and documents as the Buying
Parties may reasonably request from Ocal in connection with the
transactions contemplated hereby not later than two Business Days prior to
the Closing Date.
(b) DELIVERIES BY THE BUYING PARTIES. At the Closing, the Buying
Parties shall deliver or cause to be delivered to Ocal and the Major
Securityholders all of the following:
(i) copies of T&B's Charter and the Acquisition
Subsidiary's Charter, certified as of a recent date by the Secretaries of
the State of Tennessee and the State of Delaware, respectively;
16
(ii) a certificate of good standing of T&B, issued as of a
recent date by the Secretary of State of the State of Tennessee and a
certificate of good standing of the Acquisition Subsidiary, issued as of a
recent date by the Secretary of the State of the State of Delaware;
(iii) a certificate of the secretary or assistant secretary
of T&B, dated the Closing Date as to (A) no amendments to T&B's Charter or
By-Laws, (B) the corporate actions taken by T&B to authorize the
transactions contemplated hereby and (C) the incumbency and signatures of
the officers of T&B executing this Agreement and the other agreements,
instruments and other documents executed by or on behalf of T&B pursuant to
this Agreement or otherwise in connection with transactions contemplated
hereby;
(iv) a certificate of the secretary or assistant secretary
of the Acquisition Subsidiary, dated the Closing Date, as to (A) no
amendments to the Acquisition Subsidiary's Charter or By-Laws, (B) the
corporate actions taken by the Acquisition Subsidiary to authorize the
transactions contemplated hereby, and (C) the incumbency and signatures of
the officers of the Acquisition Subsidiary executing this Agreement and the
other agreements, instruments and other documents executed by or on behalf
of the Acquisition Subsidiary or otherwise in connection with the
transactions contemplated hereby;
(v) an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel to T&B
and the Acquisition Subsidiary, substantially in the form attached hereto
as EXHIBIT D;
----------
(vi) the certificate contemplated by SECTION 10.1(d), duly
---------------
executed by an authorized officer of T&B and the Acquisition Subsidiary,
respectively; and
(vii) such other instruments and documents as Ocal may
reasonably request from the Buying Parties in connection with transactions
contemplated hereby not later than two Business Days prior to the Closing
Date.
(c) MAJOR SECURITYHOLDERS. At the Closing, each Major
Securityholder will:
(i) deliver such evidence of identity, existence and
authority and such other customary closing documents as may reasonably be
requested by the Buying Parties;
(ii) deliver the certificate contemplated by SECTION
-------
9.1(c), duly executed by or on behalf of such Major Securityholder; and
------
17
(iii) deliver such other instruments and documents as the
Buying Parties may reasonably request from the Major Securityholders in
connection with the transactions contemplated hereby not later than two
Business Days prior to the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE MAJOR SECURITYHOLDERS
-----------------------------------------------------------
In order to induce the Buying Parties to enter into and perform this
Agreement and to consummate the transactions contemplated hereby, each Major
Securityholder severally represents and warrants to the Buying Parties with
respect only to such Major Securityholder as follows:
SECTION 5.1. AUTHORITY OF SUCH MAJOR SECURITYHOLDER. Such Major
----------- --------------------------------------
Securityholder has all requisite power and authority to enter into this
Agreement, to carry out and perform such Major Securityholder's obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by such Major Securityholder.
SECTION 5.2. ENFORCEABILITY. This Agreement has been duly executed
----------- --------------
and delivered by such Major Securityholder and is Enforceable against such Major
Securityholder. Each of the Closing Agreements to which such Major
Securityholder is a party, will be duly executed and delivered by such Major
Securityholder on or before the Closing Date, and be Enforceable against such
Major Securityholder.
SECTION 5.3. NON-CONTRAVENTION. Subject to obtaining the consents
----------- -----------------
set forth in SCHEDULE 5.3, neither the execution, delivery or performance of
------------
this Agreement nor the consummation of the transactions contemplated hereby does
or will constitute, result in or give rise to any breach or violation of, or any
default or right or cause of action under, any Contractual Obligation of such
Major Securityholder or any Legal Requirement applicable to such Major
Securityholder. Except as set forth in SCHEDULE 5.3, no approval, consent,
------------
waiver, authorization or other order of, and no declaration, filing,
registration, qualification or recording with, any Governmental Authority or any
other Person (including, without limitation, any party to any Lease, Guarantee
or other Contractual Obligation of such Major Securityholder) is required to be
made by or on behalf of such Major Securityholder in connection with the
execution, delivery or performance of this Agreement and the transactions
contemplated hereby by such Major Securityholder, other than such approvals,
consents or filings, the failure of which to obtain or make would not have a
Company Material Adverse Effect, or would otherwise materially adversely effect
the ability of the Major Securityholder to consummate the transactions
contemplated by this Agreement.
18
SECTION 5.4. TITLE. Such Major Securityholder is the record and
----------- -----
beneficial owner of all Equity Securities of the Company listed opposite the
name of such Major Securityholder in EXHIBIT A. Except for this Agreement,
---------
there is no Contractual Obligation pursuant to which such Major Securityholder
has, directly or indirectly, granted to any Person any option, warrant or other
right to acquire such Equity Securities.
SECTION 5.5. BROKERS. Except as specified in SCHEDULE 6.20, no
----------- ------- -------------
broker, finder, investment bank or similar agent is entitled to any brokerage,
finder's or other fee, Compensation or reimbursement of expenses in connection
with the transactions contemplated by this Agreement based upon agreements or
arrangements made by or on behalf of (or the conduct of) such Major
Securityholder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF OCAL
--------------------------------------
In order to induce the Buying Parties to enter into and perform this
Agreement and to consummate the transactions contemplated hereby, Ocal makes the
following representations and warranties to the Buying Parties:
SECTION 6.1. CORPORATE MATTERS, ETC.
----------- -----------------------
(a) ORGANIZATION, POWER AND STANDING. Each of Ocal and its
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization or incorporation,
and have all requisite corporate power and authority to enter into and perform
their obligations under this Agreement, to carry on the Business as currently
conducted, and to consummate the transactions contemplated hereby. Each of Ocal
and its Subsidiaries is qualified or licensed to do business as a foreign
corporation in every jurisdiction where the character of the property owned,
leased or operated by it or the nature of the Business as currently conducted by
it makes such qualification or licensing necessary, except where its failure to
be so qualified or licensed and in good standing has not and will not have a
Company Material Adverse Effect.
Ocal has delivered to the Buying Parties a complete and correct copy of the
Charters and by-laws of Ocal and its Subsidiaries, each as amended to date.
Ocal's Charter and by-laws so delivered are in full force and effect. SCHEDULE
--------
6.1(a) contains a correct and complete list of each jurisdiction where Ocal and
------
its Subsidiaries are organized and qualified to do business.
The Board of Directors of Ocal has [UNANIMOUSLY] approved this Agreement
and the Merger and other transactions contemplated hereby and has received the
opinion of its financial advisors, Houlihan, Lokey, ▇▇▇▇▇▇ and ▇▇▇▇▇, to the
effect that the Merger
19
Consideration is fair to the holders of Ocal Common Stock from a financial point
of view, a copy of which opinion has been delivered to T&B.
(b) AUTHORIZATION AND ENFORCEABILITY. Subject only to the
requirement that this Agreement be approved by the holders of the Ocal Common
Stock pursuant to the Legal Requirements of the DGCL, this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized,
and this Agreement has been duly executed and delivered by Ocal and is
Enforceable against Ocal. Upon such vote and approval, this Agreement will be
duly authorized, executed and delivered by, and Enforceable against Ocal. Other
than the filings and/or notices under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 as amended (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT") and the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") required to be
made by Ocal, and to comply with State securities laws, no notices, reports or
other filings are required to be made by Ocal with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Ocal from any Governmental Authority in connection with the execution and
delivery of this Agreement by Ocal and the consummation by Ocal of the Merger
and the other transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent material delay or materially
impair the ability of Ocal to consummate the transactions contemplated by this
Agreement.
(c) NON-CONTRAVENTION. Neither the execution, delivery or
performance of this Agreement nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the consummation of the
Merger) does or will constitute, result in or give rise to (i) a breach or
violation of or default under any Legal Requirement applicable to Ocal and its
Subsidiaries, (ii) a breach of or a default under any Charter or By-Law
provision of Ocal and its Subsidiaries, (iii) the acceleration of the time for
performance of any obligation under any material Contractual Obligation of the
Company, (iv) the imposition of any Lien upon or the forfeiture of any material
Asset (including, without limitation, any material Asset held under a
Contractual Obligation of the Company), (v) a material breach of or a material
default under any Contractual Obligation of the Company, or the requirement that
any consent under or waiver of any Lease or other Contractual Obligation be
obtained, or (vi) any severance payments, right of termination, modification of
terms (other than the modification of Ocal Options), or any other right or cause
of action under any such Contractual Obligation which relates to Compensation,
except in the case of clauses (i) (iii) (iv) (v) and (vi), for items listed on
SCHEDULE 6.1(c), or items that could not reasonably be expected to have Company
---------------
Material Adverse Effect.
(d) CAPITALIZATION. The authorized capital stock of Ocal
consists of 15,000,000 shares of Ocal Common Stock, of which 5,681,000 shares
were outstanding as of the close of business on October 5, 1998. All of the
outstanding shares of Ocal Common Stock have been duly authorized and are
validly issued, fully paid and
20
nonassessable. Ocal has no shares reserved for issuance except that as of
October 5, 1998, there were an aggregate of (i) 400,000 shares reserved for
issuance pursuant to the Ocal Option Plan, and (ii) 220,000 shares reserved for
issuance pursuant to the Representatives' Warrants. SCHEDULE 6.1(d) contains a
---------------
correct and complete list of each outstanding option to purchase shares under
the Ocal Option Plan and each outstanding warrant, including the holder, date of
grant, exercise price and number of shares subject thereto. Except as set forth
on SCHEDULE 6.1(d), there are no preemptive or other outstanding rights,
---------------
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements or arrangements or commitments for Ocal to
issue or sell any shares of capital stock or other Equity Securities of Ocal.
SECTION 6.2. OCAL REPORTS
----------- ------------
(a) SEC REPORTS. Ocal has delivered or made available to T&B
each registration statement, report, proxy statement or information statement
prepared by it since December 31, 1997 (the "AUDIT DATE"), including (i) Ocal's
Annual Report on Form 10-K for the year ended December 31, 1997 and (ii) Ocal's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1998, and June
30, 1998, each in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed subsequent to the date hereof,
the "OCAL REPORTS"). As of their respective dates, the Ocal Reports did not, and
any Ocal Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the Ocal Reports (including the related notes and schedules) fairly presents, or
will fairly present, the consolidated financial position of the Ocal and its
Subsidiaries as of its date and each of the consolidated statements of income,
shareholders' equity and cash flows included in or incorporated by reference
into the Ocal Reports (including any related notes and schedules) fairly
presents, or will fairly present, the results of operations, as the case may be,
of Ocal and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end adjustments) in each
case in accordance with Generally Accepted Accounting Principles consistently
applied during the periods involved, except as may be noted therein.
(b) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Ocal
Reports filed prior to the date hereof or as set forth on SCHEDULE 6.2(b), since
---------------
the Audit Date, Ocal has conducted its Business only in, and has not engaged in
any material transaction other than according to, the Ordinary Course of
Business and there has not been (i) as of the date hereof, any change in the
financial condition, properties, business or results of operations of Ocal and
its Subsidiaries or any development or combination of developments affecting
Ocal of which the Company has knowledge, except those
21
changes, developments or combinations of developments that, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect; (ii) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise used by
Ocal or any of its Subsidiaries, whether or not covered by insurance; (iii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the capital stock of Ocal, except for dividends or other
distributions on its capital stock publicly announced prior to the date hereof;
or (iv) any change by Ocal in accounting principles, practices or methods. Since
the Audit Date, except as provided for herein or as disclosed in the Ocal
Reports filed prior to the date hereof or on SCHEDULE 6.2(b), there has not
---------------
been any increase in the compensation payable or that could become payable by
Ocal or any of its Subsidiaries to officers or any amendment of any of the
Compensation and Benefit Plans (as defined below) other than increases or
amendments in the Ordinary Course of Business.
SECTION 6.3. LIABILITIES. Except as set forth on SCHEDULE 6.3,
----------- ----------- ------------
after giving effect to the Closing hereunder and the consummation of the
transactions contemplated hereby, the Company will not have any Liabilities
which have had or resulted or are reasonably likely to have or result in any
Company Material Adverse Effect, other than Liabilities (a) to the extent set
forth on the unaudited consolidated balance sheet of Ocal and its Subsidiaries
as of June 30, 1998, (the "INTERIM BALANCE SHEET") and the notes thereto; or (b)
incurred in usual amounts since the date of the Interim Balance Sheet in the
Ordinary Course of Business; or (c) except as disclosed in the Ocal Reports.
SECTION 6.4. ASSETS.
----------- ------
(a) TITLE TO ASSETS. The Company has good and marketable title
to, or, in the case of property held under lease or other Contractual
Obligation, a valid and Enforceable right to use under an Enforceable Lease or
License, all of its properties, rights and assets, whether real, personal or
intellectual and whether tangible or intangible collectively, (the "ASSETS"),
including, without limitation, all properties, rights and assets reflected in
the audited consolidated balance sheet of Ocal and its Subsidiaries as of
December 31, 1997 (the "AUDITED BALANCE SHEET") or in the Interim Balance Sheet
(except as sold or otherwise disposed of since the date of the Audited Balance
Sheet and the Interim Balance Sheet, respectively) with only such exceptions as
could not reasonably be expected to have a Company Material Adverse Effect. The
Assets (including, without limitation, the Equipment, the Intangibles and the
Contracts) are sufficient to permit Ocal and its Subsidiaries to conduct the
Business as currently being conducted with only such exceptions as could not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth on SCHEDULE 6.4(a), all of the Company's Assets are located at the Leased
---------------
Properties.
(b) EQUIPMENT. All of the tangible personal property other than
inventory included in the Assets and material to the operation of the Company's
Business (the "EQUIPMENT") is in good working order, operating condition and
state of repair,
22
ordinary wear and tear and routine downtime for maintenance excepted, and except
for failures to be in good working order, operating condition or state of repair
that could not reasonably be expected to have a Company Material Adverse Effect.
SCHEDULE 6.4(b) lists each lease or other Contractual Obligation (including all
---------------
amendments) under which any Equipment having a cost or aggregate capital lease
obligations in excess of $25,000 is held or used by the Company (the "LEASES").
The Company has delivered to T&B true and complete copies of each Lease and any
and all other material Contractual Obligations relating to any of the Leases, in
each case as in effect on the date hereof and (except as otherwise required by
this Agreement) as it will be in effect at the Closing, including, without
limitation, all amendments. There is no Contractual Obligation under which the
Company is liable as lessor with respect to any real property or Equipment.
SCHEDULE 6.4(b) lists the addresses of each other location, if any, at which is
---------------
located any Equipment or inventory.
(c) THE LEASED PROPERTIES. The Company owns no Real Property.
The Company currently operates the Business at the Leased Properties pursuant to
the Property Leases. True and complete copies of the Property Leases, which
contain a current legal description of the Leased Properties, have been provided
to T&B. Except as set forth on SCHEDULE 6.4(c), with respect to each of the
---------------
Leased Properties and the Property Leases:
(i) The Company has not received any written notice that
the use of the Leased Property by the Company fails to comply with any
applicable Legal Requirements, including, to the knowledge of the Company,
applicable zoning restrictions and ordinances, variances thereto or
conditional use permits of the jurisdictions in which the Leased Property
is located, other than failure to comply that could not reasonably be
expected to result in any Company Material Adverse Effect.
(ii) With respect to the Leased Properties, (A) the
Company is in peaceful and undisturbed possession of the property under the
applicable Property Lease, and (B) the Company has not received any written
notice of any other Persons claiming any tenancy or occupancy rights or of
any Contractual Obligations that preclude or restrict the ability to use
the premises for the purposes for, and in the manner in, which they are
currently being used, or of any cancellation or termination under any
option or right reserved to the lessor under the applicable Property Lease
or any notice of default under the applicable Property Lease, with such
exceptions in each of the foregoing clauses (A) and (B) that could not
reasonably be expected to result in any Company Material Adverse Effect.
(iii) The Company has not received any written notice and
has no knowledge of (i) any violation of any Legal Requirement, including,
without limitation, zoning restrictions and ordinances, health, building,
life, safety and fire
23
codes and ordinances and Environmental Laws, affecting the Leased
Properties, (ii) any violation of any Permit, or (iii) any eminent domain,
condemnation or similar proceeding pending or threatened, or any decree or
order relating thereto, which could reasonably be expected to materially
affect the current or proposed use of the Leased Properties, or any
building or improvement by the Company, in each case, that could reasonably
be expected to have a Company Material Adverse Effect.
(iv) No consent is required under the Property Leases in
connection with the transactions contemplated by this Agreement.
(v) The Company has not received any written notice of,
nor does the Company have any knowledge of, any material destruction,
damage or casualty having occurred with respect to the Leased Properties,
in each case which could have a Company Material Adverse Effect.
(vi) The Company has right of ingress to and egress from
the Leased Properties adequate for the operations of the Company as
currently conducted thereon.
(vii) To the Company's knowledge, with respect to the
Property Leases: (a) no event has occurred which (with the giving of notice
or the passage of time or both), would impair any right of the Company to
exercise and obtain the benefit of any options contained in the Property
Leases; (b) there is no default or basis for acceleration, repossession or
termination under any of the Property Leases, nor has any event occurred
which (with the giving of notice or the passage of time or both) would
constitute a default or result in or permit the repossession, acceleration
of any obligation under, or termination of, any of the Property Leases; and
(c) the Company has not received any notice of any default under any ground
lease, prime lease, mortgage or deed of trust of any lessor, any prime
lessor or with respect to the Leased Properties which could ultimately
result in a repossession under or termination of any of the Property Leases
or impair any right of the Company under any of the Property Leases.
(viii) There is no tenant improvement work in progress or
remaining incomplete under the Property Leases or any construction ongoing
or remaining incomplete with respect to the Leased Properties with a value
in excess of $100,000 in the aggregate.
(ix) All necessary services including water, electric,
telephone and gas utility services and storm drainage facilities are
currently available to the Leased Properties and are adequate for the
present use of the Leased Properties by the Company, and are provided by
independent third parties.
24
SECTION 6.5. INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 6.5 lists and
----------- ---------------------------- ------------
identifies the following items included in Intangibles: all trade and product
names; patents, patent applications, trademarks, service marks, and registered
copyrights (including registrations and applications). SCHEDULE 6.5 also
------------
identifies each Contractual Obligation (including all amendments) under which
any material Intangible is held or used by the Company in the conduct of the
Business or otherwise (the "LICENSES"). Except as disclosed on SCHEDULE 6.5,
------------
all material Intangibles are owned solely by the Company or licensed to it under
a non-cancelable License not requiring payment of any further royalty or fee.
There is no Contractual Obligation under which the Company is liable as licensor
with respect to any Intangibles and the Company has not granted licenses to any
third party with respect to any of the Intangibles. Except for matters that
could not reasonably be expected to have a Company Material Adverse Effect, the
manufacture, use or sale by the Company of any products in the Business and use
by the Company of the Intangibles as currently used does not infringe and has
not infringed upon, in any material respect, any rights of any third party, and,
to the knowledge of the Company, no activity of any third party infringes upon
the rights of the Company with respect to any of the Intangibles. No Action
alleging or relating to any such infringement against the rights of the Company,
or by the Company against any third parties is currently pending or, to the
knowledge of the Company, threatened.
SECTION 6.6. ACCOUNTS. SCHEDULE 6.6 identifies each bank account or
----------- --------- ------------
similar account for the deposit of cash or securities maintained by or on behalf
of the Company (indicating the name and address of the bank or other financial
institution, the account name and number and the individuals with signing
authority with respect to such account).
SECTION 6.7. CERTAIN CONTRACTUAL OBLIGATIONS. Set forth on SCHEDULE
----------- ------------------------------- --------
6.7 is a true and complete list of all of the following Contractual Obligations
---
to which the Company is a party:
(a) All collective bargaining agreements and other labor
agreements; all employment or consulting agreements (including, without
limitation, all contracts concerning the management or operation of any real
property) or forms thereof; all Existing Plans; and all other plans, agreements,
arrangements or practices which constitute Compensation or benefits to any of
the directors, officers or employees of the Company (including all written
arrangements and written summaries of all material oral practices or
arrangements);
(b) All Contractual Obligations under which the Company is or
may become obligated to pay following the Effective Time relating to any legal,
accounting, brokerage, finder's or similar fees or expenses in connection with,
or incur any severance pay or special Compensation obligations which would
become payable by reason of, this Agreement or the consummation of the
transactions contemplated hereby;
25
(c) All Contractual Obligations under which the Company is or
will after the Closing be (i) restricted from carrying on any business or other
activities anywhere in the world or (ii) bound to participate in any allocation
or sharing of Taxes;
(d) All Contractual Obligations (including, without limitation,
options) to: (i) sell or otherwise dispose of any material Assets except in the
Ordinary Course of Business or (ii) purchase or otherwise acquire any material
property or properties except in the Ordinary Course of Business;
(e) All Contractual Obligations under which the Company has or
will after the Closing have any liability or obligation in excess of $25,000 to
or for the benefit of any Affiliate of the Company;
(f) All Contractual Obligations under which the Company has any
liability or obligation for Debt or constituting or giving rise to a Guarantee
of any liability or obligation of any Person, or under which any Person has any
liability or obligation constituting or giving rise to a Guarantee of any
liability or obligation of the Company (including, without limitation,
partnership and joint venture agreements);
(g) All Contractual Obligations under which the Company may
become obligated to pay any amount in excess of $25,000 in respect of
indemnification obligations, purchase price adjustment or otherwise in
connection with any (i) acquisition or disposition of real property or of
property constituting a product line, (ii) other acquisition or disposition of
assets other than sales of inventory in the Ordinary Course of Business, (iii)
acquisition or disposition of securities, (iv) assumption of liabilities or
warranty, (v) settlement of claims, (vi) merger, consolidation or other business
combination, or (vii) any series or group of related transactions or events of a
type specified in subclauses (i) through (vi);
(h) All contracts with any Governmental Authority and all
Contractual Obligations with distributors, suppliers, vendors, customers, or
other purchasers or suppliers of goods or services, including, without
limitation, purchase or sales or service orders, which in the case of such other
Contractual Obligations individually are likely to require payments by or on
behalf of, or to, the Company in excess of $25,000 during the calendar year
ended December 31, 1998 or $25,000 over the remaining term of the contract;
(i) All sales representative agreements to which the Company is
party; and
(j) The Ocal Options and the Representatives' Warrants.
The Company has heretofore delivered to T&B a true, correct and complete copy
(or, in the case of oral contracts or arrangements, an accurate written summary)
of each of the
26
Contractual Obligations listed on SCHEDULE 6.7, each as in effect on the date
------------
hereof and (except as otherwise required by this Agreement) as it will be in
effect at the Closing, including, without limitation, all amendments (such
Contractual Obligations, together with the Property Leases, the Leases,
Licenses, and Insurance Policies, but excluding the Existing Plans, being
referred to herein collectively as the "CONTRACTS"). To the Company's
knowledge, each Contract is, and after giving effect to the Closing hereunder
and the consummation of the transactions contemplated hereby will be,
Enforceable by the Company against each Person (other than the Company) party
thereto, except: (i) as otherwise required by the terms of this Agreement, (ii)
for such failures to be so enforceable as do not and will not have a Company
Material Adverse Effect and (iii) as such enforceability may be limited by (A)
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and (B) general principles of equity (whether
considered in a proceeding at law or in equity). To the Company's knowledge, no
breach or default by the Company under any of the Contracts has occurred and is
continuing, and no event has occurred which with notice or lapse of time would
constitute such a breach or default or permit termination, modification or
acceleration by any other Person under any of the Contracts, except in each such
case as has not had and will not have a Company Material Adverse Effect. No
breach or default by any other Person under any of the Contracts has occurred
and is continuing, and no default has occurred which with notice or lapse of
time would constitute such a breach or default or permit termination,
modification or acceleration by the Company under any of the Contracts, except
in each such case as has not had and will not have a Company Material Adverse
Effect.
SECTION 6.8. INSURANCE. All material properties owned or used by
----------- ---------
the Company are covered by valid and currently effective insurance policies
issued in favor of the Company in amounts which are customary in the place in
which such properties are located for companies operating similar businesses and
operations. All insurance policies in coverage amounts required under the
Property Leases and the Leases are in force under valid and currently effective
insurance policies. In the event of any Loss or claim resulting in any
insurance recovery related to the Company or the Business, the amount of any
such recovery related to the Company or the Business will be paid to the
Company. Ocal has previously delivered to the Buying Parties a summary of all
policies or binders of insurance by which the Company (or any risk of the
Business) is insured (the "INSURANCE POLICIES"). The Company has paid all
premiums due under such policies, and the Company is not in default with respect
to its obligations under any of such policies. The Company does not have, and
has never had, any self-insurance arrangements other than insurance deductibles.
SECTION 6.9. TRANSACTIONS WITH AFFILIATES. Except for the matters
----------- ----------------------------
described in the Ocal Reports or as set forth on SCHEDULE 6.9 (the "AFFILIATE
------------
RELATIONSHIPS"), no Affiliate of the Company is an owner, officer, director,
employee, or consultant of any, competitor, customer, distributor, supplier or
vendor of the Company, or is party to any Contractual Obligation with the
Company. There are no Intangibles which
27
are material to the operation of the Business, or other proprietary or
confidential knowledge, that any such Affiliate (other than the Company) owns or
licenses or otherwise has the right to use which are used in the Business.
SECTION 6.10. COMPLIANCE WITH LAWS. The operations of the Business
----------- --------------------
as heretofore or currently conducted are not in violation of, nor is the Company
in default under, any Legal Requirement, except for such violations or defaults
listed on SCHEDULE 6.10 or as could not reasonably be expected to have a
-------------
Company Material Adverse Effect. The Company has been duly granted and continues
to hold, and at the Closing will hold, all licenses, permits, consents,
approvals, professional certifications, franchises and other authorizations
under any Legal Requirement or trade practice necessary for the conduct of the
Business as currently conducted (the "PERMITS"), except such as will not have a
Company Material Adverse Effect. All of the Permits are now and after giving
effect to the Closing will be in full force and effect, except such as will not
have a Company Material Adverse Effect. SCHEDULE 6.10 includes a list of all
-------------
Permits and applications therefor that are material to the Business. The
Company has not received any written notice that any Governmental Authority or
other licensing authority or association will revoke, cancel, rescind,
materially modify or refuse to renew in the ordinary course any material Permit.
SECTION 6.11. TAX MATTERS . (a) Except as set forth on SCHEDULE
------------ ----------- --------
6.11(a):
-------
(i) all material Tax Returns that are required to be filed by
or with respect to the Company (taking into account any extensions of the
time to file such Tax Returns) have been duly and timely filed in
accordance with all applicable Legal Requirements and the Company has
received no notice that a material claim has ever been made by any taxing
authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction,
(ii) all Taxes shown to be due on the Tax Returns referred to
in clause (i) have been paid in full or have been appropriately provided
for on the Audited Balance Sheet or the Interim Balance Sheet in accordance
with Generally Accepted Accounting Principles,
(iii) the statute of limitations for examining all Tax Returns
referred to in clause (i) above for taxable periods ending on or before
December 31, 1994 has expired and no Tax Returns of the Company have been
examined by the Internal Revenue Service ("INTERNAL REVENUE SERVICE") or
any State taxing authority for the periods ending after December 31, 1995,
(iv) all deficiencies asserted or assessments made as a result
of any examinations of the Tax Returns referred to in clause (i) by the IRS
or the appropriate state, local or foreign taxing authority have been paid
in full or have been appropriately provided for on the Audited Balance
Sheet or Interim Balance Sheet in accordance with Generally Accepted
Accounting Principles,
28
(v) there is no material Action, audit, claim, deficiency or
assessment pending (or, to the knowledge of the Company, threatened) with
respect to any Taxes of the Company, and there are no Liens or other
security interests on any of the Assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax other than
for current Taxes not yet due and payable,
(vi) no waivers of statutes of limitations with respect to any
Tax Return or the payment of any Taxes have been given or requested by or
requested from or on behalf of the Company,
(vii) no powers of attorney with respect to Taxes of the Company
are currently in force,
(viii) there is no Contractual Obligation (including, without
limitation, any of the Closing Agreements) covering any employee or former
employee of the Company that will give rise to the payment of any amount by
the Company that (A) will by reason of Section 280G of the Code not be
deductible nor (B) will be subject to (or subject the Company to) the
excise tax under Section 4999 of the Code, and
(ix) the Company (A) has not filed, does not file and is not
required to file any combined, consolidated or unitary State, local or
foreign Tax Returns, (B) has no liability for the Taxes of any Person
(other than the Company) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of any federal, state, local, or foreign Legal Requirement), as a
transferee or successor, by contract, or otherwise, and (C) is not a party
to any Contractual Obligation relating to any allocation or sharing of
Taxes.
(b) The Company will not have as of the Closing Date any liability
for Taxes (including, but not limited to, employee withholding taxes and state
or local sales Taxes) and any obligation to contribute to the payment of Tax
determined on a consolidated, combined or unitary basis with respect to a group
of corporations that includes or included the Company and Taxes resulting from
the Company ceasing to be a member of any affiliated group (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(d) of the Code) that includes the Company or any predecessor of or
successor to the Company) that are not provided for in accordance with Generally
Accepted Accounting Principles in the accruals and reserves for unpaid Tax
liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth in the reserve for
taxes included on the face of the Audited Balance Sheet or the Interim Balance
Sheet, other than Taxes incurred or accrued since the date of the Audited
Balance Sheet or the Interim Balance Sheet and in the Ordinary Course of
Business.
29
(c) The Company has provided or made available to T&B true,
complete, and correct copies of all material Tax Returns filed by it with Taxing
authorities for the year or period ending December 31, 1996 and for the year
ended December 31, 1997, and all requests for extensions or waivers and notices
or claims given or received with respect thereto.
(d) The Company has withheld and paid to, or will cause to be
paid to, the appropriate Taxing authorities all amounts required under state law
and the applicable provisions of the Code to be withheld from the wages of its
employees and any payments made to any independent contractors, creditors,
shareholders or other third parties, and the Company will continue to do so with
respect to all wages and other payments paid by them through the Closing Date,
except in each case for failures to withhold or pay that could not reasonably be
expected to have a Company Material Adverse Effect.
(e) All contributions due from the Company pursuant to any
unemployment insurance or workers compensation laws which are due or payable by
the Company have been accrued on the Audited Balance Sheet, the Interim Balance
Sheet, or the Transaction Balance Sheet, or have been paid in full or will be
paid through the Closing Date.
(f) The Company has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(g) No consent to the application of Section 341(f) of the Code
has been made by or on behalf of the Company with regard to any assets or
property held, acquired or to be acquired by the Company.
(h) Neither the Company, nor any member of the Company's
affiliated group (as defined in Section 1504 of the Code) (including the
Company) (i) has experienced an ownership change under Sections 382 and 383 of
the Code, (ii) engaged in a transaction described in Sections 384 or 172(h) of
the Code, or (iii) by reason of any provision of the consolidated return
regulations or otherwise has limited its ability to use any net operating losses
or other Tax attributes.
(i) The Company has not made any sales or taken any other action
with respect to which any Form 5713 International Boycott Report was or is
required to be filed at any time.
SECTION 6.12. NO ILLEGAL PAYMENTS. Neither, the Company, nor, to the
------------ -------------------
Company's knowledge, any of its respective officers, employees, agents or
Affiliates, has (a) directly or indirectly given or agreed to give any gift,
contribution, payment or similar benefit to any supplier, customer, governmental
employee or other Person who was, is or
30
may be in a position to help or hinder the Company (or assist in connection with
any actual or proposed transaction) or made or agreed to make any contribution,
or reimbursed any political gift or contribution made by any other Person, to
any candidate for federal, state, local or foreign public office (i) which in
any case could subject the Company or either Buying Party to any material damage
or penalty in any civil, criminal or governmental litigation or proceeding or
(ii) the non-continuation of which has had or will have, individually or in the
aggregate, a Company Material Adverse Effect, or (b) established or maintained
any unrecorded fund or asset or made any false entries on any books or records
for any purpose.
SECTION 6.13. EMPLOYEE BENEFIT PLANS.
------------ ----------------------
(a) SCHEDULE 6.13 lists all Employee Plans to which the Company
-------------
contributes or is obligated to contribute, or under which the Company has or may
have any material liability (each an "EXISTING PLAN"). For purposes of this
Agreement, the term "EMPLOYEE PLAN" means any single employer, multiple
employer, or multiemployer plan, program, agreement, policy or arrangement
(each, a "PLAN"), whether or not reduced to writing, that is: (i) a welfare
benefit plan within the meaning of Section 3(1) of ERISA (a "WELFARE PLAN");
(ii) a pension benefit plan within the meaning of Section 3(2) of ERISA (a
"PENSION PLAN"); (iii) a stock bonus, stock purchase, stock option, restricted
stock, stock appreciation right or similar equity-based plan; or (iv) any other
deferred-compensation, retirement, welfare-benefit, bonus, incentive or fringe-
benefit plan. With respect to each Existing Plan, the Company has provided or
made available to T&B accurate, current and complete copies of each of the
following: (1) where the plan has been reduced to writing, the plan document
together with all amendments; (2) where the plan has not been reduced to
writing, a written summary of all material plan terms; (3) where applicable,
copies of any trust agreements, custodial agreements, insurance policies,
administration agreements and similar agreements, and investment management or
investment advisory agreements; (4) copies of any summary plan descriptions,
employee handbooks or similar employee communications; (5) in the case of any
plan that is intended to be qualified under Section 401(a) of the Code, a copy
of the most recent determination letter from the IRS, if any, and any related
correspondence, including a copy of the request for such determination; (6) in
the case of any funding arrangement intended to qualify as a VEBA under Section
501(c)(9) of the Code, a copy of any IRS letter determining that it so
qualifies; (7) in the case of any plan for which Forms 5500 are required to be
filed, a copy of the three most recently filed Forms 5500, with schedules
attached; and (8) copies of any notices, letters or other correspondence from
the IRS or the U.S. Department of Labor (the "DOL") relating to the plan.
(b) Neither the Company, nor any corporation, trust, partnership
or other entity that is or at any time previously was, a member of the same
Controlled Group as the Company has ever maintained or been required to
contribute to any Employee Plan subject to Title IV of ERISA.
31
(c) Each Existing Plan maintained with respect to employees or
former employees (or their beneficiaries) of the Company that is intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified. Each Existing Plan, including any associated trust or fund, has
been administered in all material respects in accordance with its terms and with
all applicable Legal Requirements, and nothing has occurred with respect to any
Existing Plan that has subjected or could subject the Company to a liability in
any material amount under Section 502 of ERISA or Chapter 43 of Subtitle D or
Section 6652 of the Code, or that has subjected or could subject any participant
in or beneficiary of an Existing Plan to a tax in any material amount under
Section 4974 of the Code, other than liabilities which have been paid in full.
(d) All required contributions, assessments and premium payments
(including transmission of employee contributions) on account of each Existing
Plan for which the Company is or could be liable have been made.
(e) There are no existing (or, to the Company's knowledge,
threatened) lawsuits, claims or other controversies relating to an Existing
Plan, other than claims for information or benefits in the normal course.
(f) The Company does not maintain any Employee Plan which
provides severance benefits; and except as set forth on SCHEDULE 6.13, the
-------------
Company does not have an obligation to provide severance to any employees in the
event of termination of employment. Other than as required under Section 601 et
seq. of ERISA, no Existing Plan that is a Welfare Plan maintained with respect
to employees (or their beneficiaries) of the Company provides benefits or
coverage following retirement or other termination of employment. Each welfare
benefit trust or fund that constitutes or is associated with an Existing Plan
and that is intended to be exempt from federal income tax under Section
501(c)(9) of the Code is so exempt. No event has occurred that could result in a
loss of any deduction to the Company under Section 162(m) of the Code.
(g) No provision of any Existing Plan would result in any
limitation on the ability of the Company, or any Buying Party to terminate the
plan that is not otherwise set forth on SCHEDULE 6.13.
-------------
SECTION 6.14. ENVIRONMENTAL MATTERS. (a) Except as set forth in
------------ ---------------------
SCHEDULE 6.14,
-------------
(i) The Company is and has at all times been in material
compliance in all material respects with all applicable Environmental Laws
and any other applicable Legal Requirements relating to environmental,
natural resource, health or safety matters;
(ii) There is no Action pending (or, to the knowledge of
the Company, threatened) against the Company, in respect of (A)
noncompliance by
32
the Company with any Environmental Laws or any such Legal Requirement, (B)
personal injury, wrongful death, other tortious conduct, or the existence
of any nuisance relating to matters which are regulated by Environmental
Laws, or (C) the presence or release or threatened release into the
environment of any Hazardous Substance whether or not generated by the
Company or located at or about or emanating from or to any Site;
(iii) All material permits required by Environmental Laws
been obtained by the Company and are in full force and effect;
(iv) To the knowledge of the Company, (A) each Operator
other than the Company is and has at all relevant times been: (1) in
material compliance with all applicable Environmental Laws, including,
without limitation, all standards, prohibitions, requirements, and
obligations contained in and promulgated pursuant to such Environmental
Laws, and (2) in material compliance with all terms and conditions of all
Permits required by Environmental Laws and (B) there is no material Action
pending or threatened under any Environmental Laws against any such
Operator relating to its activities at any Site;
(v) With respect to each Site, the Company has made
available to T&B all information regarding the environmental condition of
such Site, and all information regarding the history of compliance with
Environmental Laws of the operations conducted thereon known to the Company
including information as to actual and potential Areas of Environmental
Concern known to exist by the Company; and
(vi) The Company has at each Site currently owned, leased
or used by the Company a sanitary waste disposal system, wastewater
treatment system and air emission control system which are utilized by the
Company in the operation of the Business; and true and complete copies of
all of the Company's current waste disposal contracts, wastewater discharge
authorizations, and similar contracts and authorizations relating to the
Business or each such Site have been furnished to T&B.
(b) Except as set forth on Schedule 6.14, to the knowledge of
-------------
the Company, no event has occurred or condition exists that could reasonably be
expected to give rise to any Liability or Losses having a Company Material
Adverse Effect on the part of the Company (or, after the Closing, either Buying
Party) either at the present or at any future time (excepting Liability or
Losses predicated upon unforeseen changes in the law) (including, without
limitation, any obligation to conduct any remedial or monitoring work) under any
Environmental Laws or otherwise resulting from or relating to the handling,
storage, use, transportation or disposal of any Hazardous Substance by or on
behalf of the Company or any of their predecessors.
33
(c) The Buying Parties agree that the environmental investigation
undertaken to date by the consultants retained by the Company shall be deemed to
constitute reasonable investigation under the circumstances, for purpose of the
representations and warranties made to the Company's knowledge.
SECTION 6.15. EMPLOYMENT RELATIONS.
------------ --------------------
(a) SCHEDULE 6.15(a) contains a true and complete list of all Persons
----------------
employed by the Company as of September 28, 1998.
(b) None of the employees of the Company is represented by a labor union,
and to the Company's knowledge no petition has been filed or proceedings
instituted by any employee or group of employees with any labor relations board
seeking recognition of a bargaining representative. To the knowledge of the
Company, there is no organizational effort currently being made or threatened by
or on behalf of any labor union to organize any employees of the Company. Except
as set forth on SCHEDULE 6.15(b), there are no controversies or disputes pending
----------------
between the Company and any of its employees, except for controversies and
disputes with individual employees arising in the Ordinary Course of Business
which have not had and will not have a Company Material Adverse Effect.
(c) Except as listed or described on SCHEDULE 6.15(c) the Company, with
----------------
respect to its employees, (i) has no written personnel policy applicable to such
employees, (ii) has no unfair labor practice charges or complaints pending or
threatened against it before the National Labor Relations Board or any other
labor relations tribunal or authority, (iii) has no grievances pending or, to
the Company's knowledge, threatened against it, and (iv) has no charges pending,
or to the Company's knowledge threatened, before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices.
SECTION 6.16. LITIGATION. There is no Action against the Company, pending
------------ ----------
except for such of the foregoing as are described in SCHEDULE 6.16 or in the
-------------
Ocal Reports. There is no Action pending or (to the knowledge of the Company)
threatened, which seeks rescission of, seeks to enjoin the consummation of, or
otherwise relates to, this Agreement or any of the transactions contemplated
hereby. No Governmental Order has been issued which has had or will have a
Company Material Adverse Effect. Except as set forth on SCHEDULE 6.16, as of the
-------------
date hereof, the Company has no knowledge of any on-going dispute which is
reasonably likely to result in, or lead to, an Action, which if pursued, would
reasonably expected to have a Company Material Adverse Effect.
SECTION 6.17. CUSTOMERS AND SUPPLIERS. SCHEDULE 6.17 sets forth (a) a list
------------ ----------------------- -------------
of the ten largest customers of the Company based on sales during the year ended
December 31, 1997 showing the approximate total sales by the Company to each
such customer during the year ended December 31, 1997, and (b) a list of the ten
largest
34
suppliers of the Company based on purchases during the year ended December 31,
1997, showing the approximate total purchases by the Company from each such
supplier during the year ended December 31, 1997. Except as described on
SCHEDULE 6.17, between December 31, 1997 and the date of this Agreement, to the
-------------
Company's knowledge, there has not been any adverse change in the business
relationship of the Company with any such customer or supplier which has
resulted or will result in a Company Material Adverse Effect and as of the date
hereof, the Company has no knowledge of any adverse change in the business
relationship of the Company with such suppliers or customers which is reasonably
likely to result in a Company Material Adverse Effect.
SECTION 6.18. WARRANTIES AND RETURNS. SCHEDULE 6.18 sets forth a summary
------------ ---------------------- -------------
of present practices and policies followed by the Company with respect to
guarantees, warranties, servicing, or repairs of any products manufactured or
sold and services rendered by it, whether such practices are oral or in writing
or are deemed to be legally enforceable. Except as set forth on SCHEDULE 6.18,
-------------
to the knowledge of the Company, there are no written statements, citations, or
decisions by any Person stating that any product actually sold by the Company is
defective or unsafe or fails to meet any standards promulgated by any such
Person. Except as set forth on SCHEDULE 6.18, there is not presently, nor has
-------------
there been, any failure of a product sold by the Company such as to require, or
which may require, a general recall or replacement campaign with respect to such
product or a reformulation or change of such product. Except as set forth on
SCHEDULE 6.18 or for matters that could not reasonably be expected to have a
-------------
Company Material Adverse Effect, to the knowledge of the Company, there is no
(a) fact relating to any product of the Company that is reasonably likely to
impose upon the Company a duty to recall any such product or a duty to warn
customers of a defect in any such product, (b) material design, manufacturing,
or other defect in any such product, or (c) material liability for warranty
claims, returns, or servicing with respect to any such product not fully
reflected on the Interim Balance Sheet.
SECTION 6.19. DISCLOSURE. This Agreement (including, without limitation,
------------ ----------
the Exhibits and Schedules hereto), and the other documents, certificates,
financial statements or other instruments required to be furnished to T&B or any
of its Affiliates, agents or representatives by or on behalf of any Major
Securityholder or the Company pursuant to this Agreement, when taken as a whole,
do not or will not contain any untrue statement of a material fact relating to
the Company or any Major Securityholder or their respective Affiliates. This
Agreement (including, without limitation, the Exhibits and Schedules hereto) and
the Financial Statements do not, considered as a whole, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
SECTION 6.20. BROKERS. Except as specified in SCHEDULE 6.20, no broker,
------------ ------- -------------
finder, investment bank or similar agent is entitled to any brokerage, finder's
or other fee, Compensation or reimbursement of expenses in connection with the
transactions
35
contemplated by this Agreement based upon agreements or arrangements made by or
on behalf of (or the conduct of) the Company or any of its Affiliates.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYING PARTIES
----------------------------------------------------
In order to induce Ocal and each Major Securityholder to enter into and
perform this Agreement and to consummate the transactions contemplated hereby,
the Buying Parties, jointly and severally, represent and warrant to Ocal and the
Major Securityholders as follows:
SECTION 7.1. CORPORATE MATTERS.
----------- -----------------
(a) ORGANIZATION, POWER AND STANDING. Each Buying Party is a
corporation duly organized, validly existing and in good standing under the laws
of Tennessee (in the case of T&B) and Delaware (in the case of Acquisition
Subsidiary) and has all requisite power and authority, corporate and otherwise,
to enter into this Agreement and all Closing Agreements to which it is a party
to carry out and perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. Each of T&B and its
Subsidiaries is qualified or licensed to do business as a foreign corporation in
every jurisdiction where the character of the property owned, leased or operated
by it or the nature of the business as currently conducted by it makes such
qualification or licensing necessary, except, where its failure to be so
qualified or licensed and in good standing could not reasonably be expected to
have a Material Adverse Effect on T&B and its Subsidiaries taken as a whole.
(b) CAPITALIZATION OF ACQUISITION SUBSIDIARY. The authorized capital
stock of Acquisition Subsidiary consists of 900 shares of Common Stock, $.10 par
value, all of which are validly issued and outstanding, and 100 shares of
Preferred Stock, $.10 par value, none of which are outstanding. All of the
issued and outstanding capital stock of Acquisition Subsidiary is, and at the
Effective Time will be owned by T&B, and there are no other (i) shares of
capital stock or other voting security of Acquisition Subsidiary, (ii) Equity
Securities of Acquisition Subsidiary, and (iii) obligations of Acquisition
Subsidiary to issue, any capital stock, voting security or securities
convertible into or exchangeable for capital stock or voting securities of
Acquisition Subsidiary. Acquisition Subsidiary has not conducted any business
prior to the date hereof and has no, and prior to the Effective Time will have
no, assets, liabilities or obligations of any nature other than those incident
to its formation and pursuant to this Agreement and the Merger and other
transactions contemplated by this Agreement.
36
SECTION 7.2. AUTHORIZATION AND ENFORCEABILITY. This Agreement and all
----------- --------------------------------
Closing Agreements to which it is or will be a party, and the transactions
contemplated hereby and thereby, have been or will be duly authorized, and this
Agreement and all Closing Agreements to which it is or will be a party have been
or will be duly executed and delivered by each Buying Party, and are Enforceable
against each Buying Party. Except for filings or notices under the ▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇ Act and the Exchange Act as required by ARTICLE VIII and to comply with
------------
state securities laws, no approval, consent, waiver, authorization or other
order of, and no declaration, filing, registration, qualification or recording
with, any Governmental Authority or any other Person, including, without
limitation, any party to any Contractual Obligation of either Buying Party, is
required to be obtained or made by or on behalf of either Buying Party in
connection with the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated hereby by either Buying Party,
except for items which shall have been obtained or made and shall be in full
force and effect at the Closing.
SECTION 7.3. NON-CONTRAVENTION. Neither the execution, delivery or
----------- -----------------
performance of this Agreement nor the consummation of the transactions
contemplated hereby (including, without limitation, the consummation of the
Merger) does or will constitute, result in or give rise to (i) a breach or
violation of or default under any Legal Requirement applicable to T&B and its
Subsidiaries, (ii) a breach of or a default under any Charter or By-Laws
provision of either Buying Party, (iii) the acceleration of the time for
performance of any obligation under any material Contractual Obligation of
either Buying Party, (iv) the imposition of any Lien upon or the forfeiture of
any material Asset of either Buying Party (including, without limitation, any
material Asset held under any Contractual Obligation of either Buying Party),
(v) a material breach of or a material default under any Contractual Obligation
of either Buying Party, or the requirement that any consent under or a waiver of
any Lease or other Contractual Obligation be obtained, except in the case of
items that could not reasonably be expected to have a Material Adverse Effect on
T&B and its Subsidiaries as a whole.
SECTION 7.4. LITIGATION. There is no Action pending or (to the
----------- ----------
knowledge of the Buying Parties) threatened, nor (to the knowledge of the Buying
Parties) any basis therefor, which seeks rescission of, seeks to enjoin the
consummation of, or otherwise relates to, this Agreement, or any of the
transactions contemplated hereby. No Governmental Order has been issued which
has had or will have a Material Adverse Effect on the ability of either Buying
Party to perform its obligations under this Agreement.
SECTION 7.5. SUFFICIENT FUNDS. Either T&B or the Acquisition
----------- ----------------
Subsidiary has sufficient funds available (through existing credit arrangements
or otherwise) to acquire all of the Ocal Equity Securities outstanding pursuant
to the Merger and this Agreement and to pay all fees and expenses related to the
transactions contemplated by this Agreement for which T&B or the Acquisition
Subsidiary is responsible.
37
SECTION 7.6. BROKERS. No broker, finder, investment bank or similar
----------- -------
agent is entitled to any brokerage, finder's or other fee, Compensation or
reimbursement of expenses in connection with the transactions contemplated by
this Agreement based upon agreements or arrangements made by or on behalf of (or
the conduct of) the Buying Parties or any of their Affiliates except such fees,
Compensation and reimbursement of expenses (if any) as shall be borne solely by
T&B.
SECTION 7.7. DISCLOSURE. This Agreement (including, without
----------- ----------
limitation, the Exhibits and Schedules hereto) and the other documents,
certificates, financial statements or other instruments required to be furnished
to the Company or any Major Securityholder or any of their Affiliates, agents or
representatives by or on behalf of T&B or the Acquisition Subsidiary pursuant to
this Agreement, when taken as a whole, do not or will not contain any untrue
statement of a material fact relating to T&B or the Acquisition Subsidiary or
their Affiliates. This Agreement (including, without limitation, the Exhibits
and Schedules hereto) does not, considered as a whole, omit to state a material
fact necessary in order to make the statements contained herein not misleading.
ARTICLE VIII
CERTAIN AGREEMENTS OF THE PARTIES
---------------------------------
SECTION 8.1. NO SOLICITATION OF OTHER OFFERS. The Major
----------- -------------------------------
Securityholders will not, and will use their reasonable best efforts to cause
Ocal and all of their and its Affiliates and all of their and its respective
employees, representatives and agents not to, and Ocal will not, directly or
indirectly, solicit or initiate or enter into discussions or transactions or
Contractual Obligations with or encourage or provide any information to any
Person (other than the Buying Parties, and their designees) concerning any
Business Combination. The Major Securityholders will, and will use their
reasonable best efforts to cause Ocal to, and Ocal will notify the Buying
Parties immediately upon becoming aware that any Person has made any proposal,
offer, inquiry, or contact with respect to any such transaction, which notice
shall include the identity of all relevant parties and the content of such
communication. The covenants contained in this SECTION 8.1 shall expire and be
-----------
of no further force and effect upon and after any termination of this Agreement
pursuant to SECTION 12.1. Nothing contained in this SECTION 8.1 shall prohibit
------------ -----------
the Ocal Board of Directors from authorizing Ocal to furnish information to,
enter into discussions or negotiations with, or enter into an agreement with
respect to a Business Combination Proposal with, any Person in connection with
an unsolicited proposal in writing by such Person for a Business Combination
with Ocal received by the Ocal Board of Directors after the date of the
Agreement, if, and only to the extent that, (a) the Ocal Board of Directors,
after consultation with its independent legal and financial advisors and taking
into consideration the advice of such advisors, determines in good faith that
such unsolicited proposal may be more favorable to the holders of Ocal Common
Stock than the transactions contemplated by this Agreement,
38
and (b) prior to furnishing such information to, or entering into discussions or
negotiations with, such Person, Ocal (i) gives the Buying Parties as promptly as
practicable prior written notice of the material terms of such proposal in
reasonable detail and of Ocal's intention to furnish such information or begin
such discussions, and (ii) receives from such Person an executed confidentiality
agreement on substantially the terms as those contained in SECTION 8.3 hereof.
-----------
For purposes of this Agreement, a proposal for a Business Combination that
follows the procedure and satisfies the criteria set forth above in subdivision
(a) as well as subdivisions (b)(i) and (ii) of this Section is deemed to be a
"BUSINESS COMBINATION PROPOSAL". As used herein, the term "BUSINESS COMBINATION"
shall mean any of the following involving Ocal: (1) any merger, consolidation,
share exchange, business combination or other similar transaction (other than
the Merger); (2) any sale, lease, exchange, transfer or other disposition (other
than a pledge or mortgage) of 25% or more of the assets of Ocal, in a single
transaction or series of transactions; or (3) the acquisition by a Person or any
"group" (as such term is defined under Section 13(d) of the Securities and
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
beneficial ownership of 33% or more of the shares of the Ocal Common Stock,
whether by tender offer, exchange offer or otherwise.
SECTION 8.2. ACCESS TO PREMISES AND INFORMATION. At all times prior
----------- ----------------------------------
to the Closing, Ocal will, and the Major Securityholders will use their
reasonable best efforts to cause the Company to, during normal business hours
and after reasonable advance notice, permit the Buying Parties and their
representatives, to have full access to their premises, documents, books and
records and to make copies of such financial and operating data and other
information with respect to the Company as the Buying Parties or any of their
representatives shall reasonably request. In addition, the Company and the Major
Securityholders shall cause the Company's management to be available to the
Buying Parties at such times, and from time to time, as the Buying Parties may
reasonably request in connection with the Merger and their review of the
Business. The Company and the Major Securityholders will cause to be delivered
such additional information and copies of documents, books and records relating
to the Company, or the Business as may be reasonably requested by the Buying
Parties, or any of their representatives, including, without limitation, all
quarterly and monthly financial statements (if any) that become available prior
to the Closing.
SECTION 8.3. CONFIDENTIALITY COVENANT OF THE BUYING PARTIES. Each of
----------- ----------------------------------------------
the Buying Parties will not, and will not permit any of its respective
representatives to, without the prior written consent of Ocal, disclose any
confidential information relating to the Company or the Major Securityholders
furnished to the Buying Parties by or on behalf of the Company or the Major
Securityholders, or use any such information for any purpose otherwise than in
evaluating the Company in connection with the transactions contemplated hereby;
provided, however, that (i) such information may be disclosed to any of the
representatives of the Buying Parties who have a need to know such information
in connection with the transactions contemplated hereby (who shall be
39
instructed to keep such information confidential in accordance with the terms of
this SECTION 8.3) and (ii) the information subject to the foregoing provisions
-----------
of this sentence shall be deemed not to include any information known generally
in the industry (other than as a result of disclosure in violation hereof) or
any information received by the Buying Parties or any of its representatives
from a third party not bound by a duty of confidentiality to the Company. In
addition, confidential information may be disclosed if required by legal process
or by operation of applicable law; provided, however, that (i) the disclosing
Person shall first promptly (and, if practicable under the circumstances, prior
to disclosure) advise and consult with the Company and its counsel concerning
the information proposed to be disclosed, (ii) the Company shall have the right
to seek an appropriate protective order or other remedy concerning the
confidential information proposed to be disclosed and the disclosing Person will
cooperate with the Company to obtain such protective order, and (iii) in the
event that such protective order or other remedy is not obtained by the Company
within a reasonable time, the disclosing Person will disclose only that portion
of the confidential information which the disclosing Person is legally required
to disclose, and the disclosing Person will use its best efforts to obtain
assurances that confidential treatment will be accorded to such information. In
the event of any termination of this Agreement pursuant to ARTICLE XII, each of
-----------
the Buying Parties and their respective representatives will return or destroy
all copies of any written materials in their possession furnished by or on
behalf of the Major Securityholders or the Company, and shall remain bound by
the provisions of this Section. The foregoing provisions of this SECTION 8.3
-----------
shall (i) supersede all prior confidentiality obligations of the Buying Parties,
(ii) terminate with respect to confidential information relating to the Company
upon the consummation of the Closing and (iii) not prohibit any retention of
records or disclosure required by law or made in connection with the enforcement
of any right or remedy relating to this Agreement or the transactions
contemplated hereby.
SECTION 8.4. OPERATION OF BUSINESS IN THE ORDINARY COURSE. On and
----------- --------------------------------------------
prior to the Closing Date, except as otherwise required by this Agreement, the
Company will, and the Major Securityholders will cause the Company to, conduct
the Business only in the Ordinary Course of Business and use their respective
commercially reasonable efforts to maintain the value of the Business as a going
concern and the relationships of the Company with customers, distributors,
suppliers, vendors, employees, agents, Governmental Authorities and others.
Without limiting the generality of the foregoing, on and prior to the Closing
Date, the Company shall, and the Major Securityholders shall cause the Company
to, except as may otherwise be consented to in writing by the Buying Parties,
pay accounts payable when due and maintain inventory levels, all in accordance
with prudent business practice and the Ordinary Course of Business; and the
Company will not, and the Major Securityholders will cause the Company not to,
without the prior written consent of the Buying Parties:
40
(a) Enter into any transactions otherwise than on an arms' length
basis or any transaction with any Major Securityholder or any other Affiliate of
the Company;
(b) Pay any Compensation other than in the Ordinary Course of Business
or increase any Compensation of any officer or employee other than such
increases in Compensation for employees (other than Affiliates of the Company)
as may be made in the Ordinary Course of Business;
(c) Make any Distribution;
(d) Incur any Debt (including, without limitation, any capital lease);
(e) Amend the Charter or By-laws of the Company;
(f) Allow any material Permit or License to lapse or terminate or fail
to renew any material Permit in accordance with prudent business practice;
(g) Enter into, amend, extend, terminate or permit any renewal notice
period to lapse with respect to the Property Leases, any other Lease or any
other Contractual Obligation that contains either consideration to be given or
performed by the Company of a value exceeding $50,000 (except (i) to the extent
otherwise required by this Agreement and (ii) Contractual Obligations involving
sales of goods in the Ordinary Course of Business); and
(h) Enter into any Contractual Obligation to do any of the things
referred to in clauses (a) through (g) above.
SECTION 8.5. CERTAIN NOTICES. Prior to the Closing, each of the
----------- ---------------
Parties will promptly upon becoming aware thereof give the other parties written
notice of: (i) any material development affecting its business or financial
condition and (ii) any breach of or inaccuracy in any of its representations or
warranties contained in this Agreement; provided, however, that no such
disclosure shall be deemed to amend any Schedule hereto, or prevent or cure any
breach of or inaccuracy in, or disclose any exception to, any of the
representations and warranties set forth herein, without the express written
consent of the Company and the Buying Parties, which consent shall not
unreasonably be withheld.
SECTION 8.6. PREPARATION FOR CLOSING.
----------- -----------------------
(a) REASONABLE BEST EFFORTS. Each Party will use its reasonable best
efforts to bring about the fulfillment of each of the conditions precedent to
the obligations of the Parties hereto set forth in this Agreement, including
preparing and filing as promptly as practicable all documentation to effect all
necessary applications,
41
notices, petitions, filings and other documents and to obtain as promptly as
practicable all permits, consents, approvals and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Authority
in order to consummate the Merger or any of the other transactions contemplated
by this Agreement; provided, however, that nothing in this SECTION 8.6 shall
-----------
require, or be construed to require, T&B to proffer to, or agree to, sell or
hold separate and agree to sell, before or after the Effective Time, any assets,
businesses, or interest in any assets or businesses of T&B, the Company or any
of their respective Affiliates (or to consent to any sale, or agreement to sell,
by the Company of any of its assets or businesses) or to agree to any material
changes or restriction in the operations of any such assets or businesses.
Subject to applicable Legal Requirements relating to the exchange of
information, T&B and the Company shall have the right to review in advance, and
to the extent practicable each will consult the other on, all the information
relating to T&B or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Authority in connection
with the Merger and the other transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Company and T&B shall act reasonably
and as promptly as practicable.
(b) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ COMPLIANCE. As soon as practicable after the
date hereof, Ocal and Buying Parties shall file with the FTC and the Antitrust
Division the notifications and reports required to be filed pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and shall undertake in good faith to file promptly any
supplemental information which may be requested in connection therewith, which
notifications and reports compiled and filing of supplemental information will
comply, in all material respects with the requirements of ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
The Parties shall each furnish the other with such information as either may
reasonably request to make such filings. In the event that the Antitrust
Division brings suit seeking to prevent or restrain the transactions
contemplated by this Agreement or in the event the FTC issues a complaint or
petitions a court to enjoin the transactions contemplated by this Agreement,
then the Buying Parties shall determine whether to appeal or contest and adverse
decision or action of the FTC or the Antitrust Division or terminate this
Agreement without further liability or obligation to the Parties.
(c) SPECIAL MEETING. (i) Ocal shall, and the Major Securityholders
shall cause Ocal to, promptly call the Special Meeting of holders of Ocal Common
Stock for the purposes of approving this Agreement, the Merger and the
transactions contemplated hereby in accordance with the DGCL; and (ii) at the
Special Meeting, the Major Securityholders shall vote all Equity Securities
owned by them and entitled to vote thereat to approve this Agreement and in
favor of the Merger (provided, the Major Securityholders' obligations under this
clause (ii) shall terminate if the Ocal Board of Directors withdraws its
recommendation of this Agreement or the Merger or resolves to do so, or if this
Agreement is terminated for any reason). Subject to fiduciary obligations under
applicable Legal Requirements, the Ocal Board of Directors shall
42
recommend approval of the Merger at the Special Meeting, and shall take all
lawful action to solicit such approval.
(d) NOTICE. Ocal and T&B each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by T&B or Ocal, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Authority with
respect to the Merger and the other transactions contemplated by this Agreement.
Ocal shall give prompt notice to T&B of any change of which Ocal has knowledge
that is reasonably likely to result in a Company Material Adverse Effect.
(e) APPRAISAL DEMAND. Ocal shall give the Buying Parties prompt
notice of any demands received by Ocal for appraisal of shares of Ocal Common
Stock pursuant to (S)262 of the DGCL, and, prior to the Closing, the Buying
Parties shall have the right to direct all negotiations and proceedings with
respect to such demands. Prior to the Closing, the Major Securityholders and
Ocal shall not, except with the written consent of the Buying Parties, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 8.7. SEC FILINGS.
----------- -----------
(a) PROXY STATEMENT. Ocal shall promptly prepare and file with the
SEC its proxy statement soliciting approval of the Merger, this Agreement, and
the transactions contemplated hereby (the "PROXY STATEMENT"). Ocal shall use its
reasonable best efforts to promptly mail, after completion by the SEC of its
review (if any) of the Proxy Statement, the Proxy Statement to the holders of
Ocal Common Stock.
(b) INFORMATION SUPPLIED. Each of Ocal and T&B shall furnish all
information concerning it and its Subsidiaries to be included in the Proxy
Statement. Ocal agrees that none of the information disclosed in or
incorporated by reference in the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to holders of Ocal Common Stock and at the
time of the Special Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the foregoing shall not
apply to the extent that any such untrue statement of a material fact or
omission to state a material fact was made by Ocal in reliance upon and in
conformity with written information concerning T&B and its Subsidiaries
furnished to Ocal by T&B or the Acquisition Subsidiary specifically for use in
the Proxy Statement. T&B agrees that none of the written information provided
by it specifically for use in the Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to holders of Ocal Common Stock
and at the time of the Special Meeting, contain any
43
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 8.8. PREPARATION OF TRANSACTION BALANCE SHEET.
------------ ----------------------------------------
(a) Ocal shall cause Ernst & Young LLP to prepare, as soon as
practicable after the last day of the calendar month immediately preceding the
month in which the Special Meeting (or any adjournments or postponements
thereof) is scheduled to occur, an unaudited consolidated balance sheet of Ocal
and its Subsidiaries as of the last day of such month (the "TRANSACTION BALANCE
SHEET"). For purposes of the Transaction Balance Sheet, there shall be added to
the consolidated stockholders' equity of Ocal and its Subsidiaries (a) the
amount of the Company's total expenditures (including, without limitation,
materials, labor and overhead) between December 31, 1997 and the date of the
Transaction Balance Sheet on the construction and repair of machinery and
equipment used in the Company's Business that had not been previously
capitalized, (b) the fair market value of inventory held by, but not recorded on
the books of, the Company that was either produced by competitors of the Company
or rejected by the Company's customers, and (c) the total amount of the fees and
expenses incurred through the date of the Transaction Balance Sheet by the
Company in connection with the Merger, this Agreement and the transactions
contemplated hereby and thereby but not to exceed $400,000 ("TRANSACTION
COSTS"). The Parties agree that the consolidated stockholders' equity of Ocal
and its Subsidiaries shall not be reduced on account of inventory that was
"specially purchased" and recorded on the Company's books at standard cost.
(b) T&B and its accountants shall have the right to observe all steps
taken by Ocal and Ernst & Young LLP in connection with the preparation of the
Transaction Balance Sheet and to review all work papers and procedures relating
thereto.
(c) The Transaction Balance Sheet shall identify the "DEFICIT AMOUNT"
referred to in SECTION 3.1(e), if any. The "Deficit Amount" shall be zero
--------------
unless the amount of the consolidated stockholders' equity on the Transaction
Balance Sheet is less than $15,029,000, in which case the Deficit Amount shall
be difference between $15,029,000 and the consolidated stockholders' equity on
the Transaction Balance Sheet.
SECTION 8.9. DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
----------- ------------------------------------------------------
T&B shall, and shall cause the Surviving Corporation to, indemnify each person
who is now, or has been at any time prior to the date hereof, an employee,
agent, director or officer of Ocal or of any of its Subsidiaries, successors and
assigns (individually an "INDEMNIFIED PARTY" and collectively the "INDEMNIFIED
PARTIES"), to the fullest extent required or permitted by law, or any agreement
with Ocal in effect immediately prior to
44
the execution of this Agreement, with respect to any claim, liability, loss,
damage, judgment, fine, penalty, amount paid in settlement or compromise, cost
or expense, including reasonable fees and expenses of legal counsel (whenever
asserted or claimed) ("INDEMNIFIED LIABILITY"), based in whole or in part on, or
arising in whole or in part out of, any matter, state of affairs or occurrence
existing or occurring at or prior to the Effective Time whether commenced,
asserted or claimed before or after the Effective Time, including liability
arising under the Securities Act of 1933, as amended, the Exchange Act, or state
law. T&B shall, and shall cause the Surviving Corporation to, maintain in effect
for not less than six years after the Effective Time (a) the current policies of
directors' and officers' liability insurance maintained by Ocal and its
Subsidiaries on the date hereof (provided that T&B may substitute therefor
policies having at least the same coverage, a comparably rated issuer and
containing terms and conditions which are no less advantageous to the persons
currently covered by such policies as insured) with respect to matters existing
or occurring at or prior to the Effective Time; and (b) the currently existing
provisions of Ocal's Certificate of Incorporation and By-laws regarding the
indemnification of directors and officers. T&B shall, and shall cause the
Surviving Corporation to pay in advance all expenses (including fees and
expenses of counsel) that may be incurred by an Indemnified Party in
successfully enforcing the indemnity or other obligations under this SECTION
-------
8.9. The rights under this SECTION 8.9 are in addition to rights that an
--- -----------
Indemnified Party may have under the Charter, By-laws, other similar
organizational documents of Ocal or any of its Subsidiaries or the DGCL. The
rights under this SECTION 8.9 are contingent upon the occurrence of, and will
-----------
survive consummation of, the Merger and are expressly intended to benefit each
Indemnified Party.
SECTION 8.10. EXPENSES OF TRANSACTION. Except as set forth in SECTION
------------ ----------------------- -------
12.2, all fees and expenses incurred in connection with the Merger, this
----
Agreement and the transactions contemplated hereby and thereby will be paid by
the Party incurring such fees or expenses, whether or not the Merger is
consummated. The Parties acknowledge that the Major Securityholders will bear
and pay their fees and expenses which are unique to their position as majority
stockholders of Ocal.
SECTION 8.11. FURTHER ASSURANCES. Each Party, upon the request from
------------ ------------------
time to time of any other Party hereto after the Closing, and without further
consideration, will do each and every act and thing as may be reasonably
necessary or reasonably requested to consummate the transactions contemplated
hereby in an orderly fashion. In the event that a lease, contract or license
does not expressly permit the Company to maintain its rights and obligations
thereunder after the Closing Date, or the Company has not obtained the necessary
written consents under any specific lease, contract or license prior to the
Closing Date, the Major Securityholders shall cooperate with T&B and the Company
in any reasonable arrangement not requiring any out-of-pocket expense by the
Major Securityholders (unless reimbursed by T&B) designed to provide the Company
with the material benefits to have been received by the Company if the consent
or approval had been obtained.
45
ARTICLE IX
CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYING PARTIES
-----------------------------------------------------------
The obligations of each Buying Party to execute and deliver the Closing
Agreements to which it is Party and of the Buying Parties to consummate the
Merger are subject to the satisfaction, at or prior to the Closing, of all of
the following conditions, compliance with which, or the occurrence of which, may
be waived prior to the Closing by the Buying Parties in their sole discretion:
SECTION 9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAJOR
----------- ---------------------------------------------------
SECURITYHOLDERS.
---------------
(a) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Major Securityholders contained in this
Agreement shall be true and correct in all material respects as of the Closing
with the same force and effect as if made at and as of the Closing.
(b) PERFORMANCE OF AGREEMENTS. Each of the Major Securityholders
shall have performed and satisfied in all material respects all covenants and
agreements required by this Agreement to be performed or satisfied by such Major
Securityholder at or prior to the Closing.
(c) CLOSING CERTIFICATE. At the Closing, the Major Securityholders
shall furnish to the Buying Parties an unqualified certificate, signed by each
of the Major Securityholders, dated the Closing Date, to the effect that the
conditions specified in SECTIONS 9.1(a) and 9.1(b) have been satisfied.
--------------- ------
SECTION 9.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
----------- ---------------------------------------------
COMPANY.
-------
(a) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties relating to the Company contained in this
Agreement shall be true and correct as of the Closing with the same force and
effect as if made at and as of the Closing, (other than those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and correct as of
such date or with respect to such period), except where a failure to be true and
correct relates to matters which could not reasonably be expected to have a
Material Adverse Effect on the Surviving Corporation; provided however, if the
failure to be true and correct relates to a matter which could be reasonably
expected to have a Material Adverse Effect on the Surviving Corporation and that
effect is reflected in the Transaction Balance Sheet, the Buying Parties shall
be deemed to have waived this provision.
46
(b) PERFORMANCE OF AGREEMENTS. The Company shall have performed and
satisfied in all material aspects all covenants and agreements required by this
Agreement to be performed or satisfied by it at or prior to the Closing.
(c) STOCKHOLDER APPROVAL. Holders of the Ocal Common Stock holding
not less than a majority of the shares of Ocal Common Stock outstanding as of
the record date for the Special Meeting shall have voted in favor of and
approved this Agreement and the Merger, in accordance with the DGCL.
(d) CLOSING CERTIFICATE. At the Closing, the Company shall furnish to
the Buying Parties an unqualified certificate, signed by the President or any
Vice President of the Company, dated the Closing Date, to the effect that the
conditions specified in SECTIONS 9.2(a) and 9.2(b) have been satisfied.
--------------- ------
SECTION 9.3. DISSENTING SHARES. If the aggregate amount of Dissenting
----------- -----------------
Shares exceeds 20% of the total number of outstanding shares of Ocal Common
Stock at the Effective Time, the Major Securityholders shall have elected to,
and shall have executed and delivered an agreement obligating them to pay or
reimburse T&B an amount equal to (i) that number of Dissenting Shares (exclusive
of any shares as to which appraisal rights are not perfected or are lost, or
withdrawn) which is greater than 20% of the outstanding shares multiplied by
(ii) the excess (if any) of the amount per share that holders of Dissenting
Shares received as a result of the appraisal proceedings or any settlement
thereof over the Per Share Merger Consideration, in a form reasonably acceptable
to T&B.
SECTION 9.4. CLOSING AGREEMENTS. At or prior to the Closing, the
----------- ------------------
Parties thereto other than the Buying Parties shall have executed and delivered
to the Buying Parties each of the following agreements (the "CLOSING
AGREEMENTS"), in substantially the form thereof attached hereto without change
other than such changes as may be reasonably satisfactory to the Buying Parties:
(i) the Certificate of Merger;
(ii) documents evidencing the Option Pay-out;
(iii) the Securityholders Agreement, which agreement shall be in
full force and effect at the Closing; and
(iv) the Consulting Agreement, which Agreement shall be in full
force and effect at the Closing.
SECTION 9.5. LEGALITY. No court, arbitrator or governmental body,
------------ --------
agency or official shall have issued any order, decree or ruling which remains
in force and there
47
shall not be any statute, rule or regulation restraining, enjoining or
prohibiting the consummation of the Merger.
SECTION 9.6. CONSENTS. The Company shall have secured written
----------- --------
consents or waivers under the Contractual Obligations of the Company identified
on SCHEDULE 9.6, in each case, to the extent necessary to permit the
------------
consummation of the transactions contemplated hereby without materially
adversely affecting any rights of the Company under any such Contractual
Obligations, except where a failure to secure a consent or waiver could not
reasonably be expected to have a Material Adverse Effect on the Company or the
Surviving Corporation.
SECTION 9.7. PREPARATION OF TRANSACTION BALANCE SHEET. Ernst & Young
----------- ----------------------------------------
LLP shall have prepared a Transaction Balance Sheet as of the last day of the
calendar month immediately preceding the Closing Date.
SECTION 9.8. MERGER. The Merger shall be occurring contemporaneously
----------- ------
with the Closing in accordance with the Certificate of Merger.
SECTION 9.9. OPINION OF COUNSEL. The Company and the Major
----------- ------------------
Securityholders shall have furnished the Buying Parties with an opinion of Irell
& ▇▇▇▇▇▇▇ LLP dated the Closing Date in substantially the form of EXHIBIT C.
---------
SECTION 9.10. REGULATORY CONSENTS. The waiting period applicable to
------------ -------------------
the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have
expired or been terminated. Other than the filing provided for in SECTION 2.5,
-----------
all filings required to be made prior to the Effective Time by Ocal or T&B or
any of their respective Subsidiaries with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by Ocal or
T&B or any of their respective Subsidiaries from, any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby shall have been made or
obtained (as the case may be), except where the failure to have made or obtained
any such filing, consent, approval or authorization would not have a Material
Adverse Effect on the Surviving Corporation and its Subsidiaries following the
Effective Time.
SECTION 9.11. GENERAL. All documents, instruments and legal and
------------- -------
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Buying
Parties, and the Buying Parties shall have received copies of all documents
which either Buying Party may reasonably have requested in connection therewith,
such documents where appropriate to be certified by proper corporate or
governmental authorities, including, without limitation the documents to be
delivered by the Company or the Major Securityholders pursuant to SECTION 4.2.
------------
48
ARTICLE X
CONDITIONS TO THE OBLIGATION TO CLOSE OF OCAL
----------------------------------------------
AND THE MAJOR SECURITYHOLDERS
-----------------------------
The obligations of Ocal and the Major Securityholders at the Closing to
consummate the Merger and to execute and deliver the Closing Agreements to which
any of them is party are subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, compliance with which, or the
occurrence of which, may be waived prior to the Closing in writing by the
Company and the Major Securityholders in their sole discretion:
SECTION 10.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
------------ ------------------------------------------
(a) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Buying Parties contained in this Agreement
shall be true and correct as of the Closing with the same force and effect as if
made at and as of the Closing, (other than those representations and warranties
that address matters only as of a particular date or only with respect to a
specific period of time which need only be true and correct as of such date or
with respect to such period), except where a failure to be true or correct
relates to matters which could not reasonably be expected to have a Material
Adverse Effect on T&B.
(b) PERFORMANCE OF AGREEMENTS. The Buying Parties shall have
performed and satisfied all covenants and agreements required by this Agreement
to be performed or satisfied by the Buying Parties at or prior to the Closing.
(c) STOCKHOLDER APPROVAL. Holders of the Ocal Common Stock holding
not less than a majority of the shares of Ocal Common Stock outstanding as of
the record date for the Special Meeting shall have voted in favor of and
approved this Agreement and the Merger, in accordance with the DGCL.
(d) OFFICER'S CERTIFICATE. At the Closing, the Buying Parties shall
furnish to the Major Securityholders a certificate signed by the President or
any Vice President of each of the Buying Parties dated the Closing Date, to the
effect that the conditions specified in SECTIONS 10.1(a) and 10.1(b) have been
---------------- -------
satisfied.
SECTION 10.2. CLOSING AGREEMENTS. At or prior to the Closing, each
------------ ------------------
Buying Party shall have executed and delivered each of the Closing Agreements to
which it is a party, such agreements being in substantially the form attached
hereto without change other than such changes as may be reasonably satisfactory
to the Major Securityholders.
49
SECTION 10.3. LEGALITY. No court, arbitrator or governmental body,
------------ --------
agency or official shall have issued any order, decree or ruling which remains
in force and there shall not be any statute, rule or regulation restraining,
enjoining or prohibiting the consummation of the Merger.
SECTION 10.4. CONSENTS. The Buying Parties shall have secured written
------------ --------
consents or waivers under all Contractual Obligations of the Buying Parties, in
a manner satisfactory in form and substance to the Major Securityholders
necessary to permit the consummation of the transactions contemplated hereby.
SECTION 10.5. PREPARATION OF TRANSACTION BALANCE SHEET. Ernst & Young
------------ ----------------------------------------
LLP shall have prepared a Transaction Balance Sheet as of the last day of the
calendar month immediately preceding the Closing Date.
SECTION 10.6. MERGER. The Merger shall be occurring contemporaneously
------------ ------
with the Closing in accordance with the Certificate of Merger.
SECTION 10.7. OPINION OF COUNSEL. The Buying Parties shall have
------------ ------------------
furnished Ocal and the Major Securityholders with an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇ dated the Closing Date in substantially the form of EXHIBIT D.
---------
SECTION 10.8. GUARANTY. T&B shall have executed and delivered the
------------ --------
Guaranty in substantially the form of EXHIBIT F hereto, pursuant to which T&B
---------
shall guarantee all Debt of the Company to ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
SECTION 10.9. REGULATORY CONSENTS. The waiting period applicable to
------------ -------------------
the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have
expired or been terminated. Other than the filing provided for in SECTION 2.5,
-----------
all filings required to be made prior to the Effective Time by Ocal or T&B or
any of their respective Subsidiaries with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by Ocal or
T&B or any of their respective Subsidiaries from, any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby shall have been made or
obtained (as the case may be), except where the failure to have made or obtained
any such filing, consent, approval or authorization would not have a Material
Adverse Effect on the Surviving Corporation and its Subsidiaries following the
Effective Time.
50
SECTION 10.10. GENERAL. All documents, instruments and legal and
------------- -------
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Major
Securityholders, and the Major Securityholders shall have received copies of all
documents which the Major Securityholders may reasonably have requested in
connection therewith, such documents where appropriate to be certified by proper
corporate or Governmental Authorities, including, without limitation the
documents to be delivered by the Buying Parties pursuant to SECTION 4.2.
-----------
ARTICLE XI
CONSENT TO JURISDICTION; JURY TRIAL WAIVER
------------------------------------------
SECTION 11.1. CONSENT TO JURISDICTION.
------------ -----------------------
(a) The Buying Parties, Ocal (prior to the Effective Time), and each
Major Securityholder, agree, and shall cause each of their respective Affiliates
to agree, that any Action arising out of or based upon this Agreement or any
Closing Agreement or relating to the subject matter hereof or thereof brought by
any of them against them or any of their Affiliates shall be brought exclusively
in the State courts of the State of Delaware or the United States District
Courts located in Delaware.
(b) Each Party by its execution hereof (i) hereby waives, to the
extent not prohibited by applicable law, and agrees not to assert by way of
motion, as a defense or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that any such
proceeding has been brought in an improper forum, or that this Agreement or any
other Closing Agreement, or the subject matter hereof or thereof may not be
enforced in or by such court and (ii) hereby agrees not to commence any Action
arising out of or based upon this Agreement or any Closing Agreement or relating
to the subject matter hereof or thereof other than before one of the above-named
courts nor to make any motion or take any other action seeking or intending to
cause the transfer or removal of any such Action to any court other than one of
the above-named courts whether on the grounds of inconvenient forum or
otherwise. Each Party hereby consents to service of process in any such
proceeding in any manner permitted by Delaware or Tennessee law, and agrees that
service of process by registered or certified mail, return receipt requested, at
its address specified pursuant to SECTION 13.8 is reasonably calculated to give
------------
actual notice.
SECTION 11.2. WAIVER OF JURY TRIAL. To the extent not prohibited by
------------ --------------------
applicable law which cannot be waived, each of the Parties hereto hereby waives
and covenants that it will not assert (whether as plaintiff, defendant or
otherwise) any right to trial by jury in any forum in respect of any issue or
Action arising out of or based
51
upon this Agreement or any other Closing Agreement or the subject matter hereof
or thereof or in any way connected with or related or incidental to the
transactions contemplated hereby, in each case whether now existing or hereafter
arising. The Major Securityholders acknowledge that they have been informed by
the Buying Parties that this SECTION 11.2 constitutes a material inducement upon
------------
which the Buying Parties are relying and will rely in entering into this
Agreement and any other agreements relating hereto or contemplated hereby. Any
party hereto may file an original counterpart or a copy of this SECTION 11.2
------------
with any court as written evidence of the consent of each such party to the
waiver of its right to trial by jury.
ARTICLE XII
TERMINATION
-----------
SECTION 12.1. TERMINATION OF AGREEMENT. This Agreement may be
------------ ------------------------
terminated by the Parties only as provided below:
(a) The Buying Parties, the Major Securityholders and Ocal may
terminate this Agreement by mutual written consent at any time prior to the
Closing.
(b) The Buying Parties may terminate this Agreement by giving written
notice to Ocal at any time prior to the Closing, so long as neither of the
Buying Parties is itself in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, either (i) in the event Ocal
or any Major Securityholder is in material breach of any representation,
warranty, covenant or agreement contained in this Agreement, T&B has notified
Ocal in writing of the breach and such breach has continued without cure for a
period of twenty (20) business days after the written notice of breach (provided
that if such breaching Party is pursuing a cure in good faith, such period for
cure shall be extended until March 31, 1999), or (ii) if the Closing shall not
have occurred on or before March 31, 1999 by reason of the failure of any
condition set forth in ARTICLE IX to be satisfied.
----------
(c) Ocal may terminate this Agreement by giving written notice to the
Buying Parties at any time prior to the Closing, so long as Ocal and none of the
Major Securityholders is in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, either (i) in the event
either Buying Party is in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, Ocal has notified the Buying
Parties in writing of the breach and such breach has continued without cure for
a period of twenty (20) business days after the written notice of breach
(provided that if such breaching Party is pursuing a cure in good faith, such
period for cure shall be extended until March 31, 1999), or (ii) if the Closing
shall not have occurred on or before March 31, 1999 by reason of the failure of
any condition set forth in ARTICLE X to be satisfied.
---------
52
(d) T&B may terminate this Agreement if the Board of Directors of Ocal
shall have withdrawn its recommendation of this Agreement or the Merger or shall
have resolved to do so.
(e) Ocal may terminate this Agreement in the exercise of its good
faith judgment, if (x) after receiving an unsolicited proposal, Ocal's Board of
Directors has made the determination called by SECTION 8.1(a) thus resulting in
--------------
a Business Combination Proposal, (y) T&B has received the notice called by
SECTION 8.1(b)(i) and (z) Ocal has received the confidentiality agreement
-----------------
referred to in SECTION 8.1(b)(ii); provided that any termination of this
------------------
Agreement by Ocal pursuant to this SECTION 12.1(e) shall not be effective until
---------------
Ocal has made payment of the full Break-up Fee required by SECTION 12.2 hereof.
------------
(f) The Buying Parties, the Major Securityholders or Ocal may
terminate this Agreement:
(i) if the Merger shall not have been consummated by March 31,
1999; provided, however, that the right to terminate this Agreement pursuant to
this SECTION 12.1(f)(i) will not be available to any Party whose failure to
------------------
perform any of its obligations under this Agreement is the cause of or results
in the failure of the Merger to be consummated by March 31, 1999;
(ii) if, at a Special Meeting duly convened therefor and finally
adjourned, approval of the holders of Ocal Common Stock of this Agreement and
the Merger shall not have been obtained; or
(iii) if any Governmental Authority shall have issued a
Governmental Order or taken any other action permanently enjoining, restraining
or otherwise prohibiting the consummation of the Merger or any of the other
transactions contemplated by this Agreement and such Governmental Order or other
action shall have become final and nonappealable.
(g) Ocal may terminate this Agreement if the Deficit Amount is more
than $1,500,000.
SECTION 12.2. BREAK-UP FEE.
------------ ------------
(a) Ocal shall pay T&B a fee (a "BREAK-UP FEE") in immediately
available funds, equal to $600,000 if this Agreement is terminated pursuant to
SECTION 12.1(d) OR 12.1(e). Ocal shall provide T&B with prompt written notice of
--------------------------
the events described in the immediately preceding sentence.
53
(b) Notwithstanding anything to the contrary in this SECTION 12.2, no
------------
Break-up Fee will be payable by Ocal if the Merger is consummated.
SECTION 12.3. EFFECT OF TERMINATION. In the event of the termination
------------ ---------------------
of this Agreement pursuant to SECTION 12.1, all obligations of the parties
------------
hereunder shall terminate without any liability of any party to any other party
(other than the provisions of SECTIONS 8.3, 8.9, 11.1, 11.2, and 12.2, this
------------ --- ---- ---- ----
SECTION 12.3, and SECTIONS 13.1, 13.2, 13.6, 13.7, 13.8, 13.9, 13.10, 13.11 and
------------ ------------- ---- ---- ---- ---- ---- ----- -----
13.13, each of which shall survive any such termination); provided, however,
-----
that no termination shall relieve any party from any liability arising from or
relating to a willful breach prior to termination.
ARTICLE XIII
MISCELLANEOUS
-------------
SECTION 13.1. ENTIRE AGREEMENT; WAIVERS. This Agreement constitutes
------------ -------------------------
the entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties with respect to such
subject matter. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), shall constitute a continuing waiver unless otherwise expressly
provided nor shall be effective unless agreed to (i) in the case of a waiver by
the Buying Parties, by the Buying Parties, (ii) in the case of a waiver by the
Major Securityholders, by the Major Securityholders and (iii) in the case of a
waiver by Ocal, by Ocal.
SECTION 13.2. AMENDMENT OR MODIFICATION. The Parties hereto may not
------------ -------------------------
amend or modify this Agreement except in such manner as may be agreed upon by a
written instrument: (i) in the case of any amendment prior to the Closing,
executed by each Buying Party, Ocal and Major Securityholders who hold a
majority of the Equity Securities of Ocal held by all Major Securityholders as
of the date hereof (calculated on a fully exercised and converted basis) or (ii)
in the case of any amendment after the Closing, subject to any contrary
requirement of applicable law, executed by T&B or Ocal and by the Major
Securityholders.
SECTION 13.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
------------ ---------------------------------------------
the representations and warranties in this Agreement or in any Schedule,
instrument or other document delivered pursuant to this Agreement will survive
the Effective Time.
SECTION 13.4. INDEPENDENCE OF REPRESENTATIONS AND WARRANTIES. The
------------ ----------------------------------------------
Parties hereto intend that each representation, warranty and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists any other representation, warranty or covenant relating to the
same subject matter
54
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that such Party is in
breach of the first representation, warranty or covenant.
SECTION 13.5. SCHEDULES; LISTED DOCUMENTS. Neither the listing nor
------------ ---------------------------
description of any item, matter or document in any Schedule hereto nor the
furnishing or availability for review of any document shall be construed to
modify, qualify or disclose an exception to any representation or warranty of
any Party made herein or in connection herewith, except to the extent that such
representation or warranty specifically refers to such Schedule and such
modification, qualification or exception is described in such Schedule;
provided, however, that with respect to any matter that is clearly disclosed in
any Section of this Agreement or in any Schedule hereto in such a way as to make
its relevance to the information called for by another Section of this Agreement
or another Schedule hereto reasonably apparent, such matter shall be deemed to
have been included in response to such other Section or Schedule,
notwithstanding the omission of any appropriate cross-reference thereto.
SECTION 13.6. SEVERABILITY. In the event that any provision hereof
------------ ------------
would, under applicable law, be invalid or unenforceable in any respect, such
provision shall (to the extent permitted under applicable law) be construed by
modifying or limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable law. The provisions hereof are
severable, and in the event any provision hereof should be held invalid or
unenforceable in any respect, it shall not invalidate, render unenforceable or
otherwise affect any other provision hereof.
SECTION 13.7. SUCCESSORS AND ASSIGNS. All of the terms and provisions
------------ ----------------------
of this Agreement shall be binding upon and shall inure to the benefit of the
Parties hereto and their respective transferees, successors and assigns (each of
which such transferees, successors and assigns shall be deemed to be a party
hereto for all purposes hereof); provided, however, this Agreement may only be
assigned by a Party with the written consent of the other Parties.
SECTION 13.8. NOTICES. Any notices or other communications required
------------ -------
or permitted hereunder shall be sufficiently given if in writing and delivered
personally or sent by telecopier, FedEx, or registered or certified mail,
postage prepaid, addressed as follows:
If to T&B, to it at: ▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇&▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President -
General Counsel and Secretary
55
If to the Acquisition
Subsidiary, to it at: Ocal Acquisition Corp.
c/o Thomas & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇&▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Schiave
If to Ocal at: Ocal, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
If to any Major Security-
holder, to such
Major Securityholder ▇▇▇▇ ▇▇▇▇▇▇
in care of: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Irell & ▇▇▇▇▇▇▇ LLP
Avenue of the Stars, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, (b) one
Business Day after being sent by FedEx, if sent by FedEx, (c) one Business Day
after being delivered, if delivered by telecopier and (d) three Business Days
after being sent, if sent by registered or certified mail. Each of the Parties
hereto shall be entitled to specify a different address by giving notice as
aforesaid to each of the other Parties hereto.
56
SECTION 13.9. PUBLIC ANNOUNCEMENTS. At all times at or before the
------------ --------------------
Closing, no Party hereto will issue or make any reports, statements or releases
to the public or generally to the customers, suppliers or other Persons to whom
the Company sells goods or provides services or with whom the Company otherwise
has significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the other parties
hereto, which consent shall not be unreasonably withheld. If any Party hereto is
unable to obtain, after reasonable effort, the approval of its public report,
statement or release from the other Parties hereto and such report, statement or
release is, in the opinion of legal counsel to such Party, required by law in
order to discharge such Party's disclosure obligations, then such party may make
or issue the legally required report, statement or release and promptly furnish
the other Parties with a copy thereof. Each Party hereto will also obtain the
prior approval of the other Parties hereto of any press release to be issued
immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
SECTION 13.10. HEADINGS. Section and subsection headings are not to
------------- --------
be considered part of this Agreement, are included solely for convenience, are
not intended to be full or accurate descriptions of the content thereof and
shall not affect the construction hereof. This Agreement shall be deemed to
express the mutual intent of the Parties, and no rule of strict construction
shall be applied against any Party.
SECTION 13.11. THIRD PARTY BENEFICIARIES. Except for the Indemnified
------------- -------------------------
Parties, nothing in this Agreement is intended or shall be construed to entitle
any Person other than the parties, the Company or their respective transferees,
successors and assigns permitted hereby to any claim, cause of action, remedy or
right of any kind.
SECTION 13.12. COUNTERPARTS. This Agreement may be executed manually
------------- ------------
or by facsimile in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument. Any Party executing the Agreement by facsimile shall as soon as
practicable thereafter deliver to the other Parties a manually signed copy of
this Agreement.
SECTION 13.13. GOVERNING LAW. This Agreement shall be governed by and
------------- -------------
construed in accordance with the domestic substantive laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any other jurisdiction.
57
SIGNATURE PAGE FOR MERGER AGREEMENT
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of the date first above
written by their respective officers thereunto duly authorized.
▇▇▇▇▇▇ & ▇▇▇▇▇ CORPORATION
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇
------------------
W. ▇▇▇▇ ▇▇▇▇▇▇
OCAL ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
OCAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
MAJOR SECURITYHOLDERS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Realty Ltd.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
▇▇▇▇ ▇▇▇▇▇▇, General Partner
58
EXHIBIT A
TO AGREEMENT
AND PLAN OF MERGER
SECURITYHOLDER NO. OF SHARES OF
-------------- ----------------
OCAL COMMON STOCK
-----------------
▇▇▇▇ ▇▇▇▇▇▇ 2,156,379
▇▇▇▇▇▇ Realty, Ltd. 910,000
