CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
BETWEEN
INTERNATIONAL SPECIALTY
PRODUCTS INC.
AND
INTERNATIONAL SPECIALTY
PRODUCTS HOLDINGS INC.
November 8, 2002
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01 The Merger.................................................2
SECTION 1.02 Effective Time; Closing....................................2
SECTION 1.03 Effect of the Merger.......................................2
SECTION 1.04 Certificate of Incorporation; Bylaws.......................2
SECTION 1.05 Directors and Officers.....................................3
ARTICLE II
CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES; DEPOSIT;
DISCLOSURE SCHEDULES
SECTION 2.01 Effect on Capital Stock....................................3
SECTION 2.02 Payment Procedures.........................................4
SECTION 2.03 Company Stock Options; Company Restricted Stock Plans......5
SECTION 2.04 Shares of Dissenting Stockholders..........................6
SECTION 2.05 Adjustment of Merger Consideration.........................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization...............................................7
SECTION 3.02 Capitalization.............................................7
SECTION 3.03 Subsidiaries...............................................7
SECTION 3.04 Authority Relative to This Agreement.......................7
SECTION 3.05 Consents and Approvals; No Violation.......................8
SECTION 3.06 Proxy Statement; Transaction Statement.....................8
SECTION 3.07 SEC Documents..............................................9
SECTION 3.08 Compliance with Laws.......................................9
SECTION 3.09 Litigation and Claims......................................9
SECTION 3.10 Employees and Employee Plans...............................9
SECTION 3.11 No Brokers................................................10
SECTION 3.12 Absence of Certain Changes................................10
SECTION 3.13 Absence of Undisclosed Liabilities........................10
SECTION 3.14 Title to Properties and Related Matters...................10
SECTION 3.15 Fairness Opinion..........................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ISPH
SECTION 4.01 Organization..............................................11
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SECTION 4.02 Capitalization............................................11
SECTION 4.03 Authority Relative to this Agreement......................11
SECTION 4.04 Consents and Approvals; No Violation......................11
SECTION 4.05 Proxy Statement...........................................12
SECTION 4.06 No Current Intention to Sell Company......................12
SECTION 4.07 No Knowledge of Breach or Inaccuracy......................12
ARTICLE V
COVENANTS
SECTION 5.01 Certain Actions Pending Merger............................13
SECTION 5.02 Proxy Statement...........................................14
SECTION 5.03 Stockholders' Meeting.....................................15
SECTION 5.04 Reasonable Efforts........................................16
SECTION 5.05 Inspection of Records.....................................16
SECTION 5.06 Notification of Certain Matters...........................16
SECTION 5.07 Public Announcements......................................17
SECTION 5.08 Indemnification by Surviving Corporation..................17
ARTICLE VI
CONDITIONS TO EACH PARTY'S
OBLIGATION TO EFFECT THE MERGER
SECTION 6.01 Stockholder Approval of Agreement........................18
SECTION 6.02 Certain Proceedings......................................19
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF ISPH
SECTION 7.01 Representations and Warranties True......................19
SECTION 7.02 Performance of Obligations...............................19
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
SECTION 8.01 Representations and Warranties True......................20
SECTION 8.02 Performance of Obligations...............................20
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination..............................................20
SECTION 9.02 Effect of Termination....................................21
SECTION 9.03 Amendment................................................21
SECTION 9.04 Extension; Waiver........................................21
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements.............................................22
SECTION 10.02 Expenses................................................22
SECTION 10.03 Notices.................................................22
SECTION 10.04 Definitions and Usage...................................23
SECTION 10.05 Accounting Terms........................................25
SECTION 10.06 Disclosure Schedules....................................25
SECTION 10.07 Severability............................................25
SECTION 10.08 Entire Agreement; Assignment............................25
SECTION 10.09 Parties in Interest.....................................25
SECTION 10.10 Specific Performance....................................26
SECTION 10.11 Governing Law...........................................26
SECTION 10.12 Headings................................................26
SECTION 10.13 Counterparts............................................26
SECTION 10.14 Construction............................................26
SECTION 10.15 No Pecuniary Interest...................................26
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INDEX OF DEFINED TERMS
Adverse Company Board Recommendation...............16
Agreement...........................................1
Balance Sheet.......................................9
beneficial owner...................................24
business day.......................................25
Cap 19
Certificate.........................................4
Certificate of Merger...............................2
Charitable Organization............................25
Closing.............................................2
Closing Date........................................2
Code.............................................. 25
Company.............................................1
Company Common Stock................................1
Company Disclosure Schedules.......................26
Company Equity Plans................................6
Company Meeting....................................16
Company Plans......................................10
Company Preferred Stock.............................1
Company Reports.....................................9
Company Stock Option Plans..........................5
Company Stock Plans.................................6
DGCL............................................... 1
Dissenting Shares...................................6
Effective Time......................................2
ERISA..............................................10
Exchange Act........................................8
Exchange Fund.......................................4
GAAP...............................................10
Governmental Entity................................10
including..........................................25
ISPH................................................1
ISPH Stock..........................................1
Knowledge..........................................26
Liens...............................................8
Majority Stockholder................................1
Majority Stockholder Shares.........................1
Majority-of-Minority Condition.....................20
Material Adverse Effect............................25
Merger..............................................1
Merger Consideration................................4
Option..............................................5
Option Spread.......................................6
Options.............................................5
Paying Agent........................................4
person.............................................26
Proxy Statement....................................16
Restricted Share....................................6
SEC.................................................9
Securities Act......................................9
Significant Subsidiary.............................26
Special Committee...................................1
Special Committee Financial Advisor................11
Subsidiary.........................................26
Surviving Corporation...............................2
Transaction Statement..............................16
Voting Agreement....................................2
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 8, 2002
(this "Agreement"), is by and between International Specialty Products Inc., a
Delaware corporation (the "Company") and International Specialty Products
Holdings Inc., a Delaware corporation ("ISPH").
RECITALS
WHEREAS, the Company has authority to issue (i) 300,000,000 shares
of Common Stock, par value $0.01 per share (the "Company Common Stock"),
65,105,602 of which were outstanding as of November 6, 2002, and (ii)
20,000,000 shares of Preferred Stock (the "Company Preferred Stock"), none of
which are outstanding;
WHEREAS, Xxxxxx X. Xxxxxx, an individual (the "Majority
Stockholder"), is the "beneficial owner" (as defined in Section 10.04) of
52,328,040 shares of Company Common Stock, representing approximately 80.4% of
the Company Common Stock (the "Majority Stockholder Shares"), and all of the
3,000 outstanding shares of common stock, par value $0.001 per share (the
"ISPH Stock"), of ISPH;
WHEREAS, ISPH is a Delaware corporation formed for the purpose of
entering into this Agreement and consummating the transactions contemplated
hereby;
WHEREAS, the Majority Stockholder has proposed to the Board of
Directors of the Company that ISPH be merged into the Company in a transaction
in which shares of the Company beneficially owned by persons other than the
Majority Stockholder at the time of the merger will be converted into the
right to receive $10.30 per share in cash;
WHEREAS, a special committee (the "Special Committee") of the Board
of Directors of the Company and the Board of Directors of the Company (with
the Majority Stockholder and Xxxxx Xxxxx abstaining) each has determined that
it is fair to, and in the best interests of, the Company and the holders of
Company Common Stock to consummate the merger (the "Merger") of ISPH with and
into the Company upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the Delaware General Corporation Law
(the "DGCL");
WHEREAS, the Board of Directors of ISPH has approved and declared
advisable this Agreement and the Merger and the other transactions
contemplated hereby upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the DGCL;
WHEREAS, the Majority Stockholder has agreed, pursuant to a Voting
Agreement (the "Voting Agreement") dated as of the date hereof, to vote or
cause to be voted all shares of Company Common Stock then beneficially owned
by the Majority Stockholder in favor of the adoption of the Agreement at any
meeting of stockholders of the Company at which the Agreement shall be
submitted for adoption and at all adjournments or postponements thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in Articles VI, VII and VIII, and in accordance with the
provisions of the DGCL, at the Effective Time (as defined in Section 1.02),
ISPH shall be merged with and into the Company. As a result of the Merger, the
separate existence of ISPH shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation").
SECTION 1.02 Effective Time; Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 9:00 a.m. New York City time on
the next business day after all of the conditions set forth in Articles VI,
VII and VIII have been satisfied or, subject to applicable law, waived (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions) in accordance
with this Agreement or (ii) at such other place and time and/or on such other
date as ISPH and the Company may agree in writing (the "Closing Date").
Subject to the provisions of this Agreement, as soon as practicable on the
Closing Date, the parties hereto shall file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in such form as is required by, and executed in accordance with, the DGCL. The
term "Effective Time" means the date and time that the Merger shall become
effective, which shall be the date and time of the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware (or such later
time as may be agreed by the parties hereto and specified in the Certificate
of Merger).
SECTION 1.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, without further act or deed, all the property, rights,
privileges, powers and franchises of the Company and ISPH shall vest in the
Surviving Corporation and all debts, liabilities and duties of each of the
Company and ISPH shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; Bylaws.
(a) Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its terms and as
provided by the DGCL.
(b) Bylaws. At the Effective Time, the Bylaws of ISPH as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with their terms and as
provided by the DGCL and the Certificate of Incorporation of the Surviving
Corporation.
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SECTION 1.05 Directors and Officers.
(a) Directors. From and after the Effective Time, the directors of
the Company immediately prior to the Effective Time (other than Xxxxxxx Xxxxxx
and those directors on the Special Committee) shall be the directors of the
Surviving Corporation until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be, in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation, the DGCL and this Agreement.
(b) Officers. From and after the Effective Time, the officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation and shall hold office until the earlier of their
resignation or removal or until their respective successors are duly appointed
and qualified, as the case may be, in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, the DGCL and this
Agreement.
ARTICLE II
CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES; DEPOSIT;
DISCLOSURE SCHEDULES
SECTION 2.01 Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of
any Company Common Stock or any shares of ISPH Stock:
(a) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than (i) Dissenting Shares (as defined in Section 2.04), (ii) shares of
Company Common Stock that are held in the treasury of the Company or by any
Subsidiary of the Company and (iii) shares of Company Common Stock then
beneficially owned by the Majority Stockholder (collectively, the "Excluded
Shares")) shall be converted into the right to receive from the Surviving
Corporation $10.30 in cash (the "Merger Consideration") without interest
thereon upon surrender of the certificate previously representing such share
of Company Common Stock as provided in Section 2.02(c). As of the Effective
Time, all shares of Company Common Stock shall cease to be outstanding and
shall automatically be canceled and shall cease to exist, and each certificate
(a "Certificate") which immediately prior to the Effective Time represented
any such share of Company Common Stock (except Excluded Shares) shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration and any dividends or other distributions to which holders become
entitled in accordance with this Article II upon the surrender of such
Certificate.
(b) Cancellation of Excluded Shares. The Excluded Shares issued and
outstanding immediately prior to the Effective Time shall be canceled and
retired and shall cease to exist without any consideration payable therefor
(subject, in the case of any Dissenting Shares, to such rights as exist
pursuant to the DGCL and Section 2.04).
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(c) Conversion of ISPH Stock. Each share of ISPH Stock (or a
fraction thereof) issued and outstanding immediately prior to the Effective
Time shall be converted into one share of Common Stock, par value $0.001 per
share (or a fraction thereof), of the Surviving Corporation.
SECTION 2.02 Payment Procedures. (a) At and after the Effective
Time, each Certificate formerly representing shares of Company Common Stock
(other than Excluded Shares) shall represent only the right to receive the
Merger Consideration, without interest.
(b) From time to time after the Effective Time, the Surviving
Corporation shall deposit, or cause to be deposited, with a bank or trust
company (the "Paying Agent"), for the benefit of the holders of the
Certificates, funds in such amounts as are necessary to make the payments
required pursuant to this Article II in exchange for shares of Company Common
Stock (other than Excluded Shares). Any cash deposited with the Paying Agent
shall hereinafter be referred to as the "Exchange Fund."
(c) As promptly as practicable after the Effective Time, the
Surviving Corporation shall send or cause to be sent to each holder of record
of shares of Company Common Stock (other than Excluded Shares) transmittal
materials for use in exchanging Certificates for the Merger Consideration. The
Surviving Corporation shall cause any check in respect of the Merger
Consideration (together with any dividends or other distributions to which
holders become entitled in accordance with this Article II upon surrender of
such Certificate) which such person shall be entitled to receive to be
delivered to such person upon delivery to the Paying Agent of Certificates
formerly representing such shares of Company Common Stock owned by such
person. In the event of a transfer of ownership of the shares of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. No interest will be paid on any
such cash to be paid pursuant to this Article II upon such delivery. The
Surviving Corporation shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable to any holder of Certificates such amounts (if
any) as the Surviving Corporation determines are required to be deducted or
withheld under the Code, or any provision of United States, state or local tax
law or any foreign tax law applicable as a result of the residence, location,
domicile or other facts relating to such holder. To the extent that amounts
are so withheld by the Surviving Corporation, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of such Certificates.
(d) Subject to Section 2.04, at the Effective Time, holders of
Company Common Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive any dividend or other
distribution with respect to the Company Common Stock with a record date
occurring prior to the Effective Time and payment of the Merger Consideration.
From and after the Effective Time, there shall be no transfers on the stock
transfer records of the Company of any shares of the Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving
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Corporation or the Paying Agent for transfer, they shall be canceled and
exchanged for the Merger Consideration deliverable in respect thereof pursuant
to this Agreement in accordance with the procedures set forth in this Section
2.02 together with any dividends or other distributions to which the holder
becomes entitled in accordance with this Article II upon the surrender of such
Certificates.
(e) 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 the
Paying Agent or the Surviving Corporation, the posting by such person of a
bond in such amount as the Paying Agent or the Surviving Corporation may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Paying Agent or the Surviving
Corporation, as the case may be, shall issue in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration deliverable in
respect thereof pursuant to this Agreement and any dividends or other
distributions to which holders become entitled in accordance with this Article
II upon the surrender of such Certificate.
SECTION 2.03 Company Stock Options; Company Restricted Stock Plans.
(a) Stock Options. The Company shall take all actions necessary to
provide that, at the Effective Time, each option to purchase a share of
Company Common Stock (an "Option" and, collectively, the "Options")
outstanding and unexercised as of the Effective Time granted pursuant to the
1991 Incentive Plan for Key Employees and Directors, the 2000 Stock Option
Plan for Non-Employee Directors and any other equity-based plans or agreements
of or with the Company or any of its Subsidiaries providing for the granting
of Options (collectively, the "Company Stock Option Plans") is canceled,
whether or not then exercisable or vested, and in consideration of such
cancellation, the Surviving Corporation shall pay to the holder of any such
Option the excess (rounded to the nearest $0.01), if any, of the Merger
Consideration over such Option's exercise price (the "Option Spread")
multiplied by the number of shares of Company Common Stock subject to such
Option immediately prior to the Effective Time. All payments made pursuant to
this Section 2.03(a) shall be made as soon as commercially practicable
following the Effective Time, as reduced by any applicable withholding taxes
and other similar charges.
(b) Restricted Shares. The Company shall take any action necessary
to cause each holder of a share of restricted Company Common Stock (a
"Restricted Share") outstanding immediately prior to the Effective Time issued
pursuant to a Company Stock Option Plan or any other equity-based plans or
agreements of or with the Company or any of its Subsidiaries providing for the
granting of Restricted Shares (collectively, the "Company Equity Plans" and
together with the Company Stock Option Plans, the "Company Stock Plans") to
surrender, immediately prior to the Effective Time, each such Restricted Share
in exchange for the right to receive an amount in cash equal to the Merger
Consideration, as reduced by any applicable withholding taxes and other
similar charges; provided that any such cash amount shall only be payable to
such holder at such time as (and to the extent that) the vesting restrictions
that were applicable to the corresponding Restricted Share would have lapsed
if not for the Merger.
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(c) As of the Effective Time, the Company shall use its reasonable
best efforts, in consultation with ISPH, to remove, or cause to be removed
from each and every plan, program, agreement or arrangement any right of any
participant thereunder to invest in, or receive a distribution in, Company
Common Stock.
SECTION 2.04 Shares of Dissenting Stockholders. (a)
Notwithstanding anything in this Agreement to the contrary, any shares of
Company Common Stock that are issued and outstanding as of the Effective Time
and that are held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who properly demands appraisal of such shares
pursuant to, and who complies in all respects with, Section 262 of the DGCL
(the "Dissenting Shares"), shall not be converted into the right to receive
the Merger Consideration as provided in Section 2.01(a), unless and until such
holder shall have failed to perfect, or shall have effectively withdrawn or
lost, his or her right to appraisal under the DGCL and instead shall be
entitled to receive such consideration as may be determined to be due with
respect to such Dissenting Shares pursuant to and subject to the requirements
of Section 262 of the DGCL. If, after the Effective Time, any such holder
shall have failed to perfect or shall have effectively withdrawn or lost such
right, each share of such holder's Company Common Stock shall thereupon be
deemed to have been converted into and to have become, as of the Effective
Time, the right to receive, without interest, the Merger Consideration, in
accordance with Section 2.01(a) (together with any dividends or other
distributions to which holders of Certificates become entitled in accordance
with this Article II upon the surrender of such Certificates).
(b) Prior to the Effective Time, the Company shall give ISPH (i)
prompt notice of any notices or demands (or withdrawals of notices or demands)
for appraisal or payment for shares of Company Common Stock received by the
Company and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands or notices. Prior to the
Effective Time, the Company shall not, without prior written consent of ISPH,
make any payments, or settle, offer to settle or otherwise negotiate, with
respect to any such demands.
(c) Dissenting Shares, if any, after payments of fair value in
respect thereof have been made to the holders thereof pursuant to the DGCL,
shall, to the extent not canceled at the Effective Time, be canceled.
SECTION 2.05 Adjustment of Merger Consideration. In the event
that, subsequent to the date of this Agreement but prior to the Effective
Time, the outstanding shares of Company Common Stock shall have been changed
into a different number of shares of a different class as a result of a stock
split, reverse stock split, stock dividend, subdivision, reclassification,
split, combination, exchange, recapitalization or other similar transaction,
the Merger Consideration and any other number or amount which is based upon
the number of shares of Company Common Stock shall be appropriately adjusted.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ISPH, except
as set forth in the Company Reports, as follows:
SECTION 3.01 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and, except where such failure would not reasonably be expected
to, either individually or in the aggregate, have a Material Adverse Effect,
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of the
Company's Subsidiaries is a legal entity duly organized or formed, validly
existing and in good standing under the laws of its jurisdiction, and, except
where such failure would not reasonably be expected to, either individually or
in the aggregate, have a Material Adverse Effect, has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted.
SECTION 3.02 Capitalization. The capitalization of the Company
appearing in the recitals of this Agreement is true and correct as of the date
hereof. All the issued and outstanding shares of Company Common Stock are
validly issued, fully paid and nonassessable and free from preemptive rights.
Except for the Options and Restricted Shares set forth in Schedule 3.02, (i)
there are no subscriptions, options, warrants, calls, rights, contracts,
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, transfer or voting of any equity security of the Company,
including any rights of conversion or exchange under any outstanding
securities or other instruments and (ii) there are not any outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any
share of Company Common Stock or make any material investment (in the form of
a loan, capital contribution or otherwise) in any person. Schedule 3.02 sets
forth the aggregate number of shares of Company Common Stock reserved for
issuance pursuant to the Options and Restricted Shares.
SECTION 3.03 Subsidiaries. The Company Reports include a list of
all persons deemed to be a material Subsidiary of the Company or of any of its
Subsidiaries together with each such entity's jurisdiction of organization.
All of the outstanding shares of capital stock or other securities evidencing
ownership of the Company's Subsidiaries are validly issued, fully paid and
nonassessable and are owned by the Company or its wholly-owned Subsidiaries
free and clear of all pledges, claims, liens, charges, options, encumbrances,
mortgages, pledges or security interests of any kind or nature whatsoever
(collectively, "Liens") with respect thereto, except such Liens that are
described in the Company Reports.
SECTION 3.04 Authority Relative to This Agreement. The Company has
the requisite corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Company and the Special Committee
and, except for the approval of this Agreement in accordance with the DGCL by
the stockholders of the Company, no other corporate proceeding on the part of
the Company is necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and constitutes a valid
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and binding obligation of the Company enforceable against it in accordance
with its terms, subject to (i) approval in accordance with the DGCL of the
stockholders of the Company and (ii) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
SECTION 3.05 Consents and Approvals; No Violation. Except for (a)
applicable requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (b) filings with various state blue sky authorities and
(c) filing and recordation of appropriate merger documents as required by the
DGCL and the corporate law of the other states in which the Company and ISPH
are qualified to do business, no filing with or notice to, and no permit,
authorization, consent or approval of, any public body or Governmental Entity
or any other person, the absence of which would reasonably be expected to,
either individually or in the aggregate, have a Material Adverse Effect on the
Company, is necessary for the execution and delivery by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
by this Agreement. Except as set forth in Schedule 3.05, none of the
execution, delivery and performance by the Company of this Agreement nor the
consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of the Company or similar governance or organizational
documents of any of the Company's Subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, lease agreement or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets may be bound or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or any of their respective properties or assets,
except with respect to clauses (ii) and (iii), such violations, breaches or
defaults which would not reasonably be expected to, either individually or in
the aggregate, have a Material Adverse Effect.
SECTION 3.06 Proxy Statement; Transaction Statement. None of the
information supplied by the Company for inclusion or incorporation by
reference in (i) the Proxy Statement (as defined in Section 5.02), (ii) the
Transaction Statement (as defined in Section 5.02) or (iii) any other document
required to be filed with the SEC or any other regulatory authority in
connection with the transactions contemplated by this Agreement will, at the
respective times filed with the SEC or any other regulatory authority and, in
addition, in the case of the Proxy Statement, the mailing of the Proxy
Statement or any amendment or supplement thereto, at the time of the meeting
of the stockholders to which the Proxy Statement relates and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement, the Transaction Statement and any other
SEC filing in connection with the Merger will comply (except with respect to
ISPH) in all material respects, as to form, with the applicable requirements
of the Exchange Act and the rules and regulations thereunder.
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SECTION 3.07 SEC Documents. Each of the Company and its
Subsidiaries has filed all forms, reports, registration statements, proxy
statements, schedules and documents required to be filed by it with the
Securities and Exchange Commission ("SEC") since July 31, 2001 through the
date hereof (collectively, the "Company Reports"). As of their respective
dates, the Company Reports (i) complied as to form in all material respects
with the applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act and the rules and regulations
thereunder and (ii) did not contain any untrue statement of material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The most recent consolidated balance sheet (the "Balance Sheet")
of the Company and its consolidated Subsidiaries included in or incorporated
by reference into the Company Reports (including the related notes and
schedules) fairly presents the consolidated financial position of the Company
and its consolidated Subsidiaries as of its date, and each of the consolidated
statements of income, retained earnings and cash flows of the Company and its
consolidated Subsidiaries included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly presents
the consolidated results of operations, retained earnings or cash flows, as
the case may be, of the Company and its consolidated Subsidiaries for the
periods set forth therein, in each case in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods
involved, except as may be noted therein (subject, in the case of unaudited
interim statements, to normal and recurring year-end adjustments and
exceptions permitted by Form 10-Q).
SECTION 3.08 Compliance with Laws. Each of the Company and its
Subsidiaries has complied and is in compliance with all applicable statutes,
regulations, rules, orders, ordinances, judgments, decrees, permits,
franchises, licenses and other laws of the United States of America, all
state, local and foreign governments and other governmental bodies and
authorities, and agencies of any of the foregoing ("Governmental Entity") to
which it is subject, except to the extent noncompliance would not reasonably
be expected to, either individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.09 Litigation and Claims. None of the Company and its
Subsidiaries is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation by any
Governmental Entity or any judgment, order, writ, injunction, decree, or award
of any Governmental Entity or any court or arbitrator, and there is no claim,
action, suit, litigation, proceeding, arbitration, investigation or
controversy affecting the Company or its Subsidiaries or, to the Knowledge (as
defined in Section 10.04) of the Company, threatened, nor is there any valid
basis known to the Company or its Subsidiaries for any such claim, action,
suit, litigation, proceeding, arbitration, investigation or controversy except
for matters which would not reasonably be expected to, either individually or
in the aggregate, have a Material Adverse Effect.
SECTION 3.10 Employees and Employee Plans. (a) Each "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and all severance, change
in control or employment plans, programs or agreements, and vacation,
incentive, bonus, stock option, stock purchase, and restricted stock plans,
programs or policies and all other employee benefit plans, agreements,
programs or other arrangements sponsored or maintained by any of the Company
and its
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Subsidiaries, in which present or former employees thereof participate or any
of the Company and its Subsidiaries has any present or future liability
(collectively, the "Company Plans") that is intended to be qualified within
the meaning of Section 401 of the Code has received a favorable determination
letter as to its qualification, and nothing has occurred that could reasonably
be expected to affect such qualification.
(b) Except as provided on Schedule 3.10, no Company Plan exists that
could result in the payment to any present or former employee of any of the
Company and its Subsidiaries of any money or other property or accelerate or
provide any other rights or benefits to any present or former employee of any
of the Company and its Subsidiaries as a result of the transaction
contemplated by this Agreement.
SECTION 3.11 No Brokers. Except pursuant to the engagement letter
(a copy of which has been delivered to ISPH) between the Special Committee and
Xxxxxx Brothers Inc., financial advisor to the Special Committee (the "Special
Committee Financial Advisor"), no broker, finder or investment banker is
entitled to any brokerage, finder's or other similar fee or commission in
connection with the Merger based upon arrangements made by or on behalf of any
of the Company and its Subsidiaries.
SECTION 3.12 Absence of Certain Changes. Since December 31, 2001,
except as disclosed in the Company Reports, each of the Company and its
Subsidiaries has conducted its business only in the ordinary course of such
business, and there has not been any change in or effect on the business,
earnings, assets, liabilities, financial or other condition or results of
operations of any of the Company and its Subsidiaries that has had or would
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.13 Absence of Undisclosed Liabilities. None of the
Company and its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, whether due or to become due,
except (a) liabilities or obligations reflected or reserved against or
disclosed in the Company Reports filed prior to the date hereof and (b)
liabilities or obligations which would not reasonably be expected to, either
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.14 Title to Properties and Related Matters.
The Company or one of its Subsidiaries (i) has good and marketable
title to all the properties and assets reflected in the Balance Sheet as being
owned by the Company or one of its Subsidiaries or acquired after the date
thereof which are material to the Company's business on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all Liens, except (A)
statutory Liens securing payments not yet due, (B) such imperfections or
irregularities of title and Liens as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties and (C) such Liens
that are described in the Company Reports, and (ii) is the lessee of all
leasehold estates reflected in the Company Reports or acquired after the date
thereof which are material to the Company's business on a consolidated basis
(except for leases that have expired by their terms since the date thereof)
and is in possession of the properties purported to be leased thereunder, and
each such
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lease is valid without default thereunder by the lessee or, to the Knowledge
of the Company, the lessor, except in the case of clauses (i) and (ii) above
as would not reasonably be expected to, either individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.15 Fairness Opinion. The Special Committee has received
an opinion of the Special Committee Financial Advisor that the Merger
Consideration is fair, from a financial point of view, to the Company's
stockholders (other than the Majority Stockholder).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ISPH
ISPH hereby represents and warrants to the Company as follows:
SECTION 4.01 Organization. ISPH is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
SECTION 4.02 Capitalization. The capitalization of ISPH appearing
in the recitals to this Agreement is true and correct as of the date hereof.
All of the issued and outstanding shares of ISPH Stock are validly issued,
fully paid and non-assessable and free from preemptive rights and all of the
outstanding shares of ISPH Stock are beneficially owned by Majority
Stockholder.
SECTION 4.03 Authority Relative to this Agreement. ISPH has the
requisite corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of ISPH and, except for the approval of this
Agreement in accordance with the DGCL by the stockholders of ISPH, no other
corporate proceeding on the part of ISPH is necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by ISPH and constitutes a valid and binding
obligation of ISPH enforceable against it in accordance with its terms,
subject to (i) approval in accordance with the DGCL of the stockholders of
ISPH and (ii) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
SECTION 4.04 Consents and Approvals; No Violation. Except for (a)
applicable requirements of the Exchange Act, (b) filings with various state
blue sky authorities and (c) filing and recordation of appropriate merger
documents as required by the DGCL and the corporate law of the other states in
which the Company and ISPH are qualified to do business, no filing with or
notice to, and no permit, authorization, consent or approval of, any public
body or Governmental Entity, the absence of which would be reasonably expected
to, either individually or in the aggregate, have a Material Adverse Effect on
ISPH is necessary for the execution and delivery by ISPH of
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this Agreement or the consummation by ISPH of the transactions contemplated by
this Agreement. None of the execution, delivery and performance by ISPH of
this Agreement nor consummation by ISPH of the transactions contemplated
hereby nor compliance by ISPH with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of ISPH, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease agreement or other instrument or
obligation to which ISPH is a party or by which ISPH or any of its properties
or assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to ISPH or any of its properties or
assets, except with respect to clauses (ii) and (iii), such violations,
breaches or defaults which, either individually or in the aggregate, would not
be reasonably expected to have a Material Adverse Effect on ISPH.
SECTION 4.05 Proxy Statement. None of the information supplied or
to be supplied by ISPH for inclusion in (i) the Proxy Statement, (ii) the
Transaction Statement or (iii) any other document required to be filed with
the SEC or any other regulatory authority in connection with the transactions
contemplated by this Agreement, will at the respective times filed with the
SEC or any other regulatory authority and, in addition, in the case of the
Proxy Statement, at the time of the mailing of the Proxy Statement or any
amendment or supplement thereto, at the time of the meeting of the
stockholders to which the Proxy Statement relates and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement, the Transaction Statement and any other
SEC filing in connection with the Merger will comply (with respect to ISPH
and/or Majority Stockholder) in all material respects, as to form, with the
applicable requirements of the Exchange Act, and the rules and regulations
thereunder.
SECTION 4.06 No Current Intention to Sell Company. As of the date
of this Agreement and to ISPH's Knowledge, the Majority Stockholder has no
intention to (i) sell, transfer or otherwise dispose of the shares of the
capital stock of Surviving Corporation; (ii) sell, lease, assign, transfer or
otherwise dispose of all or a major portion of its assets; or (iii)
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it or permit one or more other
such corporations to consolidate with or merge into it, except pursuant to
this Agreement; but there can be no assurance that the Majority Stockholder or
the Surviving Corporation will not determine to cause such events in the
future.
SECTION 4.07 No Knowledge of Breach or Inaccuracy. Neither ISPH
nor any director, officer, shareholder, employee or agent of ISPH has
Knowledge of any breach of, or inaccuracy in, any of the representations or
warranties of the Company contained in this Agreement, except such breaches
and inaccuracies as would not reasonably be expected to, either individually
or in the aggregate, have a Material Adverse Effect.
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ARTICLE V
COVENANTS
SECTION 5.01 Certain Actions Pending Merger. Prior to the
Effective Time, neither the Board of Directors of the Company nor any
committee thereof shall approve any action that would result in the Company or
any of its Subsidiaries taking any of the following actions, except with the
consent of ISPH:
(a) a split, combination or reclassification of the outstanding
shares of Company Common Stock or a declaration, set-aside or payment of any
dividend payable in cash, stock or property or any distribution with respect
to the outstanding shares of Company Common Stock or, a redemption, purchase
or other acquisition (or agreement to redeem, purchase or otherwise acquire),
directly or indirectly, any shares of Company Common Stock;
(b) an issuance, grant or agreement to issue or grant any additional
capital stock of the Company or any of its Subsidiaries or any options,
warrants or rights of any kind to acquire any shares of any such capital stock
or any securities convertible into or exchangeable for such capital stock or
any right or security the value of which is based on the value of any such
capital stock;
(c) the entering into any agreement, understanding or arrangement
with respect to the voting of its capital stock;
(d) the incurrence of (i) any indebtedness for borrowed money or the
assumption, guarantee, endorsement or any other accommodation to become
responsible for the long-term indebtedness of any other person (other than
deposits and similar liabilities, indebtedness of the Company's Subsidiaries
to the Company or any of its wholly owned Subsidiaries and indebtedness under
existing lines of credit and renewals or extensions thereof), other than in
the ordinary course of business consistent with past practice, or (ii) any
capital expenditures, obligations or liabilities, other than those budgeted as
of the date hereof or in the ordinary course of business consistent with past
practice;
(e) the sale, transfer, mortgage, encumbrance or other disposition
of any of its material properties or assets, including capital stock in any
Significant Subsidiaries (as defined in Section 10.04) of the Company, to any
person other than a direct or indirect wholly owned Subsidiary, or the
cancellation or release of any indebtedness to any such person or any claims
held by any such person, except (i) sales of inventory or immaterial assets in
the ordinary course of business consistent with past practice or (ii) pursuant
to contracts or agreements in force at the date of this Agreement;
(f) except for transactions in the ordinary course of business
consistent with past practice, the making of any material investment either by
purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other person other than a wholly
owned Subsidiary;
(g) except for transactions in the ordinary course of business
consistent with past practice, the entering into, or termination of, any
material lease, contract or agreement, or
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making of any material change in any of its material leases, contracts or
agreements, other than renewals of leases, contracts or agreements without
material changes of terms;
(h) other than in the ordinary course of business consistent with
past practice or as required by law or contracts in effect as of the date
hereof set forth in Section 3.10 or Schedule 5.01, an increase in any manner
of the wages, salaries, compensation, pension or other fringe benefits or
perquisites of any current or former employees, consultants or directors of
the Company or any of its Subsidiaries, or the vesting, funding or payment of
any pension or retirement allowance other than as required by any existing
Company Plans to any such current or former employees, consultants or
directors or the entering into, amendment, termination or commitment to any
pension, retirement, profit-sharing or welfare benefit plan or agreement or
employment, severance, consulting, retention, change in control, termination,
deferred compensation or incentive pay agreement with or for the benefit of
any current or former employee, consultant or director or, except as expressly
contemplated by this Agreement, the acceleration of the vesting, funding or
payment of any compensation payment or benefit;
(i) the settlement of any material claim, action or proceeding
involving money damages or a waiver or release of any material rights or
claims;
(j) the change in its methods of accounting in effect at December
31, 2001, except as required by changes in GAAP, or a change in any of its
methods of reporting material items of income and deductions for tax purposes
from those employed in the preparation of the tax returns of the Company for
the taxable years ending December 31, 2001 and 2000, except as required by
changes in law or regulation or as set forth in the Company Disclosure
Schedules;
(k) the adoption or implementation of any amendment to its articles
or certificate of incorporation, articles of association, by-laws (or similar
documents) or any plan of consolidation, merger or reorganization;
(l) the taking of any action that would, or would be reasonably
likely to, result in any of the representations or warranties of the Company
set forth in this Agreement not being true in all material respects or in any
of the conditions to the Merger set forth in Articles VI, VII and VIII not
being satisfied, except, in every case, as may be required by applicable law;
or
(m) the entering into any agreement to, or the making of any
commitment to, take any of the actions prohibited by this Section 5.01.
SECTION 5.02 Proxy Statement. (a) ISPH and the Company shall
cooperate in preparing and the Company shall, as soon as practicable, file
with the SEC (after providing ISPH with a reasonable opportunity to review and
comment thereon) (i) preliminary proxy materials relating to the Company
Meeting (as defined in Section 5.03) (together with any amendments thereof or
supplements thereto, the "Proxy Statement"), (ii) the transaction statement on
Schedule 13E-3 required by the Exchange Act (together with any amendments
thereof or supplements thereto, the "Transaction Statement") and (iii) any
other document required to be filed with the SEC or any other regulatory
authority in connection with the transaction contemplated by this Agreement
and shall use its reasonable best efforts to respond to any comments of the
SEC (after providing ISPH with a reasonable opportunity to review and
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comment thereon) and to cause the Proxy Statement and the Transaction
Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
SEC staff. The Company and ISPH shall promptly notify one another of the
receipt of any comments from the SEC and of any request by the SEC for
amendments or supplements to the Proxy Statement or the Transaction Statement
or for additional information and shall supply one another with copies of all
correspondence between it and any of its representatives, on the one hand, and
the SEC on the other hand, with respect to the Proxy Statement, the
Transaction Statement or the transactions contemplated hereby. If at any time
prior to the Company Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement or the Transaction
Statement, the Company shall promptly prepare and (if appropriate) mail to its
stockholders such an amendment or supplement; provided that no such amendment
or supplement will be made by the Company without providing ISPH a reasonable
opportunity to review and comment thereon.
(b) Except under the circumstances described in Section 5.03(b), the
Company shall include in the Proxy Statement and the Transaction Statement the
recommendation of the Company's Board of Directors (acting upon the
recommendation of the Special Committee) that the stockholders of the Company
(other than the Majority Stockholder) adopt this Agreement.
SECTION 5.03 Stockholders' Meeting. (a) The Company shall,
consistent with applicable law, call and hold a meeting of its stockholders
(the "Company Meeting") as promptly as practicable following the date hereof
for the purpose of voting upon the adoption of this Agreement. The Company,
through its Board of Directors (acting upon the recommendation of the Special
Committee), shall recommend to its stockholders (other than the Majority
Stockholder) adoption of this Agreement, which recommendation shall, except
under the circumstances described in Section 5.03(b), be contained in the
Proxy Statement and the Transaction Statement.
(b) Neither the Board of Directors of the Company nor any committee
thereof (including the Special Committee) shall, except as expressly permitted
by this Section 5.03(b), (i) withdraw, qualify or modify, or propose publicly
to withdraw, qualify or modify its approval or recommendation of the approval
of this Agreement and the transactions contemplated hereby or (ii) take any
other action or make any other statement in connection with the Company
Meeting inconsistent with such recommendation (collectively, an "Adverse
Company Board Recommendation"). Notwithstanding the foregoing, in the event
that prior to the satisfaction of the conditions set forth in Section 6.01,
the Special Committee determines in good faith, after receipt of advice from
outside counsel, that the failure to do so would more likely than not
constitute a breach of its fiduciary duties to stockholders of the Company
(other than the Majority Stockholder) under applicable law, then the Board of
Directors of the Company (acting upon the recommendation of the Special
Committee) or the Special Committee may make an Adverse Company Board
Recommendation.
(c) Notwithstanding any Adverse Company Board Recommendation, this
Agreement shall be submitted to the stockholders of the Company at the Company
Meeting for the purpose of adopting this Agreement and nothing contained
herein shall be deemed to relieve the Company of such obligation.
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SECTION 5.04 Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to (i) use its
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or required to be taken by any Governmental Entity or
otherwise to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, (ii) obtain from any Governmental
Entity any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by ISPH, the Company or any of the
Company's Subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger, and (iii) as
promptly as practicable, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the Merger
required under (A) the Exchange Act, and any other applicable federal or state
securities laws, and (B) any other applicable law; provided that ISPH and the
Company shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. The Company and ISPH shall use reasonable best efforts to furnish
to each other all information required for any application or other filing to
be made pursuant to the rules and regulations of any applicable law (including
all information required to be included in the Proxy Statement and the
Transaction Statement) in connection with the transactions contemplated by
this Agreement. In case at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each corporation party to this Agreement
shall take all such necessary or desirable action.
SECTION 5.05 Inspection of Records. From the date hereof to the
Effective Time, the Company shall (i) allow all designated officers,
stockholders, attorneys, financial advisors, accountants and other
representatives of ISPH reasonable access at all reasonable times to the
offices, records and files, correspondence, audits and properties, as well as
to all information relating to commitments, contracts, titles and financial
position, or otherwise pertaining to the business and affairs, of the Company
and its Subsidiaries, (ii) furnish to ISPH and its stockholders, counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and (iii) instruct the employees, counsel and financial
advisors of the Company and its Subsidiaries to cooperate with ISPH in its
investigation of the business of the Company and its Subsidiaries. No
investigation by any party, whether prior to the execution of this Agreement
or pursuant to this Section 5.05, shall affect any representation or warranty
in this Agreement of any party hereto or any condition to the obligations of
the parties hereto.
SECTION 5.06 Notification of Certain Matters. From and after the
date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of:
(a) any change or event, or series of changes or events, having, or
which would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on it or would be reasonably likely to cause any of
the conditions in Articles VI, VII and VIII not to be satisfied or to cause
the satisfaction thereof to be materially delayed;
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(b) the receipt of any material notice or other material
communication from any person alleging that the consent of such person is or
may be required in connection with the transactions contemplated hereby;
(c) the receipt of any material notice or other material
communication from any Governmental Entity in connection with the transactions
contemplated hereby; and
(d) any actions, suits, claims, investigations or proceedings
commenced or, to the Knowledge of the party, threatened against ISPH or the
Company which seeks to prohibit or prevent consummation of the transactions
contemplated hereby;
in each case, to the extent such event or circumstance is or becomes known to
the party required to give such notice; provided, however, that the delivery
of any notice pursuant to this Section 5.06 shall not be deemed to be an
amendment of this Agreement or any of the Company Disclosure Schedules, as the
case may be, and shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement.
SECTION 5.07 Public Announcements. ISPH and the Company shall use
their reasonable efforts to consult with each other before issuing any press
release or otherwise making any public statements with respect to this
Agreement or any of the transactions contemplated hereby. Prior to the
Closing, ISPH and the Company shall not issue any such press release or make
any such public statement without the prior consent of the other parties
(which consent shall not be unreasonably withheld or delayed), except as may
be required by law or regulation or any listing agreement with the New York
Stock Exchange or any other securities exchange to which the Company is a
party and, in such case, shall use their reasonable efforts to consult with
all the parties hereto prior to such release or statement being issued. The
parties shall agree on the text of a joint press release by which the parties
will announce the execution of this Agreement.
SECTION 5.08 Indemnification by Surviving Corporation. (a) From
and after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless each person who is now an officer or director of the
Company against all losses, claims, damages, costs, expenses or liabilities or
in connection with any claim, action, suit, proceeding or investigation
arising out of the fact that such person is an officer or director of the
Company (or out of any action taken by any such person on behalf of the
Company), pertaining to any matter existing or occurring on or prior to the
Effective Time (including the transactions contemplated by this Agreement),
whether asserted or claimed prior to, or on or after, the Effective Time. In
each case such indemnification shall be to the full extent permitted under
applicable law (and the Surviving Corporation will pay expenses in advance of
the final disposition of any such action or proceeding to each such director
or officer of the Company seeking indemnification hereunder to the full extent
permitted by law).
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance for all persons currently covered under the Company's officers' and
directors' liability insurance policies, in their capacities as officers and
directors, on terms substantially no less advantageous to the covered persons
than such existing insurance, pertaining to any matter existing or occurring
on or prior to the Effective
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Time (including the transactions contemplated by this Agreement), whether
asserted or claimed prior to, or on or after the Effective Time; provided,
however, that the Surviving Corporation shall not be required to maintain or
procure such coverage to pay an annual premium in excess of 200% of the
current annual premium paid by the Company for its existing coverage (the
"Cap"); and provided, further, that if equivalent coverage cannot be obtained,
or can be obtained only by paying an annual premium in excess of 200% of the
Cap, the Surviving Corporation shall only be required to obtain as much
coverage as can be obtained by paying an annual premium equal to 200% of the
Cap.
(c) The Indemnity Agreements dated August 7, 2002 among the Company
and each of the members of the Special Committee (the "Indemnification
Arrangements") shall not in any way be limited by or be affected by the rights
and obligations of the Company or of the directors and officers under this
Agreement except as expressly provided herein, and the execution and delivery
of this Agreement shall not in any way limit or affect the rights and
obligations of the Company or the other party or parties thereto under any
such Indemnification Arrangement.
(d) This Section 5.08 shall survive the consummation of the Merger.
The provisions of this Section 5.08 are intended to be for the benefit of, and
shall be enforceable by the present directors or officers of the Company, as
the case may be. The rights provided under this Section 5.08 shall be in
addition to, and not in lieu of, any rights to indemnity which any party may
have under the Certificate of Incorporation or Bylaws of the Company or the
Surviving Corporation or any other agreements. If the Surviving Corporation or
any of its successors or assigns (i) consolidates with or merges into any
other corporation or entity and is not the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties or assets to any individual, corporation
or any other entity, in each such case, proper provision shall be made so that
the successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 5.08.
(e) In the event that any action, suit, proceeding or investigation
relating thereto or to the transactions contemplated by this Agreement is
commenced, whether before or after the Effective Time, the parties hereto
agree to cooperate and use their respective reasonable efforts to vigorously
defend against and respond thereto.
ARTICLE VI
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment on or prior to the Effective Time of the
following conditions:
SECTION 6.01 Stockholder Approval of Agreement. This Agreement
and the transactions contemplated hereby shall have been adopted by (a) the
affirmative vote of the holders of at least a majority of the outstanding
shares of Company Common Stock and (b) the affirmative vote of at least
majority of the shares of Company Common Stock cast either for or against the
adoption of this Agreement (excluding the Majority Stockholder Shares and any
shares of Company Common Stock held beneficially or of record by any officers
or directors of
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ISPH or the Company) (the affirmative vote described in this clause (b), the
"Majority-of-Minority Condition").
SECTION 6.02 Certain Proceedings. No preliminary or permanent
injunction or restraining order or other order, decree or ruling issued by any
court of competent jurisdiction nor any statute, rule, regulation or order
entered, promulgated or enacted by any Governmental Entity shall be in effect
which would prevent the consummation of the Merger or the other transactions
contemplated by this Agreement (each party agreeing to use its reasonable
efforts (as set forth in Section 5.04) to have any such injunction or
restraining order or other order, decree or ruling lifted) and no action,
suit, claim or proceeding by a Governmental Entity before any domestic court,
governmental commission or administrative or regulatory authority shall have
been commenced and be pending which seeks to restrain, prevent or materially
delay or restructure the transactions contemplated by this Agreement or which
otherwise questions the validity or legality of any such transaction, other
than actions, suits, claims and proceedings which, in the reasonable opinion
of counsel to the relevant party, are unlikely to result in an adverse
judgment.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF ISPH
The obligation of ISPH to effect the Merger shall be subject to the
satisfaction or waiver, on or before the Closing Date, of the following
conditions:
SECTION 7.01 Representations and Warranties True. The
representations and warranties of the Company contained herein shall be true
and correct as of the date of this Agreement and, without giving effect to any
materiality qualifications or limitations therein, on and as of the Closing
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly speak as of a specified earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date), except such failures to be true and correct that in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
and ISPH shall have received a certificate signed on behalf of the Company by
the chief executive officer of the Company to such effect.
SECTION 7.02 Performance of Obligations. The Company shall have
performed in all material respects its agreements contained in this Agreement
required to be performed by it on or prior to the Closing Date, and ISPH shall
have received a certificate signed on behalf of the Company by the chief
executive officer of the Company to such effect.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company under this Agreement to effect the
Merger shall be subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions:
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SECTION 8.01 Representations and Warranties True. The
representations and warranties of ISPH contained herein shall be true and
correct as of the date of this Agreement and, without giving effect to any
materiality qualifications or limitations therein, on and as of the Closing
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly speak as of a specified earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date), except such failures to be true and correct that in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
and the Company shall have received a certificate signed on behalf of ISPH by
the chief executive officer of ISPH to such effect.
SECTION 8.02 Performance of Obligations. ISPH shall have
performed in all material respects its agreements contained in this Agreement
required to be performed by it on or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of ISPH by the
chief executive officer of ISPH to such effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption of this Agreement by the stockholders
of the Company:
(a) by mutual written consent of the Company (provided that such
termination has been approved by the Special Committee) and ISPH;
(b) by either the Company (provided that such termination has been
approved by the Special Committee) or ISPH if any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable injunction,
order, decree, judgment or ruling, permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) by either the Company (provided that such termination has been
approved by the Special Committee) or ISPH if the Merger shall not have
been consummated on or before May 31, 2003, unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(d) by either the Company (provided that such termination has been
approved by the Special Committee) or ISPH if there shall have been a
material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of
the Company (in the case of a termination by ISPH) or ISPH (in the case
of a termination by the Company), which breach is not cured within 30
days following written notice to the party committing such breach, or
which breach, by its nature or timing, cannot be cured prior to the date
referred to in Section 9.01(c); provided that such breach, if occurring
or continuing on the Closing Date, would constitute, individually or in
the aggregate with other such breaches occurring prior to such time and
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then continuing, the failure of the conditions set forth in Sections
7.01, 7.02, 8.01 or 8.02, as applicable;
(e) by either the Company (provided that such termination has been
approved by the Special Committee) or ISPH, if the Company Meeting shall
have been held and the holders of Company Common Stock shall have failed
to adopt this Agreement by the vote specified in Section 6.01(a) and
6.01(b) at such meeting (including any adjournment or postponement thereof
in accordance with applicable law); provided that ISPH shall not have the
right to terminate this Agreement under this Section 9.01(e) if Majority
Stockholder has failed to comply with its obligation to vote in favor of
the Merger pursuant to the Voting Agreement delivered by it in connection
with the execution and delivery of this Agreement; or
(f) by ISPH if the Special Committee or the Board of Directors of
the Company (acting upon the recommendation of the Special Committee)
shall have made an Adverse Company Board Recommendation.
SECTION 9.02 Effect of Termination. In the event of termination of
this Agreement by either ISPH or the Company as provided in Section 9.01, this
Agreement shall forthwith become void and have no effect, and none of Majority
Stockholder, ISPH, the Company, any of their respective Subsidiaries or any of
the officers or directors of any of them, as the case may be, shall have any
liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that Sections 9.02, 9.04 and Article
X shall survive any termination of this Agreement, and notwithstanding
anything to the contrary contained in this Agreement, none of Majority
Stockholder, ISPH or the Company shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement; provided that in no event shall any party hereto be liable for
any punitive damages.
SECTION 9.03 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by ISPH and the Company (acting upon approval by
the Special Committee) at any time before or after adoption of this Agreement
by the stockholders of the Company; provided, however, that after any adoption
of this Agreement by the stockholders of the Company, no amendment shall be
made which by law requires further approval by such stockholders without such
further approval (including the Majority-of-Minority Condition). This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 9.04 Extension; Waiver. At any time prior to the Effective
Time, subject to compliance with applicable law, ISPH and the Company (acting
upon approval by the Special Committee) may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto for its benefit, (b) waive any inaccuracies
in the representations and warranties of the other parties for its benefit
contained herein or in any document delivered pursuant hereto, (c) waive any
rights contained herein for the waiving party's benefit and (d) waive
compliance with any of the agreements or conditions contained herein for the
waiving party's benefit. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on
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behalf of such party, but such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
and any certificate delivered pursuant hereto by any person shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be, except that the agreements set forth in
Articles I and II and Section 5.08 shall survive the Effective Time
indefinitely, and those set forth in Section 9.02 and 9.04 and this Article X
shall survive termination indefinitely.
SECTION 10.02 Expenses. Except as otherwise provided in this Section
10.02, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense. The cost of preparing, printing and mailing the Proxy Statement and
the Transaction Statement shall be borne by the Company.
SECTION 10.03 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by facsimile or by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized overnight courier service to
the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 10.03):
if to ISPH:
c/o International Specialty Products Holdings Inc.
0000 Xxxx Xxxx
Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
if to the Company:
c/o International Specialty Products Inc.
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0000 Xxxx Xxxx
Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Special Committee Members:
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxxxxx
SECTION 10.04 Definitions and Usage. (a) For purposes of this
Agreement, the term:
(i) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares, as determined
pursuant to Rule 13d-3 under the Exchange Act, except that, for purposes
of this Agreement and the Voting Agreement, the term shall exclude (x)
shares which are held by, or for the account of, a Charitable Organization
and (y) shares which are deemed beneficially owned pursuant to Rule 13d-3
solely because of the operation of Rule 13d-3(d)(1)(i)(A);
(ii) "business day" means any day other than a Saturday, Sunday or
one on which banks are authorized by law to close in New York, New York;
(iii) "Charitable Organization" means a person that is recognized as
tax exempt pursuant to Section 501(c)(3) of the Code;
(iv) "Code" means the Internal Revenue Code of 1986, as amended. All
citations to provisions of the Code, or to the Treasury Regulations
promulgated thereunder, shall include any amendments thereto and any
substitute or successor provisions thereto;
(v) "including" means including, without limitation;
(vi) "Material Adverse Effect" means,
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(A) with respect to the Company, any changes or effects that
individually or in the aggregate (1) are or could reasonably be
expected to be material and adverse to the condition (financial or
otherwise), business, assets, liabilities or results of operations
of the Company and its Subsidiaries, taken as a whole, or (2) could
reasonably be expected to prevent or materially impair the ability
of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby; and
(B) with respect to ISPH, any effect that would prevent or
materially impair or delay the ability of ISPH to perform its
obligations under this Agreement or to consummate the transactions
contemplated hereby;
provided, however, that Material Adverse Effect shall not be deemed
to include the impact of changes in general economic conditions, or
the occurrence of other events or developments affecting the
specialty chemical manufacturing business generally except to the
extent that such changes, events or developments have an adverse
effect on the Company and its Subsidiaries taken as a whole that is
materially greater than the adverse effect on comparable entities;
(vii) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government;
(viii) "Subsidiary" and "Significant Subsidiary" shall have the
meanings ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
Notwithstanding the foregoing, for purposes of this Agreement, the Company
shall not be deemed a Subsidiary or a Significant Subsidiary of Majority
Stockholder.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) A fact, event, circumstance or occurrence shall be within a
person's "Knowledge" if, with respect to the Company or any of its
Subsidiaries, such fact, event, circumstance or occurrence is or was actually
known by any of the Company's or the relevant Subsidiary's executive officers
or directors, or, with respect to ISPH, such fact, event or circumstance or
occurrence is or was actually known by any of ISPH's executive officers or
directors.
(c) The symbol "$" and the word "dollar" or "dollars" shall refer to
the lawful currency of the United States of America.
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SECTION 10.05 Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP.
SECTION 10.06 Disclosure Schedules. Prior to the execution and
delivery of this Agreement, the Company has delivered to ISPH schedules (the
"Company Disclosure Schedules") setting forth, among other things, in each
case with respect to specified sections of this Agreement, items the
disclosure of which is necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more of the Company's representations or warranties
contained in Article III or to one or more of the Company's covenants
contained in Sections 5.01; provided, however, that notwithstanding anything
in this Agreement to the contrary, the mere inclusion of an item in the
Company Disclosure Schedules as an exception to a representation or warranty
shall not be deemed an admission by a party that such item represents a
material exception or material fact, event or circumstance or that such item
has had or would reasonably be expected to have a Material Adverse Effect with
respect to the Company. Matters disclosed in any particular section of the
Company Disclosure Schedules shall be deemed to have been disclosed in any
other section with respect to which such matter is relevant so long as the
relevance of such disclosure is readily apparent.
SECTION 10.07 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the major
economic or legal substance of the Merger is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Merger be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.08 Entire Agreement; Assignment. This Agreement
(including the Company Disclosure Schedules, which are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties, which
shall not be unreasonably withheld, except that ISPH may assign all or any of
its rights and obligations hereunder to any wholly-owned Subsidiary of ISPH or
entity wholly-owned by Majority Stockholder.
SECTION 10.09 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than the provisions of Article II and Section
5.08 (which are intended to be for the benefit of the persons covered thereby
and may be enforced by such persons).
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SECTION 10.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 10.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely in such State. Each of the parties
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, any and all rights to trial by jury in connection with any
litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.
SECTION 10.12 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 10.13 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.14 Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be
construed without regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this Agreement and such
other documents and instruments shall be construed as though all of the
parties participated equally in the drafting of the same. Consequently, the
parties acknowledge and agree that any rule of construction that a document is
to be construed against the drafting party shall not be applicable either to
this Agreement or such other documents and instruments.
SECTION 10.15 No Pecuniary Interest. The parties hereto acknowledge
that the Majority Stockholder has disclaimed any pecuniary interest in the
Company Common Stock in excess of his interests in certain limited partnership
and limited liability company entities that own shares of Company Common
Stock.
* * * * *
(remainder of page intentionally left blank)
IN WITNESS WHEREOF, the Company and ISPH have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
INTERNATIONAL SPECIALTY
PRODUCTS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and General Counsel
INTERNATIONAL SPECIALTY
PRODUCTS HOLDINGS INC.
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: President and Chief Executive
Officer
