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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 17, 1998
among
THE RIVAL COMPANY,
XXXXXX PRODUCTS CORP.
and
XXXXXXXX ACQUISITION CORP.
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TABLE OF CONTENTS
ARTICLE I. THE OFFER....................................................... 1
SECTION 1.1. THE OFFER................................................. 1
SECTION 1.2. COMPANY ACTION............................................ 3
SECTION 1.3. DIRECTORS................................................. 5
ARTICLE II. THE MERGER..................................................... 6
SECTION 2.1. THE MERGER................................................ 6
SECTION 2.2. CLOSING................................................... 6
SECTION 2.3. EFFECTIVE TIME............................................ 6
SECTION 2.4. EFFECTS OF THE MERGER..................................... 6
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS..................... 7
SECTION 2.6. DIRECTORS................................................. 7
SECTION 2.7. OFFICERS.................................................. 7
SECTION 2.8. FURTHER ASSURANCES........................................ 7
ARTICLE III................................................................. 8
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT CORPORATIONS.... 8
SECTION 3.1. EFFECT ON CAPITAL STOCK................................... 8
SECTION 3.2. STOCK OPTIONS............................................. 9
SECTION 3.3. EXCHANGE OF CERTIFICATES.................................. 9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................. 11
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 11
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.......... 26
ARTICLE V................................................................... 28
COVENANTS RELATING TO CONDUCT OF BUSINESS................................. 28
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY........................ 28
SECTION 5.2. OTHER ACTIONS............................................. 30
ARTICLE VI. ADDITIONAL AGREEMENTS.......................................... 30
SECTION 6.1. MEETING OF STOCKHOLDERS................................... 30
SECTION 6.2. PROXYSTATEMENT............................................ 31
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY.................... 32
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS........................... 32
SECTION 6.5. FINANCING................................................. 33
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE....... 33
SECTION 6.7. PUBLIC ANNOUNCEMENTS...................................... 34
SECTION 6.8. ACQUISITION PROPOSALS..................................... 34
SECTION 6.9. STOCKHOLDER LITIGATION.................................... 35
SECTION 6.10. COMPANY ACTION RELATING TO BENEFIT PLANS................. 35
SECTION 6.11. CONSENTS AND APPROVALS................................... 36
SECTION 6.12. REPAYMENT OF INDEBTEDNESS................................ 36
SECTION 6.12. GUARANTY OF SUB'S OBLIGATIONS............................ 36
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ARTICLE VII. CONDITIONS PRECEDENT.......................................... 36
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER 36
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB............... 37
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY.................. 38
SECTION 7.4. EXCEPTION.................................................. 38
SECTION 7.5 FRUSTRATION OF CONDITIONS.................................. 38
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER............................ 39
SECTION 8.1. TERMINATION............................................... 39
SECTION 8.2. EFFECT OF TERMINATION..................................... 40
SECTION 8.3. AMENDMENT................................................. 41
SECTION 8.4. EXTENSION; WAIVER......................................... 42
ARTICLE IX. GENERAL PROVISIONS............................................. 42
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............. 42
SECTION 9.2. FEES AND EXPENSES......................................... 42
SECTION 9.3. DEFINITIONS............................................... 42
SECTION 9.4. NOTICES................................................... 42
SECTION 9.5. INTERPRETATION............................................ 43
SECTION 9.6. COUNTERPARTS.............................................. 43
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES............... 43
SECTION 9.8. GOVERNING LAW............................................. 44
SECTION 9.9. ASSIGNMENT................................................ 44
SECTION 9.10. ENFORCEMENT............................................... 44
SECTION 9.11. SEVERABILITY.............................................. 44
ANNEX I...................................................................... 1
DISCLOSURE SCHEDULES......................................................... 4
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 17, 1998
among
THE RIVAL COMPANY,
A DELAWARE CORPORATION (THE "COMPANY"),
XXXXXX PRODUCTS CORP.,
A MASSACHUSETTS CORPORATION ("PARENT"),
and
XXXXXXXX ACQUISITION CORP.,
A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF
PARENT ("SUB")
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that this
Agreement and the transactions contemplated hereby including the Offer and the
Merger (each as defined herein) are fair to and in the best interest of the
Company and its stockholders;
WHEREAS, the Board of Directors of each of Parent and Sub has determined
that the transactions contemplated by this Agreement (including the Offer and
the Merger) are in the best interests of Parent and Sub and their respective
stockholders; and
WHEREAS, the Boards of Directors of the Company, Parent and Sub, have each
approved and adopted this Agreement and approved the Offer and the Merger and
the other transactions contemplated hereby and agreed to recommend, in the case
of the Company, acceptance of the Offer by its stockholders.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) PURCHASE PRICE AND CONDITIONS. Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto which is not waived by Parent, Parent shall or shall
cause Sub to, as promptly as practicable following the date hereof, but in no
event later than five business days after the initial public announcement of the
Offer, commence (within the meaning of Rule 14d-2 under the Securities
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Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (as
amended from time to time in accordance with this Agreement, the "Offer") to
purchase all of the issued and outstanding shares of common stock, par value
$0.01 per share, of the Company (the "Shares" or "Common Stock"), at a price of
not less than $13.75 per Share, net to the seller in cash, subject to reduction
only for any applicable back-up withholding or stock transfer taxes payable by
the seller. For purposes of this Article 1, the party which makes the Offer,
whether Parent or Sub, shall be referred to as the "Offeror." The obligation of
Offeror to accept for payment and to pay for any Shares tendered in the Offer
shall be subject only to (i) the condition that there shall be validly tendered
in accordance with the terms of the Offer prior to the expiration date of the
Offer and not withdrawn a number of Shares which, together with any Shares then
owned by Parent or Sub, represents at least 70% of the Shares then outstanding
(the "Minimum Condition"), (ii) the receipt of cash proceeds of the Financing
(as defined in Section 4.2(d) hereof) in an amount sufficient to consummate the
transactions contemplated hereby pursuant to the terms of the Commitments (as
defined in said Section 4.2(d)) or such other terms as Parent and the Company
shall agree or as are not materially more onerous to Parent than as set forth in
the Commitments (the "Financing Condition") and (iii) the other conditions set
forth in Annex I hereto (together with the Minimum Condition and the Financing
Condition, the "Tender Offer Conditions").
(b) MODIFICATION OF CONDITIONS. Offeror expressly reserves the right in
its sole discretion, subject to the limitations set forth in this Section
1.1(b), to waive any condition to the Offer (including the Minimum Condition,
provided that no waiver of the Minimum Condition shall decrease the Minimum
Condition to less than a majority of the Shares outstanding on a fully-diluted
basis), to increase the price per Share payable in the Offer, to extend the
Offer and to make any other changes in the terms and conditions of the Offer;
provided, however, that unless previously approved by the Company in writing,
Offeror will not (i) decrease the price per Share payable in the Offer, (ii)
decrease the maximum number of Shares to be purchased in the Offer, (iii) impose
terms and conditions to the Offer in addition to those set forth in Annex I
hereto, (iv) change the terms and conditions to the Offer in any respect adverse
to the Company, (v) except as provided in the next sentence, extend the Offer,
(vi) change the form of consideration payable in the Offer or (vii) amend any
other term or condition of the Offer in a manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Offeror may, without the consent of the
Company, (i) extend the Offer (the initial scheduled expiration date being 20
business days following commencement of the Offer), at any time up to March 15,
1999, for one or more periods of not more than ten business days each, if any of
the Tender Offer Conditions shall not be satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, or (iii) if all of the Tender Offer Conditions
are satisfied or waived and the number of Shares tendered is at least equal to
70%, but less than 90%, of the then-outstanding number of Shares, further extend
the Offer for an aggregate period of not more than ten business days beyond the
then-scheduled expiration date. So long as this Agreement is in effect, the
Offer has been commenced and the Tender Offer Conditions have not been satisfied
or waived, the Offeror shall cause the Offer not to expire.
(c) ACCEPTANCE OF SHARES. Subject to the terms and conditions of the Offer
and this Agreement, Offeror shall accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer that Offeror becomes
obligated to accept for payment, and pay for,
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pursuant to the Offer as soon as practicable after expiration of the Offer,
subject to compliance with Rule 14e-1 (c) under the Exchange Act. Subject to the
terms and conditions of the Offer, Parent and Sub will each use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Offer.
(d) OFFER DOCUMENTS. As soon as practicable on the date of the
commencement of the Offer, Offeror shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer which will contain the
offer to purchase and form of the related letter of transmittal and summary
advertisement (together with any supplements or amendments thereto and including
exhibits thereto, the "Offer Documents"). The Offer Documents will comply in all
material respects with applicable federal securities laws and any other
applicable laws. Parent, Sub and the Company each agree to promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect. Offeror
will take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws and any other
applicable laws. The Company and its counsel shall be given an opportunity to
review and comment on the Offer Documents and any amendments thereto prior to
the filing thereof with the SEC; provided that Offeror will attempt to give the
Company and its counsel as much time prior to filing to so review and comment as
Offeror believes is reasonably practicable under the circumstances. Offeror will
provide the Company and its counsel with any comments Offeror and its counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt thereof.
(e) TERMINATION OF OFFER. In the event that the Offer is terminated or
withdrawn by Offeror, Parent and Sub shall cause all tendered Shares to be
returned to the registered holders of the Shares represented by the certificate
or certificates surrendered to the Exchange Agent (as defined in Section 3.3
hereof).
SECTION 1.2. COMPANY ACTION.
(a) APPROVAL BY BOARD OF DIRECTORS. The Company hereby consents to the
Offer and represents that as of the date hereof its Board of Directors (the
"Board of Directors"), at a meeting duly called and held, has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (as defined in Section 2.1 hereof), are fair
to and in the best interest of the Company and its stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approvals are sufficient to render
entirely inapplicable to the Offer and the Merger or Parent or Sub the
provisions of Section 203 of the Delaware General Corporation Law (the "Delaware
GCL"), assuming neither Parent nor Sub is an "interested stockholder" as defined
therein, (iii) taken such action as is necessary to approve this Agreement, the
purchase of Shares pursuant to the Offer, the Merger and the other transactions
contemplated hereby under the provisions of the Company's Restated Certificate
of Incorporation and By-laws, each as amended to date (as so amended, the
"Restated Certificate of Incorporation" and "By-laws", respectively), and (iv)
subject
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to the terms hereof, resolved to recommend acceptance of the Offer and approval
and adoption of this Agreement and the Merger by its stockholders.
(b) OPINION OF FINANCIAL ADVISOR. NationsBanc Xxxxxxxxxx Securities LLC
(the "Financial Advisor") has delivered to the Board of Directors its written
opinion, as of the date hereof, subject to the qualifications and limitations
stated therein, to the effect that the consideration to be received by the
holders of the Shares (other than Shares owned by Parent and its Affiliates)
pursuant to each of the Offer and the Merger, taken together, is fair to the
holders of Shares from a financial point of view. The Company has been
authorized by the Financial Advisor to permit, subject to prior review and
consent by the Financial Advisor, the inclusion of the fairness opinion (or a
reference thereto) in the Offer Documents and the Schedule 14D-9 (as defined in
paragraph (e) of this Section 1.2) on the terms of the engagement letter between
the Company and the Financial Advisor dated September 24, 1998.
(c) TENDERS BY DIRECTORS AND OFFICERS. Concurrently with the execution
hereof, each of the Company's directors and certain executive officers, as
requested by Parent, have executed and delivered a Tender and Voting Agreement
with Parent and Sub, pursuant to which each of such persons has agreed, subject
to the terms thereof, to the extent of their beneficial ownership of Shares, to
tender their Shares pursuant to the Offer and to vote such Shares in favor of
the Merger.
(d) STOCKHOLDER LIST. The Company will promptly furnish Parent with a list
of its stockholders, mailing labels containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case as of the most recent practicable date, and
will provide to Parent such additional information (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably request
from time to time in connection with the Offer and the Merger (including but not
limited to communicating the Offer and the Merger to the record and beneficial
holders of Shares). Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent, Offeror and
their agents and advisors shall use the information contained in any such labels
and listings only in connection with the Offer and the Merger and, if this
Agreement shall be terminated pursuant to Article VIII hereof, shall deliver to
the Company all copies and extracts of such information then in their possession
or under their control.
(e) SCHEDULE 14D-9. On or prior to the date that the Offer is commenced,
the Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any supplements or amendments thereto and
including exhibits thereto, the "Schedule 14D-9"), which shall contain the
recommendations of the Board of Directors referred to in Section 1.2(a) hereof,
subject to the fiduciary duties of the Board of Directors under applicable law
and to the terms of this Agreement. The Schedule 14D-9 will comply in all
material respects with all applicable federal
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securities laws and any other applicable laws. The Company, Parent and Sub each
agree to promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company will take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws and any other applicable laws. Parent, Sub and their
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC;
provided that the Company will attempt to give Parent, Sub and their counsel as
much time prior to filing to so review and comment as the Company believes is
reasonably practicable under the circumstances. The Company will provide Parent
and Sub and their counsel with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
SECTION 1.3. DIRECTORS.
(a) APPOINTMENT OF PARENT DESIGNEES. Effective upon the purchase of and
payment for Shares by Offeror pursuant to the Offer such that Offeror shall own
at least a majority of the Shares and from time to time thereafter, Parent shall
be entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board of Directors that equals the product of (i) the total
number of directors on the Board of Directors (giving effect to any increase in
the number of directors pursuant to this Section 1.3) multiplied by (ii) the
percentage that the number of Shares owned by Parent and Sub bears to the total
number of Shares outstanding on an undiluted basis, and the Company shall take
all action necessary to cause Parent's designees to be elected or appointed to
the Board of Directors, including, without limitation, increasing the number of
directors and/or securing the resignations of such number of incumbent directors
as is necessary to enable Parent's designees to be elected to the Board of
Directors and to cause Parent's designees to be so elected. At such times, the
Company will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Board of
Directors of (x) each committee of the Board of Directors, (y) each board of
directors of each Subsidiary (as defined below) of the Company and (z) each
committee of each such board. Notwithstanding the foregoing, until the Effective
Time (as defined in Section 2.3 hereof), the Company shall use its best efforts
to ensure that not less than two persons who are directors on the date hereof
shall remain as members of the Board of Directors (the "Continuing Directors")
until the Effective Time, and Parent and Sub shall take no action (other than
removal for cause) to prevent such Continuing Directors from so serving. In the
event there is only one Continuing Director, such Continuing Director shall have
the right to designate a person, who is reasonably acceptable to Offeror, to
become a Continuing Director. For purposes of this Agreement, "Subsidiary" means
any corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company or Parent, as applicable.
(b) COMPLIANCE WITH INFORMATION REQUIREMENTS. The Company's obligations to
appoint designees to the Board of Directors shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Company, with
Parent's cooperation, shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3, including mailing to the stockholders as part of the Schedule 14D-9
the information required by such Section 14(f), as is necessary to enable
Parent's designees to be elected to the Board of Directors. Parent will supply
to the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. For purposes of this Agreement, "affiliate"
shall
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mean, as to any person, any other person that would be deemed to be an
"affiliate" of such person as that term is defined in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(c) CONTINUING DIRECTOR APPROVAL. Following the election or appointment of
Parent's designees pursuant to this Section 1.3 and prior to the Effective Time
(as defined in Section 2.3), so long as there shall be at least one Continuing
Director, any amendment of this Agreement, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or Sub, any consent of the Company
contemplated hereby, any extension of the Effective Time as contemplated by the
last sentence of Section 2.3, any waiver of any of the Company's rights
hereunder, any amendment to the Company's Restated Certificate of Incorporation
or By-laws or any action taken by the Company that materially adversely affects
the interests of the stockholders of the Company (other than the Offeror) with
respect to the transactions contemplated hereby, will require the concurrence of
at least one of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware GCL, at the
Effective Time, Sub shall be merged with and into the Company (the "Merger").
Upon the Effective Time, the separate existence of Sub shall cease, and the
Company shall continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation").
SECTION 2.2. CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8. 1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., Boston time, not later than the third business day following the
date on which the last to be fulfilled or waived of the conditions set forth in
Article VII shall be fulfilled or waived in accordance with this Agreement (the
"Closing Date"), at the offices of Posternak, Xxxxxxxxxx & Xxxx, L.L.P., 000
Xxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless another date, time or place
is agreed to by the parties hereto.
SECTION 2.3. EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the Closing Date (or on such other date as Parent and the Company may agree)
a Certificate of Merger or other appropriate documents, executed in accordance
with the relevant provisions of the Delaware GCL, and make all other filings or
recordings required under the Delaware GCL in connection with the Merger. The
Merger shall become effective upon the filing of the Certificate of Merger with
the Delaware Secretary of State, or at such later time as is agreed upon by the
parties hereto and specified in the Certificate of Merger (the "Effective
Time").
SECTION 2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the appropriate provisions of the Delaware GCL. Without limiting the
generality of the foregoing,
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and subject thereto, at the Effective Time, all the assets, properties, rights,
privileges, powers and franchises of the Company and Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) The Company's Restated Certificate of Incorporation, as in effect at
the Effective Time, shall be, from and after the Effective Time, the Certificate
of Incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The Company's By-laws, as in effect at the Effective Time, shall be,
from and after the Effective Time, the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION 2.6. DIRECTORS. The directors of Sub at the Effective Time shall
become, from and after the Effective Time, 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.
SECTION 2.7. OFFICERS. The officers of Sub at the Effective Time,
including such officers of the Company as shall have become duly elected and
qualified officers of Sub, shall become, from and after the Effective Time, the
officers 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.
SECTION 2.8. FURTHER ASSURANCES. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Sub acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either the Company or Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
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ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS
SECTION 3.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder:
(a) COMMON STOCK OF SUB. Each share of the capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and non-assessable share of common stock,
par value $0.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
issued or outstanding immediately prior to the Effective Time that is owned by
the Company or by Parent or Sub shall be canceled automatically and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) CONVERSION OF COMPANY SHARES. At the Effective Time, each Share other
than (i) Shares to be canceled pursuant to Section 3.1(b) and (ii) Dissenting
Shares (as hereinafter defined) shall be converted into and become the right to
receive, upon surrender of the certificate representing such Shares in
accordance with Section 3.3, the cash price per Share paid by Sub pursuant to
the Offer (the "Merger Consideration").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Shares issued and outstanding immediately prior to the Effective Time
and held by a holder (a "Dissenting Stockholder"), if any, who has the right to
demand, and who properly demands, an appraisal of such Shares in accordance with
the Delaware GCL (including but not limited to Section 262 thereof, or any
successor provision) ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration unless such Dissenting Stockholder fails to
perfect or otherwise loses or withdraws such Dissenting Stockholder's right to
such appraisal, if any. Provided the holder of any Dissenting Shares complies
with the provisions of Delaware law, such holder shall have with respect to such
Shares solely the rights provided under the Delaware GCL. If, after the
Effective Time, such Dissenting Stockholder fails to perfect or otherwise loses
or withdraws any such right to appraisal, each such Share of such Dissenting
Stockholder shall be treated as a Share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to Parent of any
demands received by the Company for appraisal of any Dissenting Shares, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, which consent shall not be unreasonably
withheld, make any payment with respect to, or settle or offer to settle, any
such demands.
(e) CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective Time
all certificates representing Shares, other than certificates representing
Shares to be canceled in accordance with Section 3.1(b) or Dissenting Shares,
issued and outstanding
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immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 3.3.
SECTION 3.2. STOCK OPTIONS. As of the Effective Time, each outstanding,
unexercised stock option to purchase Shares (a "Company Stock Option") issued
under the Company's 1986 Stock Option Plan (the "1986 Plan") and the 1994 Stock
Option Plan (the "1994 Plan") (collectively, the "Company Stock Option Plans")
shall terminate and be canceled and each holder of a Company Stock Option shall
be entitled to receive, in consideration therefor, a cash payment from the
Company (which payment shall be tendered to such holder on the Closing Date, or
such earlier date after the consummation of the Offer and not later than five
business days after the option holder shall have tendered the option to the
Company and consented to its cancellation in exchange for payment) equal to the
product of (a) the excess, if any, of (x) the Merger Consideration over (y) the
per Share exercise price of such Company Stock Option, times (b) the number of
Shares then subject to such Company Stock Option. Such cash payment shall be net
of any required withholding taxes. Not later than the second business day
following the execution and delivery of this Agreement, the Company shall cause
the committee administering each Company Stock Option Plan (the "Option
Committee") to provide to each holder of a Company Stock Option written notice
regarding the termination of such Company Stock Option as contemplated by
Section 3.13(a)(i) of the 1986 Plan and Section 3.12(a)(i) of the 1994 Plan,
respectively. As of the Effective Time, each outstanding Company Stock Option
and each of the Company Stock Option Plans shall terminate and be of no further
force or effect, and the Company shall take such action as shall be necessary to
ensure, to Parent's reasonable satisfaction, that no holder of a Company Stock
Option or participant in any other employee benefit plan or program of the
Company will have any right to acquire any interest in the Surviving Corporation
under the Company Stock Option Plans or any other such plan or program.
SECTION 3.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as the
Surviving Corporation) shall deposit, or shall cause to be deposited, with or
for the account of a bank, trust company or other agent designated by Sub, which
shall be reasonably satisfactory to the Company (the "Exchange Agent"), for the
benefit of the holders of Shares, cash in an aggregate amount equal to the
product of (x) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 3.1(b) and
Dissenting Shares), times (y) the Merger Consideration (such amount being
hereinafter referred to as the 'Payment Fund"). The Exchange Agent shall invest
the Payment Fund, as directed by the Surviving Corporation, in any of the
following: (i) obligations issued or guaranteed by the United States of America;
(ii) certificates of deposit, time deposits, commercial paper or any other
obligations of any bank or trust company organized or licensed to conduct a
banking business under the laws of the United States or any state thereof and
having total assets of not less than $10.0 billion; (iii) commercial paper with
maturities of not more than ninety days having the highest rating then given by
Xxxxx'x Investors Services, Inc. or Standard & Poor's Corporation; (iv)
repurchase obligations for underlying securities of the types described in
clause (i) above; (v) any trust, fund, Money
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Market account or other collective investment vehicle investing principally in
the investments specified in clauses (i) through (iv) above; or (vi) any other
investment reasonably satisfactory to the Company. Earnings on the Payment Fund
shall be for the account of Parent.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
each holder of an outstanding certificate or certificates which prior thereto
represented outstanding Shares shall, upon surrender to the Exchange Agent of
such certificate or certificates and acceptance thereof by the Exchange Agent,
be entitled to the amount of cash which the aggregate number of Shares
previously represented by such certificate or certificates surrendered shall
have been converted into the right to receive pursuant to Section 3.1(c). The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. If the
consideration to be paid in the Merger (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate
representing Shares surrendered in exchange therefor is registered, it shall be
a condition to such exchange that the certificate so surrendered shall be
properly endorsed with the signature guaranteed or otherwise be in proper form
for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other tax required by reason of the payment of
such consideration to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. After the Effective
Time, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing Shares, and if such certificates are
presented to the Company for transfer, they shall be canceled against delivery
of the Merger Consideration as hereinabove provided. Until surrendered as
contemplated by this Section 3.3(b), each certificate representing Shares shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without any interest
thereon, as contemplated by Section 3.1. No interest will be paid or will accrue
on any cash payable as Merger Consideration to any holder of Shares.
(c) LETTER OF TRANSMITTAL. Promptly after the Effective Time, but in any
event within five business days thereafter, the Surviving Corporation shall
cause to be mailed to each record holder of certificates that immediately prior
to the Effective Time represented Shares which have been converted pursuant to
Section 3.1, a form of letter of transmittal and instructions for use in
surrendering such certificates and receiving the consideration to which such
holder shall be entitled therefor pursuant to Section 3.1.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger Consideration
paid upon the surrender for exchange of certificates representing Shares in
accordance with the terms of this Article III shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates, and no holder of Shares shall
thereby have any equity interest in the Surviving Corporation.
(e) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares
more than six months after the Effective Time (including, without limitation,
all interest and other income received by the Exchange Agent in respect to all
funds made available to it) shall be delivered to the Surviving
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Corporation, upon demand, and any such holders of Shares who have not
theretofore complied with this Article III shall thereafter look only to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) and only as general creditors thereof for payment of their claim for the
Merger Consideration.
(f) NO LIABILITY. None of Parent, Sub, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates representing Company Shares shall not have been surrendered
immediately prior to such date on which the Merger Consideration in respect of
such certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.1(d)), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(g) WITHHOLDING RIGHTS. The Surviving Corporation, Parent or Sub shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares, and shall promptly pay over
to the appropriate Governmental Entity, such amounts as the Surviving
Corporation, Parent or Sub is required to deduct and withhold with respect to
the making of such payment under the Code (as defined herein), or any provision
of state, local or foreign tax law, including, without limitation, withholdings
required in connection with payments with respect to Company Stock Options. To
the extent that amounts are so withheld by the Surviving Corporation, Parent or
Sub, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to carry on its business as now being conducted and to own,
operate and lease its properties as now owned, operated and leased. The Company
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not (i) have a material adverse effect
upon the business, assets, properties, condition (financial or otherwise), or
results of operations of the Company and its Subsidiaries taken as a whole, or
(ii) prevent the Company from consummating the transactions contemplated hereby
(a "Material Adverse Effect"). The Company has delivered to Parent complete
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and correct copies of its Restated Certificate of Incorporation and By-laws, as
amended to the date of this Agreement.
(b) SUBSIDIARIES. Section 4.1(b) of the disclosure schedule delivered by
the Company to Parent contemporaneously herewith (the "Disclosure Schedule")
sets forth the name, jurisdiction of incorporation, capitalization and number of
shares of outstanding capital stock of each of the Company's Subsidiaries. All
the issued and outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable and are owned, directly or
indirectly, by the Company, beneficially and of record, free and clear of all
liens, pledges, encumbrances or restrictions of any kind. No Subsidiary has
outstanding any securities convertible into or exchangeable or exercisable for
any shares of its capital stock, there are no outstanding options, warrants or
other rights to purchase or acquire any capital stock of any Subsidiary, there
are no irrevocable proxies with respect to such shares, and there are no
contracts, commitments, understandings, arrangements or restrictions by which
any Subsidiary or the Company is bound to issue additional shares of the capital
stock of a Subsidiary. Except for the Company's Subsidiaries, and as otherwise
disclosed in Section 4.1(b) of the Disclosure Schedule, the Company does not
own, directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity interest in any business. Each
of the Company's Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) has all requisite corporate power and authority to carry on
its business as it is now being conducted and to own, operate and lease its
properties as now owned, operated or leased; and (c) is qualified or licensed to
do business as a foreign corporation and is in good standing in each of the
jurisdictions in which (i) the ownership or leasing of real property or the
conduct of its business requires such qualification or licensing and (ii) the
failure to be so qualified or licensed, either singly or in the aggregate, would
have a Material Adverse Effect. The Company has delivered to Parent complete and
correct copies of the Certificate of Incorporation or other charter documents
and By-laws of each of its Subsidiaries, each as amended to date.
(c) CAPITALIZATION. As of the date hereof, the authorized capital stock of
the Company consists solely of 15,000,000 shares of Common Stock. As of the date
hereof, 9,294,227 Shares are issued and outstanding, 880,311 shares of Common
Stock are reserved for issuance pursuant to outstanding Company Stock Options,
and 513,497 shares of Common Stock are held by the Company in its treasury.
Except as set forth above, no shares of capital stock or other equity securities
of the Company are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be issued
pursuant to the Company Stock Option Plans will be, when issued, duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights. Section 4.1(c) of the Disclosure Schedule accurately sets
forth the number of Shares issuable upon exercise of each outstanding Company
Stock Option, the vesting schedule thereof, and the applicable exercise price
with respect to each such Company Stock Option. Except as set forth in Section
4.1(c) of the Disclosure Schedule, the Company has no outstanding option,
warrant, subscription or other right, agreement or commitment which either (i)
obligates the Company to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or (ii)
restricts the transfer of Common Stock. Except as set forth in Section 4.1(c) of
the Disclosure Schedule, the Company has no outstanding stock appreciation
rights, phantom stock or stock equivalents.
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(d) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of its stockholders, if required, as set forth in
Section 7.1(a) with respect to the consummation of the Merger, to consummate the
Merger and the other transactions contemplated by this Agreement. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of its stockholders as set forth in Section 7.1(a). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions hereof will not, (i) violate any of the
provisions of the Restated Certificate of Incorporation or By-laws of the
Company, (ii) except as otherwise set forth in Section 4.1(d) of the Disclosure
Schedule and subject to the governmental filings and other matters referred to
in the following sentence, contravene any law, rule or regulation of any state
or of the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, or (iii) violate, conflict with or constitute a breach under any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument to which the Company or any of its Subsidiaries is a party or by
which any of its assets is bound or subject, which, in the case of clauses (ii)
and (iii) above, singly or in the aggregate, would have a Material Adverse
Effect or prevent consummation of the transactions contemplated hereby. No
consent, approval or authorization of, or declaration or filing with, or notice
to, any governmental agency, board, commission, department or regulatory
authority, domestic or foreign (a "Governmental Entity"), which has not been
received or made, is required by or with respect to the Company or any
Subsidiary in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) compliance with any applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder, (ii) state
securities or blue sky laws and state takeover, antitrust and compensation law
filings and approvals, (iii) compliance with any applicable requirements of The
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iv) the filing of the Certificate of Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, and (v) such other consents,
approvals, authorizations, filings or notices as are set forth in Section 4.1(d)
of the Disclosure Schedule or as to which the failure to so receive or make
would not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party or subject to, or bound by, any contract, agreement,
indenture, mortgage, deed of trust, lease or other instrument which prevents or
restricts its power and authority or its ability to grant liens upon or
otherwise pledge its assets, to guarantee obligations of third parties or pay
dividends on its capital stock, except as set forth in Section 4.1(d) of the
Disclosure Schedule.
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(e) FINANCIAL STATEMENTS; SEC REPORTS. The Company has previously
furnished Parent and Sub with true and complete copies of (i) its Annual Reports
on Form 10-K for the fiscal years ended June 30, 1996 (the "1996 Annual
Report"), June 30, 1997 (the "1997 Annual Report") and June 30, 1998 (the "1998
Annual Report" and, together with the 1996 Annual Report, the 1997 Annual
Report, and the Form 10-Q as defined below, the "Reports") filed by the Company
with the SEC, (ii) its Quarterly Report on Form 10-Q for the three months ended
September 30, 1998 (the "Form 10-Q") filed by the Company with SEC, (iii) the
unaudited consolidated balance sheets and the unaudited consolidated statements
of operations of the Company and its Subsidiaries as at October 31, 1998,
November 30, 1998 and for the months then ended (the "Monthly Financial
Statements"), (iv) proxy statements relating to all of the Company's meetings of
stockholders (whether annual or special) held or scheduled to be held since June
30, 1996 and (v) each other registration statement, proxy or information
statement or current report on Form 8-K filed since June 30, 1996 by the Company
with the SEC. Since the effective date of its initial public offering in 1992,
the Company has complied in all material respects with its SEC filing
obligations under the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"). The financial statements and related schedules and notes
thereto of the Company contained in the Reports (or incorporated therein by
reference) and the Monthly Financial Statements were prepared in accordance with
generally accepted accounting principles (except, in the case of interim
unaudited financial statements, as permitted by the rules and regulations
applicable to Form 10-Q) applied on a consistent basis except as noted therein,
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, subject (in the case of interim unaudited financial statements) to normal
year-end audit adjustments, and such financial statements complied as to form as
of their respective dates in all material respects with applicable rules and
regulations of the SEC. Each such registration statement, proxy statement and
Report was prepared in accordance with the requirements of the Securities Act or
the Exchange Act and did not, on the date of effectiveness in the case of such
registration statements, on the date of mailing in the case of such proxy
statements and on the date of filing in the case of such Reports, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be disclosed in
the Reports or as otherwise disclosed in Section 4.1(f) of the Disclosure
Schedule, since June 30, 1998 there has not been (i) any declaration, setting
aside or payment of any dividend or other distribution in respect of the capital
stock of the Company or any redemption or other acquisition by the Company of
any of its capital stock, other than cash dividends of $.07 per Share paid or to
be paid to stockholders on or about September 15, 1998 and December 15, 1998;
(ii) any issuance by the Company, or agreement or commitment of the Company to
issue, any shares of its Common Stock or securities convertible into or
exchangeable for shares of its Common Stock, except for stock options and stock
purchase rights set forth in Section 4.1(c) of the Disclosure Schedule; (iii)
any change by the Company in accounting methods, principles or practices, except
as required by generally accepted accounting principles; (iv) any increase in
wage or bonus, severance, profit sharing, retirement, deferred compensation,
change of control, insurance or other compensation or benefits or any new
compensation or benefit plans or arrangements or any amendments to any
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Benefit Plans (as hereinafter defined) existing on June 30, 1998, other than as
required under written agreements or commitments in effect as of June 30, 1998
and other than customary increases or bonus payments made in the ordinary course
of business consistent with prior practice (not including, however, any new or
additional Benefit Plans unless disclosed in Section 4.1(f) of the Disclosure
Schedule); (v) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or its Subsidiaries which
would have a Material Adverse Effect; (vi) any other event or change which would
have a Material Adverse Effect; or (vii) any agreement or commitment to which
the Company is a party, whether in writing or otherwise, to take any action
described in this subsection 4.1(f). Since June 30, 1998, the Company and its
Subsidiaries have conducted their respective businesses in all material respects
only in the ordinary course, consistent with past custom and practice, except as
contemplated by this Agreement or as described in Schedule 5.1 of the Disclosure
Schedule.
(g) NO UNDISCLOSED LIABILITIES. Except as set forth in the Reports, or as
contemplated by the Restructuring (as defined in Section 5.1), neither the
Company nor any of its Subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise), except liabilities (i) in the aggregate adequately
provided for in the Company's audited balance sheet (including any related notes
thereto) for the fiscal year ended June 30, 1998 included in the 1998 Annual
Report (the "1998 Balance Sheet"), (ii) incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected on the 1998 Balance Sheet, (iii) incurred since June 30, 1998 in the
ordinary course of business consistent with past practice, (iv) incurred in
connection with this Agreement or (v) which would not have a Material Adverse
Effect.
(h) COMPLIANCE WITH LAWS. The business of the Company and each of the
Subsidiaries has been operated at all times in compliance with applicable
statutes, laws, rules, regulations, permits, licenses, orders, injunctions and
judgments (collectively, "Laws"), including, without limitation, applicable Laws
governing or regulating environmental matters, manufacturing, marketing and
distribution of products, product safety (including the regulations of the
Consumer Product Safety Commission, the Canadian Standards Association and
Underwriters' Laboratory), product recalls, wages and hours, plant closings or
reductions of activities at any facility, layoffs or reductions in force,
working conditions and health and safety, except for such violations or failures
to comply that, individually or in the aggregate, would not have a Material
Adverse Effect.
(i) LITIGATION. Except as set forth in Section 4.1(i) of the Disclosure
Schedule or otherwise disclosed in the Reports, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries which, individually or in the aggregate,
would have a Material Adverse Effect, nor is there any judgment, decree,
injunction, ruling or order of any Governmental Entity outstanding against the
Company or any of its Subsidiaries which, individually or in the aggregate,
would have a Material Adverse Effect.
(j) EMPLOYEE BENEFIT MATTERS.
(A) Section 4.1(j) of the Disclosure Schedule sets forth a list of
all material employee welfare benefit plans (as defined in Section 3(l) of
the Employee Retirement
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Income Security Act of 1974, as amended ("ERISA")), employee pension
benefit plans (as defined in Section 3(2) of ERISA), and all other bonus,
stock option, stock purchase, benefit, profit sharing, savings,
retirement, disability, insurance, incentive, deferred compensation and
other similar fringe or employee benefit plans, programs or arrangements
for the benefit of, or relating to, any employee or director of, or
independent contractor or consultant to, the Company or its Subsidiaries
(together, the "Benefit Plans") and any employment, severance or
termination agreement to which the Company or any Subsidiary is a party.
The Company has made available to Parent true and complete copies of all
Benefit Plans, as in effect, together with all amendments thereto which
will become effective at a later date, as well as the latest Internal
Revenue Service ("IRS") determination letters obtained with respect to any
Benefit Plan intended to be qualified under Section 401(a) or 501(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). True and
complete copies of the (i) most recent annual actuarial valuation report,
if any, (ii) last filed Form 5500 together with Schedule A and/or B
thereto, if any, (iii) summary plan description (as defined in ERISA), if
any, and all modifications thereto communicated to employees, (iv) most
recent annual and periodic accounting of related plan assets, if any, and
(v) such other materials with respect to the Employee Plans reasonably
requested by Parent in each case, relating to the Benefit Plans, have been
or will be delivered to Parent and are, or will be, correct in all
material respects.
(B) Except to the extent that any of the following, either alone or
in the aggregate, would not have a Material Adverse Effect, or as set
forth on Schedule 4.1(j) of the Disclosure Schedule: (i) neither the
Company nor, to the Company's knowledge, any of its directors, officers,
employees or agents has, with respect to any Benefit Plan, engaged in or
been a party to any "prohibited transaction", as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, which could result in
the imposition of either a penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, in each case
applicable to the Company or any Benefit Plan; (ii) all Benefit Plans are
and have been at all times in compliance in all respects with the
currently applicable requirements prescribed by all statutes, orders, or
governmental rules or regulations currently in effect with respect to such
Benefit Plans, including, but not limited to, ERISA and the Code (except
for such requirements that are not required to be adopted as of the
effective date of the applicable requirement) and, to the knowledge of the
Company, there are no pending or threatened claims, lawsuits or
arbitrations (other than routine claims for benefits), relating to any of
the Benefit Plans, which have been asserted or instituted against the
Company, any Benefit Plan or the assets of any trust for any Benefit Plan,
nor, to the knowledge of the Company, is there any basis for one; (iii)
each Benefit Plan intended to be qualified under Section 401(a) of the
Code, is so qualified, and has heretofore been determined by the IRS to be
so qualified; (iv) neither the Company nor any trade or business which,
together with the Company, is treated as a single employer under Section
414(t) of the Code (an "ERISA Affiliate") has, or at any time has had, an
obligation to contribute to a "defined benefit plan" as defined in Section
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3(35) of ERISA, a pension plan subject to the funding standards of Section
302 of ERISA or Section 412 of the Code, a "multiemployer plan" within the
meaning of Section 3(37) or 4001(a)(13) of ERISA or Section 414(f) of the
Code or a "multiple employer plan" within the meaning of Section 210(a) of
ERISA or Section 413(c) of the Code; (v) with respect to each group health
plan benefiting any current or former employee of the Company, or any
ERISA Affiliate, that is subject to Section 4980B of the Code, the Company
and any ERISA Affiliate, have complied with (A) the continuation coverage
requirements of Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA and (B) the Health Insurance Portability and
Accountability Act of 1996, as amended; (vi) all (A) insurance premiums
required to be paid with respect to, (B) benefits, expenses, and other
amounts due and payable under, and (C) contributions, transfers, or
payments required to be made to, any Benefit Plan prior to the Effective
Time will have been paid, made or accrued on or before the Effective Time;
(vii) with respect to any insurance policy providing funding for benefits
under any Benefit Plan, (A) there is no liability of the Company or any of
its Subsidiaries, in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated on the
date hereof, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to
the knowledge of the Company, no such proceedings with respect to any
insurer are imminent; (viii) no Benefit Plan provides benefits, including,
without limitation, death or medical benefits, beyond termination of
service or retirement other than (A) coverage mandated by law, (B) death
or retirement benefits under any qualified Benefit Plan, or (C) deferred
compensation benefits reflected on the books of the Company; (ix) the
execution and performance of this Agreement will not (A) constitute a
stated triggering event under any Benefit Plan that will result in any
payment (whether of severance pay or otherwise) becoming due from the
Company or any of the Company's Subsidiaries to any officer, director,
employee, or former employee (or dependents of such employee), or (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any employee, officer or director of the Company; (x)
any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of the Company or
any of its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect would not be characterized
as an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code); (xi) the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to any
amount paid or payable by the Company or any affiliate of the Company
under any contract, Benefit Plan, program, arrangement or understanding
currently in effect; (xii) neither the Company nor any ERISA Affiliate has
any current or future liability with respect to any "employee benefit
plans" (within the meaning of Section 3(3) of ERISA), other than the
Benefit Plans, previously maintained or contributed to by the Company, any
ERISA Affiliate or any predecessor to either
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thereof, or to which the Company, any ERISA Affiliate, or any such
predecessor previously had an obligation to contribute.
(k) TAXES. Except as disclosed in the Reports or in Section 4.1(k) of the
Disclosure Schedule, each of the Company and the Subsidiaries (i) has timely
filed all federal and, except as would not have a Material Adverse Effect, state
and foreign Tax Returns required to be filed by the Company and each Subsidiary,
respectively, for tax years ended prior to the date of this Agreement and all
such Tax Returns are correct and complete in all material respects, (ii) has
timely paid, withheld or accrued all Taxes due and payable, whether or not
reflected on such Tax Returns, except as would not have a Material Adverse
Effect, (iii) has not entered into any agreement or waiver which would extend
the statute of limitations for filing any Tax Returns that have not yet been
filed, and (iv) has "open" years for federal income Tax Returns only as set
forth in Section 4.1(k) of the Disclosure Schedule. There are no liens for Taxes
on the assets of the Company or the Subsidiaries except for liens for current
Taxes not yet due, and, except as set forth in the Reports or in Section 4.1(k)
of the Disclosure Schedule, there is no pending, nor has the Company or any
Subsidiary received written notice of any threatened, Tax audit, examination,
refund litigation or adjustment in controversy. Neither the Company nor any
Subsidiary is a party to any agreement providing for the allocation or sharing
of Taxes. All Taxes which each of the Company and the Subsidiaries has been
required to collect or withhold have been duly collected or withheld and to the
extent required when due, have been or will be duly and timely paid to the
proper taxing authority, except as would not have a Material Adverse Effect.
Further, (A) no Taxes have been incurred after June 30, 1998 which were not
incurred in the ordinary course of business consistent with prior practice,
except as would not have a Material Adverse Effect, (B) the Company has not
filed a consent to the application of Section 341(f) of the Code, (C) the
Company is not and has not been a United States real property holding company
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(ii) of the Code, (D) no indebtedness of the
Company is "corporate acquisition indebtedness" within the meaning of Section
279(b) of the Code, and (E) within the past three years, the Company has not
been a member of an affiliated group filing consolidated or combined Tax Returns
other than a federal income tax group the common parent of which is the Company.
As used in the foregoing paragraph, (a) "Taxes" shall mean (i) all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, transfer,
use, license, payroll and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof, and
such term shall include any interest, penalties or additions to tax attributable
to such taxes, charges, fees, levies or other assessments and any obligations
under any agreement or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity and (ii)
all obligations, including joint and several liability pursuant to the law of
any jurisdiction or otherwise, for the payment of any of the types of taxes
referred to in clause (i) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period, and
(b) "Tax Returns" shall mean any report, return or other information required to
be supplied to any taxing authority in connection with Taxes.
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(l) BUSINESS COMBINATION STATUTE. The Board of Directors has taken all
action necessary to render Section 203 of the Delaware GCL inapplicable to the
Offer, the Merger, this Agreement, and any of the transactions contemplated
hereby and thereby, assuming neither Parent nor Sub is an "interested
stockholder" as defined in such Section 203.
(m) CONDUCT OF BUSINESS.
(A) The Company and its Subsidiaries hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of any
Governmental Entity or other persons necessary for the ownership, leasing,
operation, occupancy and use of their respective property and assets and
the conduct of their respective businesses as currently conducted
("Permits"), except where the failure to hold such Permits individually
and in the aggregate would not have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received notice that any Permit
will be terminated or modified or cannot be renewed in the ordinary course
of business, and the Company has no knowledge of any reasonable basis for
any such termination, modification or non-renewal, except for such
terminations, modifications or non-renewals as individually and in the
aggregate would not have a Material Adverse Effect.
(B) The Company has provided to Parent a true and accurate listing
of the Company's and its Subsidiaries' material insurance policies. Each
of such policies is in full force and effect as of the date hereof, and
the Company and its Subsidiaries have no knowledge of any noncompliance
with the terms of such policies or any threatened termination of any of
such policies, except as would not have a Material Adverse Effect. Neither
the Company nor any Subsidiary, as of the date hereof, (i) self-insures
against any occurrence subsequent to December 31, 1993 (except for
self-insurance retentions or deductibles not exceeding $500,000 with
respect to any single occurrence) or (ii) is a participant or shareholder
in any captive or industry insurance program, except as set forth in
Section 4.1(m) of the Disclosure Schedule.
(C) The Company has provided to Parent a report, true and accurate
as of its date, as to the Company's and its Subsidiaries' computer and
system readiness for the Year 2000, including but not limited to, their
ability to conduct and operate their business and to maintain and operate
their books and records, to use and operate their computers and other
systems and software and to process dates and date-related data both
before and after the Year 2000 (collectively, "Year 2000 Compliance"). The
Company and its Subsidiaries have used commercially reasonable efforts to
identify and address their internal and third-party risks on a timely
basis in order to achieve Year 2000 Compliance, except for such
non-compliance as would not have a Material Adverse Effect.
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(n) INTELLECTUAL PROPERTY.
(A) The Company has previously provided to Parent a true and
complete list of all of the Company's and its Subsidiaries' (i) patents,
(ii) trademark and service xxxx registrations, (iii) material copyright
registrations, and (iv) all material licenses related to the foregoing.
(B) Except as set forth in Section 4.1(n) of the Disclosure
Schedule, the Company and its Subsidiaries own or have the valid right to
use all intellectual property used by them in connection with their
business, including: (i) trademarks and service marks (registered or
unregistered) and trade names, and all goodwill associated therewith; (ii)
patents, patentable inventions, discoveries, improvements, ideas,
know-how, processes and computer programs, software and databases
(including source code); (iii) trade secrets and the right to limit the
use or disclosure thereof; (iv) copyrights in all works, including
software programs and mask works; and (v) domain names (collectively
"Intellectual Property"), except where the failure to own or have the
valid right to use the Intellectual Property would not have a Material
Adverse Effect.
(C) Except as set forth in Section 4.1(n) of the Disclosure Schedule
or as would not have a Material Adverse Effect, all grants, registrations
and applications for Intellectual Property that are used in the conduct of
the business of the Company and its Subsidiaries as currently conducted
(i) are valid, subsisting, in proper form and have been duly maintained,
including the submission of all necessary filings and fees in accordance
with the legal and administrative requirements of the appropriate
jurisdictions and (ii) have not lapsed, expired or been abandoned.
(D) Except as set forth in Section 4.1(n) of the Disclosure
Schedule, to the Company's knowledge, (i) there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Material Adverse Effect,
and (ii) the conduct of the business of the Company and its Subsidiaries
as currently conducted does not conflict with or infringe any proprietary
right of any third party, which conflict or infringement would have a
Material Adverse Effect. Except as set forth in Section 4.1(n) of the
Disclosure Schedule, there is no claim, suit, action or proceeding pending
or, to the Company's knowledge, threatened against the Company or any
Subsidiary (i) alleging any such conflict or infringement with any third
party's proprietary rights, or (ii) challenging the ownership, use,
validity or enforceability of the Intellectual Property, except for
claims, suits, actions or proceedings which would not in the aggregate
have a Material Adverse Effect.
(E) Except as set forth in Section 4.1(n) of the Disclosure Schedule
or as would not have a Material Adverse Effect, no former or present
employees, officers or directors of the Company or any Subsidiary hold any
right, title or interest directly or indirectly, in whole or in part, in
or to any Intellectual Property.
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(o) MATERIAL CONTRACTS.
(A) Other than the contracts or agreements of the Company included
as exhibits to the 1998 Annual Report (the "Material Contracts"), and
contracts or agreements between the Company and its wholly owned
Subsidiaries or between wholly owned Subsidiaries of the Company, true and
complete copies of each of the following contracts and agreements to which
the Company or any of its Subsidiaries is a party or by which any of them
is bound (contracts and agreements of the types described below being
"Identified Contracts") has been previously delivered to Parent, in each
case as such Identified Contract is in effect on the date hereof:
(i) each contract or agreement for (A) the purchase of
inventories, goods or other materials by, or for the furnishing of
services to, the Company or any of its Subsidiaries that requires
payments by the Company or any of its Subsidiaries in excess of
$250,000 in the aggregate, or (B) for the sale of inventories, goods
or other materials by the Company or any of its Subsidiaries other
than in the ordinary course of business; that, in the case of both
(A) and (B), has a remaining term of one year or more and is not
terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty;
(ii) manufacturer's representative, sales agency and
distribution contracts and agreements that have a term of one year
or more and are not terminable by the Company or Subsidiary party
thereto, as the case may be, on notice of six months or less without
penalty;
(iii) each contract, agreement or instrument (A) governing the
terms of indebtedness, or guarantees of indebtedness, of the Company
or any of its Subsidiaries in excess of $50,000 principal amount in
the aggregate, all of which such indebtedness the Company represents
is unsecured, or (B) governing the terms of capital leases or leases
that would be classified as operating leases under generally
accepted accounting principles but as a loan or financing
arrangement for federal income tax purposes, pursuant to which the
Company or any of its Subsidiaries has financial obligations in
excess of $50,000, or (C) evidencing, governing the terms of or
providing for any letters of credit, documentary acceptances, trade
bills, trust receipt loans, shipside bonds, standby letters of
credit or performance bonds to which the Company or any Subsidiary
is a party, or (D) providing for obligations of the Company and its
Subsidiaries in respect of interest rate swap or similar agreements,
commodity swaps or options or similar agreements or foreign currency
hedge, exchange or similar agreements or any other derivative
instrument (a list of the Identified Contracts included in this
paragraph (iii), together with the outstanding balances thereunder,
is set forth on
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Section 4.1(o) of the Disclosure Schedule, which list shall be
updated by the Company as of each expiration date of the Offer and
as of the Closing Date);
(iv) contracts and agreements entered into since January 1,
1995 providing for the acquisition or disposition of assets
(including the capital stock of any entity) having a value in excess
of $1,000,000 other than sales or purchases of inventories in the
ordinary course of business and sales of obsolete equipment;
(v) joint venture agreements, partnership agreements and other
similar contracts and agreements involving a sharing of profits and
expenses; and
(vi) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of
the Company or any of its Subsidiaries.
(B) Each contract or agreement to which the Company or any of its
Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to
the actual knowledge of the Company, any other person, is in breach of, or
default under, any such contract or agreement, and no event has occurred
that with notice or passage of time or both would constitute such a breach
or default thereunder by the Company or any of its Subsidiaries, or, to
the actual knowledge of the Company, any other person, except for such
failures to be in full force and effect and such breaches and defaults as
individually and in the aggregate would not have a Material Adverse
Effect.
(p) ENVIRONMENTAL MATTERS.
(A) Except as disclosed in the Reports, as disclosed in Section
4.1(p) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, and except for those noncompliance matters that have been and are
resolved, the Company and its Subsidiaries are and have been in compliance
with all applicable Environmental Laws (as hereinafter defined).
(B) Except as disclosed in the Reports, as disclosed in Section
4.1(p) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, (i) there has been no Release and/or Threat of Release (each, as
hereinafter defined) of any Hazardous Substance (as hereinafter defined),
and there is no Hazardous Substance present, on, in, under, above,
migrating to and/or about any of the properties or assets owned, leased or
operated by the Company or its Subsidiaries, and (ii) the Company and its
Subsidiaries have not caused or allowed, nor contracted with any party
for, the generation, use, transportation, treatment, storage or disposal
of any Hazardous Substance; except, in the case of clauses (i) and (ii),
for such quantities of Hazardous Substances as are stored, used
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and disposed of in the ordinary course of business in compliance with all
Environmental Laws.
(C) Except as disclosed in the Reports or as disclosed in Section
4.1(p) of the Disclosure Schedule, there are no Environmental Claims (as
hereinafter defined) pending or threatened against the Company or any of
its Subsidiaries that individually or in the aggregate would have a
Material Adverse Effect nor, to the Company's knowledge, does any basis
for such an Environmental Claim exist.
(D) The Company has disclosed and, where requested, made available
to Parent all material information, including such studies, analyses and
test results, and litigation and/or administrative case files, in the
possession, custody or control of or otherwise known and available to the
Company or any of its Subsidiaries relating to Hazardous Substances, the
Release and/or Threat of Release of Hazardous Substances, and/or the
environmental conditions on, in, under, above, migrating to and/or about
any of the properties or assets owned, leased, or operated by any of the
Company and its Subsidiaries or any predecessor in interest thereto at the
present time or in the past.
(E) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the
Company or any of its Subsidiaries by any person or entity
including, without limitation, any Governmental Entity, alleging any
liability or potential liability of any name or nature, both in law
and in equity (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, real or personal property damage or
penalties) arising, in part or in whole, out of, based on, or
resulting from the presence, Release and/or Threat of Release, of
any Hazardous Substance at any location, whether or not owned,
leased, operated or used by the Company or its Subsidiaries;
(ii) the term "Environmental Laws" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous
Substances, and/or otherwise relating to the clean-up, manufacture,
generation, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport, handling, licensing and/or permitting
of Hazardous Substances, including the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource
Conservation and Recovery Act ("RCRA"), and the Occupational Safety
and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and
oil and petroleum products, (2) any substance that is or contains
friable asbestos, urea formaldehyde foam
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insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related
materials, (3) any substance that requires removal, remediation,
permitting, licensing and/or government approved plans under any
Environmental Law, or is defined, listed or identified as a
"hazardous waste" or "hazardous substance" thereunder, (4) any
substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous; in each case in clauses (1)-(4) above which is regulated
under any Environmental Law, (5) hazardous waste as defined under
RCRA, (6) hazardous substances as defined under CERCLA, and (7)
"pollutants" as defined under the Federal Clean Air Act;
(iv) (a) the term "Release" means any releasing, disposing,
discharging, spilling, leaking, pumping, pouring, escaping,
leaching, dumping, emitting, migration, transporting, placing and
the like, including into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment; and
(b) the term "Threat of Release" means a substantial
likelihood of a Release which requires action to prevent or mitigate
damage to the environment which may result from such Release.
(q) LABOR RELATIONS; EMPLOYEES. Except as set forth in Section 4.1(q) of
the Disclosure Schedule, there are no collective bargaining agreements covering
any of the employees of the Company or any of its Subsidiaries. Except as set
forth in Section 4.1(q) of the Disclosure Schedule or as would not have a
Material Adverse Effect, there are no pending or, to the knowledge of the
Company, threatened (i) employment discrimination charges or complaints against
or involving the Company or any of its Subsidiaries before any Governmental
Entity, (ii) unfair labor practice charges or complaints, disputes or grievances
affecting the Company or any of its Subsidiaries, (iii) union representation
petitions or other organizing activity respecting the employees of the Company
or any of its Subsidiaries, or (iv) strikes, picketing, slow downs, work
stoppages or lockouts or threats thereof affecting the Company or any of its
Subsidiaries. Except as set forth in Section 4.1(q) of the Disclosure Schedule,
to the Company's knowledge, the Company and its Subsidiaries are in compliance
with all applicable Laws respecting employment and employment practices,
including provisions of such Laws relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other Taxes, except
where the failure to so comply would not have a Material Adverse Effect.
(r) DISCLOSURE DOCUMENTS.
(A) Each document required to be filed by the Company with the SEC
in connection with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), including, without limitation, the
Schedule 14D-9, the proxy or information statement of the Company (the
"Company Proxy Statement"), if any, to be filed with the SEC in connection
with the Merger, and any amendments or supplements thereto, will, when
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filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
(B) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the
time such stockholders vote on adoption of this Agreement and approval of
the Merger and at the Effective Time, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of
the filing of any Company Disclosure Document other than the Company Proxy
Statement, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, each such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
The representations and warranties contained in paragraphs (A) and (B) of
this Section 4.1(r) will not apply to statements or omissions included in
the Company Disclosure Documents or the Company Proxy Statement, if any,
based upon information furnished to the Company in writing by Parent or
Sub specifically for use therein.
(C) The information with respect to the Company or any Company
Subsidiary that the Company furnishes to Parent or Sub in writing
specifically for use in the Offer Documents will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, 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 made therein, in the
light of the circumstances under which they were made, not misleading.
(s) FAIRNESS OPINION. The Board of Directors has received from the
Financial Advisor the written opinion referred to in Section 1.2(b) hereof, and
such opinion has not been withdrawn or modified as of the date hereof.
(t) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
other than pursuant to an engagement letter with the Financial Advisor, a copy
of which has been furnished to Parent.
(u) BOARD RECOMMENDATION. The Company's Board of Directors has taken the
actions specified in Section 1.2(a) hereof as of the date hereof.
(v) OPTION AGREEMENTS. Each outstanding option agreement executed in
connection with a Company Stock Option pursuant to the Company Stock Option
Plans is in substantially the form provided to Purchaser as an exhibit to the
1986 Plan or the 1994 Plan, as the case may be.
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SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent
and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Parent is a corporation
duly organized, validly existing and in corporate good standing under the laws
of the Commonwealth of Massachusetts. Sub is a corporation duly organized,
validly existing and in corporate good standing under the laws of the State of
Delaware. Each of Parent and Sub has the requisite corporate power and authority
to carry on its business as now being conducted. Each of Parent and Sub is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect on
the business, financial condition or results of operations of Parent and Sub
taken as a whole.
(b) CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Sub consists of 1,000 shares of common stock, par value $0.01
per share, 1,000 shares of which are presently issued and outstanding, which
constitutes all of the issued and outstanding capital stock of Sub. All of the
issued and outstanding shares of capital stock of Sub are validly issued, fully
paid and non-assessable and are held by Parent.
(c) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Sub. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against such party in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) violate any of the provisions
of the charter documents or By-laws of Parent or Sub, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of the United States or
any political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for (A) the existing credit agreement dated as of November 26, 1997 among Parent
and certain of its subsidiaries and BankBoston, N.A. and certain other lenders
party thereto (the "Parent Credit Agreement") which is to be refinanced with a
portion of the proceeds of the Financing, and (B) certain filings and notices
required to be made under the Indenture dated as of November 26, 1997 among
Parent, certain of its subsidiaries and State Street Bank and Trust Company as
trustee, violate, conflict with or constitute a breach under any contract,
agreement, indenture, mortgage, deed of trust, lease or other instrument to
which
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Parent or any of its Subsidiaries is a party or by which any of their assets is
bound or subject, which, in the case of clauses (ii) and (iii) above, singly or
in the aggregate, would have a material adverse effect on the business,
financial condition or results of operations of Parent and Sub taken as a whole
or prevent consummation of the transactions contemplated hereby. No consent,
approval or authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or with
respect to Parent or Sub in connection with the execution and delivery of this
Agreement by Parent or Sub or the consummation by Parent or Sub, as the case may
be, of any of the transactions contemplated by this Agreement, except for (i)
compliance with any applicable requirements of the Exchange Act and the rules
and regulations promulgated thereunder, (ii) state securities or blue sky laws
and state takeover, antitrust and competition law filings and approvals, (iii)
compliance with any applicable requirements of the HSR Act, (iv) the filing of
the Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 4.1(d) of the
Disclosure Schedule or as to which the failure to so receive or make would not
have a material adverse effect on the business, financial condition or results
of operations of Parent and Sub taken as a whole or prevent Parent and Sub from
consummating the transactions contemplated hereby.
(d) FINANCING. Parent and Sub have received and accepted (i) a written
commitment from BankBoston, N.A. (the "Bank") for the provision of a senior
credit facility or facilities (the "Credit Facility") for the transactions
contemplated hereby, in an amount of up to $325 million, (ii) a written
commitment from BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("BRS") and Xxxxxx Brothers
Inc. ("Xxxxxx") for the issuance of senior subordinated debt securities (the
"Debt Securities") for the transactions contemplated hereby in an amount of at
least $30 million, and (iii) written commitments from stockholders of Parent and
their affiliates to subscribe for an aggregate of $50 million of equity
securities of Parent to finance the transactions contemplated hereby (the
"Equity Infusion"). The aggregate amount of the financing (the "Financing")
contemplated by the commitments from the Bank for the Credit Facility, from BRS
and Xxxxxx for the Debt Securities and from stockholders of Parent and their
affiliates for the Equity Infusion (collectively, the "Commitments"), will be
sufficient to consummate the Offer and the Merger. Parent has provided true and
correct copies of the Commitments to the Company prior to the date hereof, and
will provide copies of any material amendments or modifications thereto. To the
knowledge of Parent and Sub, there exists no condition with respect to Parent or
Sub as of the date of this Agreement that would materially adversely affect the
ability of Parent and Sub to satisfy in all respects the conditions set forth in
the Commitments.
(e) DISCLOSURE DOCUMENTS.
(A) The information with respect to Parent and its Subsidiaries that
Parent furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not 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 made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement, if any, at the time the Company Proxy Statement or any amendment or
supplement
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thereto is first mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the Effective Time, and
(ii) in the case of any Company Disclosure Document other than the Company Proxy
Statement, at the time of the filing thereof, at the time of any distribution
thereof and throughout the remaining pendency of the Offer.
(B) The Offer Documents will comply in all material respects with
the applicable requirements of the Exchange Act and will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading; provided, that no representation is made by
Parent or Sub with respect to statements or omissions in the Offer Documents
based upon information furnished to Parent or Sub in writing by the Company
specifically for use therein.
(f) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Parent or Sub, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
except for fees and expenses payable to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation and fees payable to the providers of the Commitments, which fees and
expenses shall remain the sole responsibility of Parent and Sub.
(g) OWNERSHIP OF SHARES. Neither Parent, Sub nor any other subsidiary of
Parent is the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of any Shares.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the
Effective Time, the Company shall operate, and shall cause each Subsidiary to
operate, its business in the ordinary course of business in a manner consistent
with past practices. Without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Effective Time, except as
expressly contemplated by this Agreement, and except for actions requested by a
majority of those directors of the Company designated by Parent pursuant to
Section 1.3(a), the Company and the Subsidiaries shall not, without the prior
written consent of Parent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's outstanding capital stock, except for a cash dividend of $.07 per
Share payable on December 15, 1998, (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (z) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares;
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(ii) issue, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, except for the issuance of Shares upon
exercise of Company Stock Options outstanding prior to the date of this
Agreement and disclosed in Section 4.1(c), or take any action that would make
the Company's representations and warranties set forth in Section 4.1(c) not
true and correct in all material respects;
(iii) amend its Restated Certificate of Incorporation or By-laws or the
comparable charter or organizational documents of any of its Subsidiaries;
(iv) acquire any business or any corporation, partnership, joint venture,
association or other business organization or division thereof (or any interest
therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its assets, except in the ordinary
course of business, other than (x) obsolete or immaterial equipment or tooling,
and (y) in connection with the restructuring described in Section 5.1 of the
Disclosure Schedule (the "Restructuring");
(vi) make any capital expenditures, enter into leases or agreements for
new locations, close any locations (other than in connection with the
Restructuring), or make other commitments with respect thereto, except capital
expenditures, leases, agreements or commitments (x) set forth on Section 5.1 of
the Disclosure Schedule, or (y) not exceeding $100,000 in the aggregate as the
Company may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any such
indebtedness of another person, other than (A) borrowings in the ordinary course
under existing lines of credit, (B) indebtedness owing to, or guaranties of
indebtedness owing to, the Company or (C) in connection with the Financing, or
(y) make any loans or advances to any other person, other than routine advances
to employees;
(viii) except as disclosed in Section 4.1(f) of the Disclosure Schedule,
grant or agree to grant to any employee any increase in wages or bonus,
severance, profit sharing, retirement, deferred compensation, insurance or other
compensation or benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing Benefit Plans, except (x)
as may be required under existing agreements, and (y) customary increases in the
ordinary course of business consistent with prior practice (not including,
however, any new or additional Benefit Plan unless disclosed in Section 4.1(f)
of the Disclosure Schedule);
(ix) merge, amalgamate or consolidate with any other person or entity in
any transaction, sell all or substantially all of its business or assets, or
acquire all or substantially all of the business or assets of any other person
or entity;
(x) except as disclosed in Section 4.1(f) or 5.1 of the Disclosure
Schedule, enter into or amend any employment, consulting (except for consulting
agreements for development services for
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new products involving payments by the Company or any Subsidiary of less than
$500,000 in the aggregate, prior to March 31, 1999, and less than $500,000 in
the aggregate for the period from April 1, 1999 to June 30, 1999), severance or
similar agreement with any person or amend the Company's engagement letter with
the Financial Advisor;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as set forth in Section 4.1(f) of the Disclosure Schedule,
enter into any material contract, agreement or commitment not otherwise
permitted under this Section 5.1, including, without limitation, any contract,
agreement or commitment involving expenditures by the Company or any of its
Subsidiaries in excess of $50,000 or which is not terminable by the Company upon
giving 30 days or less prior written notice, except in the ordinary course of
business consistent with prior practice;
(xiii) settle or compromise any pending or threatened suit, action or
claim, except for products liability cases being defended in the ordinary course
of business, if such settlement or compromise involves the payment of more than
$100,000 by the Company or any Subsidiary or would impose any material
obligations on, or (other than releasing the Company's or any Subsidiary's claim
for relief in such proceeding and the Company's or any Subsidiary's right to a
trial of such claim) waive or affect any material right or interest of, the
Company, any Subsidiary, Parent or Sub; or
(xiv) commit or agree to take any of the foregoing actions.
SECTION 5.2. OTHER ACTIONS. The Company shall not, and shall cause its
Subsidiaries not to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
of the Offer set forth in Annex I or of the Merger set forth in Article VII not
being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. MEETING OF STOCKHOLDERS.
(a) Following the expiration of the Offer (or at such earlier time as the
parties hereto shall mutually agree), unless the Merger is to be effected
pursuant to Section 253 of the Delaware GCL or pursuant to written consents, the
Company will promptly take all action necessary in accordance with applicable
law and its Restated Certificate of Incorporation and By-laws to duly call, give
notice of, and convene a meeting of its stockholders (the "Stockholders'
Meeting") to consider and vote upon the adoption and approval of this Agreement
and the Merger and all actions contemplated hereby which require approval and
adoption by the Company's stockholders; provided,
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however, that the obligations contained herein shall be subject to the
provisions of Section 6.8. Parent shall agree to cause all of the shares of
capital stock of the Company held by Parent and/or Sub to be voted, either in
person or by proxy, in favor of the adoption and approval of this Agreement and
the Merger at the Stockholders' Meeting.
(b) Subject to the earlier termination of this Agreement in accordance
with the provisions of Section 8.1 (other than Section 8.1(b)(A)), if, as of
March 15, 1999, (i) more than 50% of the then-outstanding Shares shall have been
validly tendered in the Offer and not withdrawn, (ii) all of the Tender Offer
Conditions other than the Minimum Condition shall have been satisfied or waived
by Offeror, and (iii) the Minimum Condition shall not have been waived by
Offeror in order to purchase the Shares pursuant to the Offer, then, upon the
written request of Parent or Company given to the other within five days
following the expiration of the Offer, the Company shall promptly proceed to
take the actions specified in Section 6.1(a) above with respect to the
Stockholders Meeting, and the parties hereto shall, subject to the provisions of
Article VII and Section 8.1 hereof (other than Section 8.1(b)(A)), undertake in
an expeditious manner the efforts required by Section 6.4 hereof to consummate
and make effective the Merger.
SECTION 6.2. PROXY STATEMENT.
(a) In connection with the Stockholders' Meeting contemplated hereby, as
promptly as practicable after Offeror first purchases Shares pursuant to the
Offer or if the parties proceed under Section 6.1(b) hereof, and if required by
applicable law, the Company will promptly prepare and file, and Parent will
cooperate with the Company in the preparation and filing of, a preliminary
Company Proxy Statement (the "Preliminary Proxy Statement") with the SEC and
will use its commercially reasonable best efforts to respond to the comments of
the SEC concerning the Preliminary Proxy Statement and to cause the Company
Proxy Statement to be mailed to the Company's stockholders, in each case as soon
as reasonably practicable. The Company shall pay the filing fees for the
Preliminary Proxy Statement. Each party to this Agreement will notify the other
parties promptly of the receipt of the comments of the SEC, if any, and of any
request by the SEC for amendments or supplements to the Preliminary Proxy
Statement or the Company Proxy Statement or for additional information, and will
supply the other parties with copies of all correspondence between such party or
its representatives, on the one hand, and the SEC or members of its staff, on
the other hand, with respect to the Preliminary Proxy Statement, the Company
Proxy Statement or the Merger.
(b) If at any time prior to the Stockholders' Meeting, any event should
occur relating to the Company or any of the Subsidiaries which should be set
forth in an amendment of, or a supplement to, the Company Proxy Statement, the
Company will promptly inform Parent. If at any time prior to the Stockholders'
Meeting, any event should occur relating to Parent or Sub or any of their
respective Associates or Affiliates, or relating to the plans of any such
persons for the Surviving Corporation after the Effective Time of the Merger, or
relating to the Financing, that should be set forth in an amendment of, or a
supplement to, the Company Proxy Statement, the Company, with the cooperation of
Parent, will, upon learning of such event, promptly prepare, file and, if
required, mail such amendment or supplement to the Company's stockholders;
provided that, prior to such filing or
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mailing, the Company shall consult with Parent with respect to such amendment or
supplement and shall afford Parent reasonable opportunity to comment thereon.
(c) Parent will furnish to the Company the information relating to Parent
and Sub, their respective Associates and Affiliates and the plans of such
persons for the Surviving Corporation after the Effective Time of the Merger,
and relating to the Financing, which is required to be set forth in the
Preliminary Proxy Statement or the Company Proxy Statement under the Exchange
Act and the rules and regulations of the SEC thereunder. The Company shall use
its best efforts to cause to be included as an exhibit to the Preliminary Proxy
Statement and the Company Proxy Statement the fairness opinion of the Financial
Advisor referred to in Section 4.1(s).
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. From and after the
date hereof, the Company will provide to Parent, its financing sources and their
respective Representatives (as defined below), reasonable access, upon notice
and during normal business hours, to the Company's facilities, books and records
and shall cause the directors, employees, accountants, attorneys, financial
advisors, lenders and other agents and representatives (collectively,
"Representatives") of the Company to continue to cooperate fully with Parent and
Parent's Representatives in order to enhance such persons' knowledge of the
Company's assets, contracts, liabilities, operations, records and other aspects
of its business (including any environmental investigation of the Company's
facilities) and the efforts of Parent and Sub to secure the Financing as
described in Section 4.2(d). As soon as reasonably practicable after monthly
financial statements of the Company become available to senior officers of the
Company, the Company shall provide Parent with a copy of the same. Parent shall,
and shall cause Parent's Representatives to, keep all information supplied or
made available to Parent hereunder in confidence in accordance with and subject
to the terms of that certain letter agreement between Parent and BancAmerica
Securities, Inc. dated October 1, 1998 (the "Confidentiality Agreement").
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions and other agreements set
forth in this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken (including, without limitation,
by such parties' respective Representatives), all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger, the Financing and
the other transactions contemplated by this Agreement, including the
satisfaction of the respective conditions set forth in Annex I and Article VII
hereof. Following the purchase by Offeror of Shares pursuant to the Offer,
neither Parent nor Sub will take any action as a stockholder of the Company that
would cause the Company to breach any of the Company's obligations contained in
this Agreement.
(b) Parent and the Company shall promptly notify each other of (i) the
occurrence or non-occurrence of any fact or event which would be reasonably
likely (A) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time or (B) to cause any covenant, condition or
obligation under this Agreement not to be complied with or satisfied in any
material
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respect, and (ii) any failure of the Company or Parent or Sub, as the case may
be, to comply with or satisfy any covenant, condition or obligation to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.
SECTION 6.5. FINANCING. Each of Parent and Sub shall use commercially
reasonable efforts to accept and close the Financing on terms consistent with
the Commitments or such other terms as shall be satisfactory to Parent or as are
not materially more onerous to Parent than as set forth in the Commitments, and
to execute and deliver definitive agreements with respect to the Financing (the
"Definitive Financing Agreements") on or before the Closing Date. Parent and Sub
shall use commercially reasonable efforts to satisfy on or before the Closing
Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing and to drawing
the cash proceeds thereunder. The obligations contained herein are not intended,
nor shall they be construed, to benefit or confer any rights upon any person,
firm or entity other than the Company.
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) The Certificate of Incorporation and By-laws of the Company or the
Surviving Corporation, as the case may be, shall not be amended, repealed or
otherwise modified for a period from the date hereof until six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who as of the date hereof are or were directors, officers,
employees, fiduciaries or agents of the Company and its Subsidiaries or
otherwise entitled to indemnification, advancement of expenses or exculpation
from liability under the Company's Restated Certificate of Incorporation,
By-laws or indemnification agreements (the "Indemnified Parties"). It is
understood and agreed that the Company shall, to the fullest extent permitted
under Delaware law and regardless of whether the Merger becomes effective,
indemnify, defend and hold harmless, and after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, to the fullest extent permitted
under Delaware law, indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, including without limitation liabilities arising
out of this transaction, to the extent that it was based on the fact that such
Indemnified Party is or was a director, officer, employee, fiduciary or agent of
the Company or its Subsidiaries and arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time, and in
the event of any such claim, action, suit proceeding, or investigation (whether
arising before or after the Effective Time), (i) Parent, the Company or the
Surviving Corporation, as applicable, shall advance expenses to such Indemnified
Parties in advance of the final disposition thereof upon receipt of the
undertaking specified in Section 145 of the Delaware GCL, including payment of
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent, promptly as statements
therefor are received and (ii) Parent, the Company and the Surviving Corporation
will cooperate in the defense of any such matter; provided, however, that
neither Parent, the Company
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nor the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and further, provided, that neither Parent, the Company nor the Surviving
Corporation shall be obliged pursuant to this Section 6.6 to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in any single
action except to the extent that, in the written opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. Any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under Delaware law, the Certificate of Incorporation or
By-laws, as the case may be, shall be made by independent counsel mutually
acceptable to Parent and the Indemnified Party.
(b) At or prior to the Effective Time, Parent, the Company or the
Surviving Corporation shall obtain a fully-paid officers' and directors'
liability insurance policy covering the Indemnified Parties who are currently
covered by the Company's officers' and directors' liability insurance policy for
a term of six years on terms not materially less favorable than those in effect
on the date hereof in terms of coverage and amounts. This Section 6.6 shall
survive the consummation of the Merger. Notwithstanding Section 9.7 hereof, this
Section 6.6 is intended to be for the benefit of and to grant third party rights
to Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained herein.
(c) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.6.
SECTION 6.7. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the existence of and transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement without the consent of the other party following
such consultation, except as may be required by applicable law, regulation or
judicial process, and in such case only after reasonable notice to the other
party.
SECTION 6.8. ACQUISITION PROPOSALS. The Company shall not, nor shall it
authorize or permit any of its Representatives to, directly or indirectly, (i)
solicit, initiate or knowingly encourage any Third Party (as hereinafter
defined) with respect to the submission of any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company (or, if applicable, a duly appointed
committee thereof (the "Special Committee")) from: (i) furnishing information
to, or entering into discussions or negotiations with, any Third Party in
connection with an unsolicited bona fide Acquisition
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Proposal by such Third Party if, and to the extent that, the Board of Directors
of the Company (or the Special Committee), after consultation with independent
legal counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is required for the Board of Directors
of the Company to comply with its fiduciary obligations under applicable law;
(ii) withdrawing or modifying its recommendation referred to in Section 1.2(a)
following receipt of a bona fide unsolicited Acquisition Proposal if the Board
of Directors of the Company (or the Special Committee), after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary obligations
under applicable law; or (iii) making to the Company's stockholders any
recommendation and related filing with the SEC as required by Rule 14e-2 and
14d-9 under the Exchange Act, with respect to any tender offer, or taking any
other equally required action (including, without limitation, the making of
public disclosures as may be necessary or advisable under applicable securities
laws); and provided further, that, in the event of an exercise of the Company's
or its Board of Director's (or the Special Committee's) rights under clause (i),
(ii) or (iii) above, notwithstanding anything contained in this Agreement to the
contrary, such action shall not constitute a breach of this Agreement by the
Company. The Company shall provide immediate written notice to Parent of the
receipt of any oral or written inquiry or proposal from a Third Party with
respect to a merger, consolidation, share exchange, tender offer or similar
transaction involving the Company, or any purchase or other acquisition of all
or substantially all of the assets or equity interests of the Company, other
than the transactions contemplated by this Agreement (an "Acquisition
Transaction") and of the Company's intention to furnish information to, or enter
into discussions or negotiations with, such person or entity, along with a copy
of any such written inquiry or proposal and copies of any information furnished
to such Third Party, to the extent not previously provided to Parent. For
purposes of this Agreement, (i) "Acquisition Proposal" means any written
proposal with respect to an Acquisition Transaction that the Board of Directors
of the Company (or the Special Committee), after consultation with and receipt
of advice from the Financial Advisor or another nationally recognized investment
banking firm, determines in good faith in the exercise of its fiduciary
obligations under applicable law to be more favorable than the transactions
contemplated by this Agreement; and (ii) "Third Party" means any corporation,
partnership, person or other entity or "group" (as defined in Section 13(d)(3)
of the Exchange Act) other than Parent, Sub or any Affiliates of Parent or Sub
and their respective directors, officers, employees, representatives and agents.
SECTION 6.9. STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate, at the expense of Parent, in the defense or
settlement of any stockholder litigation against the Company and its
Representatives relating to the transactions contemplated by this Agreement;
provided, however, that no such settlement shall be agreed to without Parent's
consent, which consent shall not be unreasonably withheld.
SECTION 6.10. COMPANY ACTION RELATING TO BENEFIT PLANS. Without Parent's
prior written consent, no action shall be taken by or on behalf of the Company,
any Subsidiary or any trustee or administrative committee with respect to any
Benefit Plan which action would, by itself, constitute cause for any employee of
the Company or a Subsidiary party to any employment, severance or change of
control agreement to claim constructive termination under such agreement.
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SECTION 6.11. CONSENTS AND APPROVALS. As soon as practicable following the
date of this Agreement, the Company and Parent and Sub shall make all filings
and notifications required to be made with and seek all consents, approvals,
permits and authorizations required to be obtained from, any third parties or
Governmental Entities in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, the filing of any required
notification under the HSR Act as promptly as practicable, and any other filing,
consent or approval listed on Section 4.1(d) of the Disclosure Schedule. The
Company shall pay any required filing fees or other expense in connection
therewith; provided that Parent shall pay the required filing fee under the HSR
Act.
SECTION 6.12. REPAYMENT OF INDEBTEDNESS. Parent or Sub shall utilize a
portion of the net proceeds of the Financing, together with available cash of
the Company, to (or to enable the Company to) repay, satisfy or otherwise
discharge, in full, the Company's or its Subsidiaries' indebtedness (including
under any guaranty or surety obligation) to (i) NationsBank, N.A. and the other
banks party to the Credit Agreement dated April 15, 1996, as amended, (ii) Bank
of America Canada pursuant to the revolving credit facility dated September 2,
1998, (iii) Bank of America National Trust and Savings Association pursuant to
the Hong Kong letter of credit facility dated June 2, 1998, and (iv) the
noteholders pursuant to the Note Purchase Agreements dated July 23, 1993 and
April 15, 1996, in each case as existing on the Closing Date (or make such other
arrangements with respect to the foregoing indebtedness as shall be satisfactory
to the lenders thereof).
SECTION 6.13. GUARANTY OF SUB'S OBLIGATIONS. Parent hereby
unconditionally guaranties to the Company the due and punctual performance by
Sub of all of Sub's obligations hereunder.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Merger and this Agreement shall have been
adopted and approved by the requisite vote of the holders of outstanding Shares,
if required by the Delaware GCL.
(b) GOVERNMENTAL CONSENTS. All filings required to be made prior to the
Effective Time with, and all consents, approvals, permits and authorizations
required to be obtained prior to the Effective Time from, any Governmental
Entities under the HSR Act which, either individually or in the aggregate, if
not made or obtained would have a Material Adverse Effect or would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
judgment, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or
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other legal restraint or prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that the parties invoking this condition
shall use their best efforts to have any such order or injunction vacated.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligations
of Parent and Sub to effect the Merger are further subject to the satisfaction,
or waiver by Parent, on or prior to the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in Section 4.1 that are qualified by materiality shall be
true and correct, and the representations and warranties of the Company set
forth in Section 4.1 that are not so qualified shall be true and correct in all
material respects, individually and in the aggregate, as of the Closing Date as
though made on and as of the Closing Date, except (i) for changes permitted or
contemplated by this Agreement, and (ii) in the case of any breach of such
representations and warranties, where such breach or breaches would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) COMPANY OBLIGATIONS. The Company shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants of the Company required to be performed or complied
with by it under this Agreement including, without limitation, its obligations
under Articles V and VI hereof, except, in the case of any breach of any such
obligation, agreement or covenant, where such breach or breaches would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) OFFICERS' CERTIFICATE. The Company shall have furnished Parent with
such certificates and other documents to evidence the fulfillment of the
conditions set forth in this Section 7.2 as Parent may reasonably request.
(d) FINANCING. The Financing Condition shall have been satisfied.
(e) GOVERNMENTAL CONSENTS. All filings required to be made by the Company
or its Subsidiaries prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained by the Company or
its Subsidiaries prior to the Effective Time from, any Governmental Entities,
which, either individually or in the aggregate, if not made or obtained would
have a Material Adverse Effect on or after the Effective Time or would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
(f) MATERIAL ADVERSE CHANGE. Between the date of the Agreement and the
Effective Time, there shall not have been a material adverse change in the
business, assets, properties, condition (financial or otherwise), or results of
operations of the Company and its Subsidiaries taken as a whole.
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(g) DISSENTING SHARES. The percentage of Dissenting Shares shall not be
greater than 10% of the aggregate number of Shares outstanding immediately prior
to the Effective Time.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Merger are further subject to the satisfaction, or
waiver by the Company, on or prior to the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Sub set forth in Section 4.2 that are qualified by materiality shall
be true and correct, and the representations and warranties of Parent and Sub
set forth in Section 4.2 that are not so qualified shall be true and correct in
all material respects, individually and in the aggregate, as of the Closing Date
as though made on and as of the Closing Date, except (i) for changes permitted
or contemplated by this Agreement, and (ii) in the case of any breach of such
representations and warranties, where such breach or breaches would not,
individually or in the aggregate, materially and adversely affect the
consummation of the Merger.
(b) PARENT OBLIGATIONS. Parent and Sub shall have performed in all
material respects all obligations and complied in all material respects with all
agreements and covenants required to be performed or complied with by them under
this Agreement including, without limitation, their respective obligations under
Article VI hereof, except, in the case of any breach of any such obligation,
agreement or covenant, where such breach or breaches would not, individually or
in the aggregate, materially adversely affect the consummation of the Merger.
(c) OFFICERS' CERTIFICATE. Parent shall have furnished the Company with
such certificates and other documents to evidence the fulfillment of the
conditions set forth in this Section 7.3 as the Company may reasonably request.
(d) GOVERNMENTAL CONSENTS. All filings required to be made by Parent or
its subsidiaries prior to the Effective Time with, and all consents, approvals,
permits and authorizations required to be obtained by Parent or its subsidiaries
prior to the Effective Time from, any Governmental Entities, which, either
individually or in the aggregate, if not made or obtained would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
SECTION 7.4. EXCEPTION. The conditions set forth in Sections 7.2 and 7.3
hereof shall cease to be conditions to the obligations of any of the parties
hereto if Offeror shall have accepted for payment and paid for Shares validly
tendered pursuant to the Offer.
SECTION 7.5. FRUSTRATION OF CONDITIONS. No party hereto may rely on the
failure of any condition set forth in this Article to be satisfied if such
failure was caused by such party's failure to use commercially reasonable
efforts to consummate the transactions contemplated by this Agreement.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company prior to the
purchase of Shares pursuant to the Offer; or
(b) (A) by either Parent or the Company, if: (i) the Offer shall not have
been commenced within the time period specified in Section 1.1(a), unless the
failure to have commenced the Offer is as a result of any judgment, injunction,
order, decree or other legal restraint or prohibition enjoining or otherwise
restraining the commencement of the Offer, and provided notice of termination
under this subsection has been given prior to the actual commencement of the
Offer (even if such commencement occurs later than the time period specified in
Section 1.1(a)), or (ii) the Offer shall have terminated or expired or been
withdrawn in accordance with its terms without Offeror having purchased any
Shares pursuant to the Offer, or (iii) at any time after March 15, 1999 (or such
later date to which the Offer shall have been extended pursuant to Section
1.1(b)) the Offer has not been consummated; but only to the extent that the
parties shall not then be required to proceed under Section 6.1(b) and provided
that the failure to commence or consummate the Offer, as the case may be, is not
attributable to the failure of the terminating party to fulfill its obligations
pursuant to this Agreement; or (B) by the Company prior to the purchase of
Shares pursuant to the Offer, if any change to the Offer is made by Offeror in
contravention of the provisions of Section 1.1; or
(c) by either Parent or the Company, if: (i) upon a vote at the
Stockholders Meeting, or any adjournment thereof, the adoption and approval of
this Agreement and the Merger by the stockholders of the Company required by
Delaware law, the Company's Restated Certificate of Incorporation or By-laws or
the terms of this Agreement shall not have been obtained; or (ii) the Merger
shall not have been consummated on or before June 15, 1999, provided that the
failure to consummate the Merger is not attributable to the failure of the
terminating party to fulfill its obligations pursuant to this Agreement; or
(iii) there shall be any law or regulation that makes consummation of the Offer
or the Merger illegal or otherwise prohibited, or if any judgment, injunction,
order or decree enjoining or otherwise restraining Offeror from purchasing
Shares pursuant to the Offer or Parent, Sub or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree shall become
final and non-appealable; provided that neither Parent nor the Company may
terminate this Agreement pursuant to clause (i) or (ii) hereof if the Shares are
purchased pursuant to the Offer; or
(d) by the Company prior to the purchase of Shares pursuant to the Offer,
immediately after payment to Parent of the Termination Amount as defined in
Section 8.2(b), if the Board of Directors shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or recommendation of the Offer,
this Agreement or the Merger in order to permit the Company to
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execute an Acquisition Proposal providing for the acquisition of the Company by
a Third Party as determined by the Board of Directors in good faith after
consultation with independent legal counsel (who may be the Company's regularly
engaged independent counsel) that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to
stockholders under applicable law; or
(e) by Parent prior to the purchase of Shares pursuant to the Offer, if
the Board of Directors of the Company shall have approved an Acquisition
Proposal or withdrawn or modified (including by amendment of the Schedule
14D-9), in a manner adverse to Parent or Sub, the Board of Director's
recommendation pursuant to Section 1.2(a); or
(f) by Parent prior to the purchase of Shares pursuant to the Offer, if
any of the conditions set forth in Sections 7.1 or 7.2 shall have become
incapable of fulfillment, and shall not have been waived by Parent, or if the
Company shall breach in any respect any of its representations, warranties or
obligations hereunder and such breach shall have a Material Adverse Effect, and
the Company shall not have provided reasonable assurance that such breach will
be cured in all material respects on or before the Closing Date; or
(g) by the Company prior to the purchase of Shares pursuant to the Offer,
if any of the conditions set forth in Sections 7.1 or 7.3 shall have become
incapable of fulfillment, and shall not have been waived by the Company, or if
Parent or Sub shall breach in any respect any of their respective
representations, warranties or obligations hereunder and such breach shall have
a material adverse effect on the consummation of the transactions contemplated
by this Agreement, and Parent or Sub, as the case may be, shall not have
provided reasonable assurance that such breach will be cured in all material
respects on or before the Closing Date;
provided, however, that the party seeking termination pursuant to clause
(f) or (g) hereof is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
(a) AGREEMENT VOID. In the event of the termination and abandonment of
this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease, except for agreements contained in
Sections 6.6, 8.2 and 9.2; provided, however, that (i) nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement nor relieve the Company from any liability under this Article VIII,
and (ii) the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms.
(b) TERMINATION AMOUNT. If this Agreement is terminated pursuant to either
of Sections 8.1(d) or 8.1(e), then the Company shall (provided that neither
Parent nor Sub is then in material breach of its obligations under this
Agreement) promptly (but not later than the second
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44
business day following such termination) pay to Parent the sum of $4.5 million
in cash (the "Termination Amount").
(c) ACQUISITION PROPOSAL FOLLOWING TERMINATION. If (i) as of the
expiration or other termination of the Offer in accordance with its terms, the
number of Shares then validly tendered in the Offer and not withdrawn shall be
equal to or less than 50% of the then outstanding number of Shares, and this
Agreement is terminated, (ii) all Tender Offer Conditions are satisfied at the
time of the expiration or termination of the Offer (except (x) any condition
that requires tender of 50% or more of the Shares, (y) in the case of the
Financing Condition, the parties issuing the Commitments would be then prepared
to provide the financing thereunder (if the required number of Shares were
tendered), and (z) condition (e) set forth on Annex I, provided Parent or Sub
have not terminated the Agreement for any breach of the Agreement which
constitutes a violation of said condition (e)), and (iii) at any time prior to
or within one year after termination of this Agreement, the Company enters into
an agreement relating to an Acquisition Proposal at a value (if the
consideration is other than a cash payment) or at a price per Share to
stockholders which is greater (after giving effect to any stock dividends, stock
splits, recapitalizations and similar events affecting the Shares) than the per
share price set forth in this Agreement, with a person other than Parent or Sub
or their Affiliates and Associates, which agreement is Consummated within such
one year period, then, upon the Consummation thereof, the Company shall pay to
Parent the Termination Amount. At no time prior to or within one year after
termination of this Agreement shall the Company enter into any agreement
relating to any such Acquisition Proposal which is to be Consummated within such
one year period with a person other than Parent or Sub or their Affiliates and
Associates unless such agreement provides that such person shall, upon the
execution of such agreement, pay any Termination Amount due Parent under this
Section 8.2 which at that time remains unpaid. For purposes hereof, an
Acquisition Proposal shall be "Consummated" on the first date after the
execution thereof that the other party thereto acquires any Shares or assets of
the Company or its Subsidiaries, whether by purchase, exchange, merger,
consolidation or otherwise.
(d) REASONABLE INDUCEMENT. The parties acknowledge and agree that the
provisions for payment of the Termination Amount are included herein in order to
reasonably induce Parent to enter into this Agreement and to reimburse Parent
for incurring the costs and expenses related to entering into this Agreement,
obtaining the Commitments and the Financing, and consummating the transactions
contemplated by this Agreement.
(e) COSTS OF ENFORCEMENT. Notwithstanding anything to the contrary set
forth in this Agreement, in the event Parent and/or Sub files suit to seek all
or a portion of the Termination Amount, the prevailing party in any such suit
shall be entitled, in addition to any other relief to which it may be entitled,
to payment by the non-prevailing party of all expenses, including reasonable
attorneys' fees and expenses, which it incurs in enforcing its rights under this
Section 8.2.
SECTION 8.3. AMENDMENT. Subject to the applicable provisions of the
Delaware GCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after approval of the Merger by the stockholders of the Company, no amendment
shall be made which reduces the consideration payable in the Merger or adversely
41
45
affects the rights of the Company's stockholders hereunder without the approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 8.4. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to Section 8.2, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties set forth in this Agreement shall survive the
Effective Time or, if earlier, the date of the purchase of Shares pursuant to
the Offer. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after such time or date,
including, without limitation, Section 6.6.
SECTION 9.2. FEES AND EXPENSES. Except as provided otherwise in this
Agreement, including, without limitation, in Sections 6.2, 6.11 and 8.2, whether
or not the Merger shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.3. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 9.4. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to: Xxxxxx Products Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
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Attn: Jordan X. Xxxx, President
Telecopy No.: (000) 000-0000
with copies to: Berkshire Partners LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Managing Director
Telecopy No.: (000) 000-0000
- and -
Posternak, Xxxxxxxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, P.C.
Telecopy No.: (000) 000-0000
(b) if to the Company, to: The Rival Company 000
Xxxx 000xx Xxxxxxx Xxxxxx Xxxx, XX 00000
Attn: Board of Directors Telecopy No.:
000-000-0000
with a copy to: Xxxxxxxx & Xxxxxx LLP
Two Crown Center
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
SECTION 9.5. INTERPRETATION. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
and the other agreements referred to herein, including without limitation the
Confidentiality Agreement, constitute the entire agreement, and supersede all
prior agreements and
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47
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not intended to confer upon
any person, other than the parties hereto and the third party beneficiaries
referred to in the following sentence, any rights or remedies. The parties
hereto expressly intend the provisions of Section 6.6 to confer a benefit upon
and be enforceable by, as third party beneficiaries of this Agreement, the third
persons referred to in, or intended to be benefited by, such provisions.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Parent may assign this
Agreement (i) to any wholly owned subsidiary of Parent or (ii) together with all
of the outstanding capital stock of Sub, to an entity organized under the
corporate or limited liability laws of jurisdiction of one of the United States
of America, the ownership interests of which entity are substantially identical
to the ownership interests of Parent immediately prior to such assignment and
which entity specifically and expressly assumes by written agreement the
obligations of Parent under this Agreement; in either case so long as such
assignment shall not adversely affect the ability of Parent and Sub to secure
the Financing described in Section 4.2(d) and without Parent being released from
liability hereunder and such transfer or assignment will not relieve Parent or
Sub of their obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 9.11. SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the Company, Parent and Sub have caused this Agreement
to be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
THE RIVAL COMPANY
By: /s/ XXXXXX X. XXXXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman/Chief Executive Officer
XXXXXX PRODUCTS CORP.
By: /s/ JORDAN X. XXXX
---------------------------------------
Name: Jordan X. Xxxx
Title: President and Chief Executive
Officer
XXXXXXXX ACQUISITION CORP.
By: /s/ JORDAN X. XXXX
---------------------------------------
Name: Jordan X. Xxxx
Title: President
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ANNEX I
The capitalized terms used in this Annex have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or the Merger Agreement,
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1 (c) under the
Exchange Act (relating to Offeror's obligation to pay for or return tendered
Shares after the termination or withdrawal of the Offer), to pay for any Shares,
and may terminate and withdraw the Offer, if (i) the Minimum Condition has not
been satisfied, (ii) the applicable waiting period under the HSR Act shall not
have expired or been terminated, (iii) the Financing Condition has not been
satisfied, or (iv) at any time on or after the date of the Merger Agreement and
prior to the acceptance for payment of or payment for Shares, any of the
following conditions shall occur and be continuing:
(a) there shall be instituted or pending any action, suit, investigation,
litigation or proceeding before any domestic court, government or Governmental
Entity or arbitrator, other than by Parent or Sub, a stockholder of Parent or
Sub or any person affiliated with Parent or Sub that, in the reasonable judgment
of Parent, materially adversely affects, or is reasonably likely to materially
adversely affect, the Company and its Subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, the Financing, or the consummation of
the transactions contemplated by the Merger Agreement, provided that, in any
such case, Parent shall have used commercially reasonable efforts to defeat or
have vacated any such action or proceeding against Parent or Sub and shall have
failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its Subsidiaries or
to the Company or any of its Subsidiaries or the Offer or the Merger, by any
court, government or Governmental Entity, other than the application of the
waiting period provision of the HSR Act to the Offer or the Merger that, in the
reasonable judgment of Parent, is likely, directly or indirectly, to result in
any of the consequences referred to in paragraph (a) above; or
(c) any change, event, occurrence or circumstance shall have occurred
that, in the reasonable judgment of Parent, would have a Material Adverse
Effect; or
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, which
suspension or limitation shall continue for at least three consecutive trading
days (excluding suspensions or limitations resulting solely from physical damage
or interference with such exchange not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) a commencement of a war or armed hostilities
or other national or international calamity directly or indirectly involving the
United States which would reasonably be expected to
50
have a material adverse impact on the capital markets of the United States, or
(iv) in the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration, escalation or worsening thereof; or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement, or (i)
any of the representations and warranties of the Company set forth in the Merger
Agreement that are qualified as to materiality shall not be true and correct, or
(ii) any of the representations and warranties of the Company set forth in the
Merger Agreement that are not so qualified shall not be true and correct in any
material respect, individually or in the aggregate, in each case when made and
as of the expiration of the Offer; except for changes permitted or contemplated
by the Merger Agreement and except for such breaches of representations,
warranties, covenants or agreements as would not have, individually or in the
aggregate, a Material Adverse Effect or materially adversely affect the
Financing or the consummation of the transactions contemplated by the Merger
Agreement; or
(f) the Merger Agreement shall have been terminated in accordance with its
terms; or
(g) any Third Party acquires beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of 25% or more of the outstanding Shares, unless
such Shares have been validly tendered and not withdrawn; or
(h) a tender offer or exchange offer for more than 25% of the Shares shall
have been made or publicly proposed by a Third Party; or
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Sub or Parent its approval or recommendation of the Offer, the
Merger Agreement or the Merger or recommends or approves an Acquisition Proposal
by a Third Party; or
(j) any filing required to be made by the Company or its Subsidiaries
with, or any consent, approval, permit or authorization required to be obtained
by the Company or its Subsidiaries from, any Governmental Entity which, either
individually or in the aggregate, if not made or obtained would have a Material
Adverse Effect at the time of or after the consummation of the Offer or would
prevent the consummation of the Offer shall not have been made or obtained (as
the case may be);
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Sub and may be
asserted by Parent or Sub regardless of the circumstances giving rise to such
condition or may be waived by Parent or Sub in whole or in part at any time and
from time to time in its sole discretion. The failure by Parent or Sub or any
Affiliate of Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and
51
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
