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EXHIBIT 2.1
[COMPOSITE]
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX-FIELD HEALTH PRODUCTS, INC.
GFHP ACQUISITION CORP.,
AND
XXXXX ENTERPRISES, INC.
DATED AS OF SEPTEMBER 5, 1997,
AS AMENDED AS OF
SEPTEMBER 29, 1997
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TABLE OF CONTENTS
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PARTIES............................................................................. A-5
PREAMBLE............................................................................ A-5
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger....................................................................... A-5
1.2 Time and Place of Closing.................................................... A-5
1.3 Effective Time............................................................... A-5
ARTICLE 2
TERMS OF MERGER
2.1 Charter...................................................................... A-6
2.2 Bylaws....................................................................... A-6
2.3 Directors and Officers....................................................... A-6
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares......................................................... A-6
3.2 Anti-Dilution Provisions..................................................... A-7
3.3 Shares Held by Target or Buyer............................................... A-7
3.4 Fractional Shares............................................................ A-7
3.5 Stock Options................................................................ A-8
ARTICLE 4
Exchange of Shares
4.1 Exchange Procedures.......................................................... A-8
4.2 Rights of Former Target Stockholders......................................... A-9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TARGET
5.1 Organization, Standing, and Power............................................ A-9
5.2 Authority of Target; No Breach By Agreement.................................. A-10
5.3 Capital Stock................................................................ A-10
5.4 Target Subsidiaries.......................................................... A-11
5.5 SEC Filings; Financial Statements............................................ A-11
5.6 Absence of Undisclosed Liabilities........................................... A-12
5.7 Absence of Certain Changes or Events......................................... A-12
5.8 Tax Matters.................................................................. A-12
5.9 Assets....................................................................... A-13
5.10 Intellectual Property........................................................ A-14
5.11 Environmental Matters........................................................ A-14
5.12 Compliance with Laws......................................................... A-15
5.13 Labor Relations.............................................................. A-15
5.14 Employee Benefit Plans....................................................... A-15
5.15 Material Contracts........................................................... A-17
5.16 Legal Proceedings............................................................ A-17
5.17 Reports...................................................................... A-17
5.18 Statements True and Correct.................................................. A-17
5.19 Tax and Regulatory Matters................................................... A-18
5.20 State Takeover Laws.......................................................... A-18
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5.21 Charter Provisions........................................................... A-18
5.22 Opinion of Financial Advisor................................................. A-18
5.23 Affiliate Transactions....................................................... A-18
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization, Standing, and Power............................................ A-19
6.2 Authority; No Breach By Agreement............................................ A-19
6.3 Capital Stock................................................................ A-19
6.4 Buyer Subsidiaries........................................................... A-20
6.5 SEC Filings; Financial Statements............................................ A-20
6.6 Absence of Undisclosed Liabilities........................................... A-21
6.7 Absence of Certain Changes or Events......................................... A-21
6.8 Tax Matters.................................................................. A-21
6.9 Assets....................................................................... A-22
6.10 Intellectual Property........................................................ A-22
6.11 Environmental Matters........................................................ A-23
6.12 Compliance With Laws......................................................... A-23
6.13 Labor Relations.............................................................. A-23
6.14 Employee Benefit Plans....................................................... A-23
6.15 Material Contracts........................................................... A-25
6.16 Legal Proceedings............................................................ A-25
6.17 Reports...................................................................... A-25
6.18 Statements True and Correct.................................................. A-25
6.19 Authority of Sub............................................................. A-26
6.20 Tax and Regulatory Matters................................................... A-26
6.21 Rights Agreement............................................................. A-26
6.22 Affiliate Transactions....................................................... A-26
6.23 Vote Required................................................................ A-27
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Target.............................................. A-27
7.2 Negative Covenants of Target................................................. A-27
7.3 Covenants of Buyer........................................................... A-28
7.4 Adverse Changes in Condition................................................. A-29
7.5 Reports...................................................................... A-30
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Stockholder Approval................ A-30
8.2 Exchange Listing............................................................. A-31
8.3 Applications; Antitrust Notification......................................... A-31
8.4 Filings with State Offices................................................... A-31
8.5 Agreement as to Efforts to Consummate........................................ A-31
8.6 Investigation and Confidentiality............................................ A-31
8.7 Press Releases............................................................... A-32
8.8 No Solicitations, etc........................................................ A-32
8.9 Tax Treatment................................................................ A-32
8.10 State Takeover Laws.......................................................... A-32
8.11 Agreement of Affiliates...................................................... A-32
8.12 Employee Benefits and Contracts.............................................. A-32
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8.13 Indemnification.............................................................. A-33
8.14 Related Party Contracts and Transactions..................................... A-34
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party...................................... A-34
9.2 Conditions to Obligations of Buyer........................................... A-35
9.3 Conditions to Obligations of Target.......................................... A-35
ARTICLE 10
TERMINATION
10.1 Termination.................................................................. A-36
10.2 Effect of Termination........................................................ A-37
10.3 Non-Survival of Representations and Covenants................................ A-37
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.................................................................. A-37
11.2 Expenses..................................................................... A-43
11.3 Brokers and Finders.......................................................... A-43
11.4 Entire Agreement............................................................. A-43
11.5 Amendments................................................................... A-43
11.6 Waivers...................................................................... A-43
11.7 Assignment................................................................... A-44
11.8 Notices...................................................................... A-44
11.9 Governing Law................................................................ A-45
11.10 Counterparts................................................................. A-45
11.11 Captions; Articles and Sections.............................................. A-45
11.12 Interpretations.............................................................. A-45
11.13 Severability................................................................. A-45
11.14 Enforcement of Agreement..................................................... A-45
SIGNATURES............................................................................. A-45
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of September 5, 1997, as amended as of September 29, 1997, by and among
XXXXXX-FIELD HEALTH PRODUCTS, INC. ("Buyer"), a Delaware corporation; GFHP
ACQUISITION CORP. ("Sub"), a Delaware corporation; and XXXXX ENTERPRISES, INC.
("Target"), a Delaware corporation.
PREAMBLE
The respective Boards of Directors of Target, Sub and Buyer are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective stockholders. This Agreement
provides for the acquisition of Target by Buyer pursuant to the merger of Sub
with and into Target. At the effective time of such merger, the outstanding
shares of the capital stock of Target shall be converted into the right to
receive shares of the common stock of Buyer (except as provided herein). As a
result, stockholders of Target shall become stockholders of Buyer and Target
shall continue immediately following such merger to conduct its business and
operations as a wholly owned subsidiary of Buyer. The transactions described in
this Agreement are subject to the approvals of the stockholders of Target, the
stockholders of Buyer, expiration of the required waiting period under the HSR
Act, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the Merger
for federal income tax purposes shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code.
In consideration of the transactions contemplated hereby and in order to
induce the parties to enter into this Agreement, BIL (Far East Holdings)
Limited, BIL Securities (Offshore) Ltd., Xxxxx Holdings I, L.P., J. Xxx Xxxxx,
X.X. Xxxxx, The X.X. Xxxxx Foundation, Inc., The Xxxxxxxx Xxxxxxx Xxxxx Trust
and The Xxxxxx Xxxxxx Xxxxx Trust have concurrently with the execution and
delivery of this Agreement executed and delivered to Buyer a Stockholders
Agreement in the form attached hereto as Annex-B. Additionally, in consideration
of the transactions contemplated hereby and in order to induce the parties to
enter into this Agreement, Xxxx X. Xxxxxxx has concurrently with the execution
and delivery of this Agreement executed and delivered to Buyer a Voting
Agreement in the form attached hereto as Annex C.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, Sub shall be merged with and into Target in accordance with the
provisions of Section 251 of the DGCL and with the effect provided in Section
251 of the DGCL (the "Merger"). Target shall be the Surviving Corporation
resulting from the Merger and shall become a wholly owned Subsidiary of Buyer
and shall continue to be governed by the Laws of the State of Delaware. The
Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of Target, Sub
and Buyer and by Buyer, as the sole stockholder of Sub.
1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective
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with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the authorized officers of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on the first
business day following the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the stockholders of Target and Buyer approve
this Agreement to the extent such approval is required by applicable Law.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Certificate of Incorporation of Target in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until duly amended or repealed;
provided that such Certificate of Incorporation shall be amended to reflect that
the name of the Surviving Corporation shall be "Lumex/Basic American Holdings,
Inc."
2.2 Bylaws. The Bylaws of Target in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.3 Directors and Officers. The directors of Sub in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Sub in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of Buyer, Target, Sub or the stockholders of any of the foregoing, the shares of
the constituent corporations shall be converted as follows:
(a) Each share of capital stock of Buyer issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall be
converted into one share of Target Common Stock.
(c) Each share of Target Common Stock (excluding shares held by any
Target Entity or any Buyer Entity) issued and outstanding immediately prior
to the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive 2.1 shares of Buyer Common
Stock (the "Base Exchange Ratio" and, subject to the provisions of the
remainder of this sentence, the "Exchange Ratio"); provided, that, in the
event that the Average Closing Price shall be greater than $17.6190 (the
"Upper Threshold Price"), the Exchange Ratio shall equal that multiple of a
share of Buyer Common Stock (rounded to the nearest ten thousandth of a
share) obtained by dividing the product of the Base Exchange Ratio and the
Upper Threshold Price by the Average Closing Price; provided further, that
in the event that the Average Closing Price shall be less than $13.5714
(the "Lower Threshold Price"), the Exchange Ratio shall equal that multiple
of a share of Buyer Common Stock (rounded to the nearest ten thousandth of
a share) obtained by dividing the product of the Base Exchange Ratio and
the Lower Threshold Price by the Average Closing Price. For purposes of
this Agreement, "Average Closing Price" is defined to mean the average of
the daily closing prices for the shares of Buyer Common Stock for the ten
(10) consecutive trading days on which such shares are actually traded on
the NYSE (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Buyer)
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ending at the close of trading on the second trading day immediately
preceding the Closing Date). Pursuant to the Buyer Rights Agreement, each
share of Buyer Common Stock issued in connection with the Merger upon
conversion of Target Common Stock shall be accompanied by a Buyer Right.
3.2 Anti-Dilution Provisions. In the event Buyer changes the number of
shares of Buyer Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted. In the
event Buyer changes the number of shares of Buyer Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be after the Exchange Ratio has been determined
in accordance with Section 3.1(c) and prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted. In the event Buyer changes the number
of shares of Buyer Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the date on which the Exchange Ratio is determined in accordance with Section
3.1(c), (i) the Average Closing Price Limitations shall be adjusted to
appropriately adjust the ratio under which shares of Target Common Stock will be
converted into shares of Buyer Common Stock pursuant to Section 3.1(c), and (ii)
if necessary, the anticipated Effective Time shall be postponed for an
appropriate period of time agreed upon by the parties in order for the Average
Closing Price to reflect the market effect of such stock split, stock dividend,
or similar recapitalization.
3.3 Shares Held by Target or Buyer. Each of the shares of Target Common
Stock held by any Target Entity or by any Buyer Entity shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 Fractional Shares. (a) No certificate or scrip representing fractional
shares of Buyer Common Stock to which holders of Target Common Stock would
otherwise be entitled pursuant to this Agreement will be issued in the Merger
upon the surrender for exchange of certificates representing shares of Target
Common Stock, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Buyer.
(b) As promptly as practicable following the Effective Time, the Exchange
Agent (as defined in Section 4.1) shall determine the aggregate number of whole
shares of Buyer Common Stock represented by fractional shares of Buyer Common
Stock to which holders of Target Common Stock would be entitled but for the
provisions of paragraph (a) of this Section 3.4 (such number of shares being
herein called the "Excess Shares"). As soon after the Effective Time as
practicable, the Exchange Agent, as agent for the holders of Target Common
Stock, shall sell the Excess Shares at then prevailing prices on the NYSE, all
in the manner provided in paragraph (c) of this Section 3.4.
(c) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through a member firm of the NYSE and shall be executed in round
lots to the extent practicable. Until the net proceeds of such sale or sales
have been distributed to the holders of Target Common Stock, the Exchange Agent
will hold such proceeds in trust for the holders of Target Common Stock (the
"Common Stock Trust"). Buyer shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent , incurred in connection with such sale of the Excess Shares. In
addition, Buyer shall pay the Exchange Agent's compensation and expenses in
connection with such sale. The Exchange Agent shall determine the portion of the
Common Stock Trust to which each holder of Target Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Stock Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such holder of Target Common
Stock is entitled and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Target Common Stock are
entitled.
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(d) As soon as practicable after the determination of the amount of cash to
be paid to holders of Target Common Stock in lieu of any fractional share
interests in accordance with the immediately preceding paragraph, the Exchange
Agent shall make available such amounts to such holders of Target Common Stock
in a manner consistent with paragraphs (b) and (c) of this Section 3.4
3.5 Stock Options. (a) At the Effective Time, each option or other right
to purchase shares of Target Common Stock pursuant to stock options ("Target
Options") granted by Target under the Target Stock Plans, which are outstanding
at the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to Buyer Common Stock, and Buyer shall assume each
Target Option, in accordance with the terms of the Target Stock Plan and stock
option agreement by which it is evidenced, except that from and after the
Effective Time, (i) Buyer and its Compensation Committee shall be substituted
for Target and the Committee of Target's Board of Directors (including, if
applicable, the entire Board of Directors of Target) administering such Target
Stock Plan, (ii) each Target Option assumed by Buyer may be exercised solely for
shares of Buyer Common Stock, (iii) the number of shares of Buyer Common Stock
subject to such Target Option shall be equal to the number of shares of Target
Common Stock subject to such Target Option immediately prior to the Effective
Time multiplied by the Exchange Ratio (as the same may have been adjusted in
accordance with Section 3.2) and (iv) the per share exercise price under each
such Target Option shall be adjusted by dividing the per share exercise price
under each such Target Option by the Exchange Ratio (as the same may have been
adjusted in accordance with Section 3.2) and rounding up to the nearest cent. In
addition, notwithstanding the provisions of clauses (iii) and (iv) of the first
sentence of this Section 3.5, with respect to each Target Option which is an
"incentive stock option" Buyer shall take no action that would constitute a
modification, extension, or renewal of the option, within the meaning of Section
424(h) of the Internal Revenue Code.
(b) As soon as practicable after the Effective Time, Buyer shall deliver to
the participants in each Target Stock Plan an appropriate notice setting forth
such participant's rights pursuant thereto and the grants pursuant to such
Target Stock Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.5(a) after giving effect to
the Merger), and Buyer shall comply with the terms of each Target Stock Plan to
ensure, to the extent required by, and subject to the provisions of, such Target
Stock Plan, that Target Options which qualified as incentive stock options prior
to the Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, Buyer shall take all
corporate action necessary to reserve for issuance sufficient shares of Buyer
Common Stock for delivery upon exercise of Target Options assumed by it in
accordance with this Section 3.5. As soon as practicable after the Effective
Time, Buyer shall file a registration statement on Form S-8 (or any successor or
other appropriate form), with respect to the shares of Buyer Common Stock
subject to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses with respect thereto) for so long as such
options remain outstanding.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, Buyer and
Target shall cause the exchange agent selected by Buyer (the "Exchange Agent")
to mail to each holder of record of a certificate or certificates which
represented shares of Target Common Stock immediately prior to the Effective
Time (the "Certificates") appropriate transmittal materials and instructions
(which shall specify that delivery shall be effected, and risk of loss and title
to such Certificates shall pass, only upon proper delivery of such Certificates
to the Exchange Agent). The Certificate or Certificates of Target Common Stock
so delivered shall be duly endorsed as the Exchange Agent may require. In the
event of a transfer of ownership of shares of Target Common Stock represented by
Certificates that are not registered in the transfer records of Target, the
consideration provided in Section 3.1 may be issued to a transferee if the
Certificates representing such shares are delivered to the Exchange Agent,
accompanied by all documents required to evidence such transfer and by evidence
satisfactory to the Exchange Agent that any applicable stock transfer taxes have
been paid. If any
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Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
Buyer and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. After the Effective Time, each holder of shares of Target Common
Stock (other than shares to be canceled pursuant to Section 3.3) issued and
outstanding at the Effective Time shall surrender the Certificate or
Certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1, together with all undelivered dividends or distributions in
respect of such shares (without interest thereon) pursuant to Section 4.2. Buyer
shall not be obligated to deliver the consideration to which any former holder
of Target Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's Certificate or Certificates for exchange as provided in
this Section 4.1. Any other provision of this Agreement notwithstanding, neither
Buyer, the Surviving Corporation nor the Exchange Agent shall be liable to a
holder of Target Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law. Adoption of this Agreement by the stockholders of Target
shall constitute ratification of the appointment of the Exchange Agent.
4.2 Rights of Former Target Stockholders. At the Effective Time, the stock
transfer books of Target shall be closed as to holders of Target Common Stock
immediately prior to the Effective Time and no transfer of Target Common Stock
by any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1, each Certificate
theretofore representing shares of Target Common Stock (other than shares to be
canceled pursuant to Section 3.3) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Sections 3.1 and 3.4 in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Target in respect of such shares of Target Common Stock in accordance with
the terms of this Agreement and which remain unpaid at the Effective Time. To
the extent permitted by Law, former stockholders of record of Target shall be
entitled to vote after the Effective Time at any meeting of Buyer stockholders
the number of whole shares of Buyer Common Stock into which their respective
shares of Target Common Stock are converted, regardless of whether such holders
have exchanged their Certificates for certificates representing Buyer Common
Stock in accordance with the provisions of this Agreement. Whenever a dividend
or other distribution is declared by Buyer on the Buyer Common Stock, the record
date for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares of Buyer Common Stock issuable
pursuant to this Agreement, but beginning six months after the Effective Time no
dividend or other distribution payable to the holders of record of Buyer Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any Certificate until such holder surrenders such Certificate for
exchange as provided in Section 4.1. However, upon surrender of such
Certificate, both the Buyer Common Stock certificate (together with all such
undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each share represented by such
Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Buyer as follows:
5.1 Organization, Standing, and Power. Target is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of Delaware, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material Assets. Target is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and
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foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect. The minute books and other organizational documents for Target
have been made available to Buyer for its review and, except as disclosed in
Section 5.1 of the Target Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and stockholders thereof.
5.2 Authority of Target; No Breach by Agreement. (a) Target has the
corporate power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Target, subject to the adoption of this Agreement by the
holders of a majority of the outstanding shares of Target Common Stock, which is
the only stockholder vote required for approval of this Agreement and
consummation of the Merger by Target. This Agreement has been duly executed and
delivered by Target and, subject to such requisite stockholder approval, this
Agreement represents a legal, valid, and binding obligation of Target,
enforceable against Target in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Target, nor the
consummation by Target of the transactions contemplated hereby, nor compliance
by Target with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of Target's Certificate of Incorporation or Bylaws or
the certificate or articles of incorporation or bylaws of any Target Subsidiary
or any resolution adopted by the board of directors or the stockholders of any
Target Entity, or (ii) except as disclosed in Section 5.2 of the Target
Disclosure Memorandum, constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Target Entity under, any Contract or Permit of any Target Entity, where such
Default or Lien, or any failure to obtain such Consent, is reasonably likely to
have, individually or in the aggregate, a Target Material Adverse Effect, or,
(iii) subject to receipt of the requisite Consents referred to in Section
9.1(b), constitute or result in a Default under, or require any Consent pursuant
to, any Law or Order applicable to any Target Entity or any of their respective
Assets where such Default, or any failure to obtain such Consent is reasonably
likely to have, individually or in the aggregate, a Target Material Adverse
Effect.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities as
described in Section 5.2 of the Target Disclosure Memorandum, and other than
notices to or filings with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect to any employee benefit plans, or under the
HSR Act, and other than Consents, filings, or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Target of the Merger and the other transactions contemplated in this Agreement.
5.3 Capital Stock. (a) The authorized capital stock of Target consists of
(i) 20,000,000 shares of Target Common Stock, par value $2.50 per share, of
which 4,482,709 shares are issued and outstanding as of the date of this
Agreement and not more than 5,055,109 shares will be issued and outstanding at
the Effective Time, and (ii) 8,000,000 shares of preferred stock, par value
$1.00 per share, none of which are issued and outstanding. All of the issued and
outstanding shares of capital stock of Target are duly and validly issued and
outstanding and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of Target has been issued in violation of
any preemptive rights of the current or past stockholders of Target.
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(b) Except as set forth in Section 5.3(a), or as disclosed in Section 5.3
of the Target Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Target outstanding and no outstanding Equity Rights
relating to the capital stock of Target, and all shares of Target Common Stock
issuable upon the exercise or conversion of such outstanding Equity Rights will,
when so issued, be duly and validly issued and outstanding and fully paid and
nonassessable under the DGCL.
5.4 Target Subsidiaries. Target has disclosed in Section 5.4 of the Target
Disclosure Memorandum all of the Target Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which it is
qualified and/or licensed to transact business, and the number of shares owned
and percentage ownership interest represented by such share ownership) and all
of the Target Subsidiaries that are general or limited partnerships, limited
liability companies, or other non-corporate entities (identifying the Law under
which such entity is organized, each jurisdiction in which it is qualified
and/or licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.4 of the Target Disclosure
Memorandum, Target or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock (or other equity interests) of each Target
Subsidiary. No capital stock (or other equity interest) of any Target Subsidiary
is or may become required to be issued (other than to another Target Entity) by
reason of any Equity Rights, and there are no Contracts by which any Target
Subsidiary is bound to issue (other than to another Target Entity) additional
shares of its capital stock (or other equity interests) or Equity Rights or by
which any Target Entity is or may be bound to transfer any shares of the capital
stock (or other equity interests) of any Target Subsidiary (other than to
another Target Entity). Except as disclosed in Section 5.4 of the Target
Disclosure Memorandum, there are no Contracts relating to the rights of any
Target Entity to vote or to dispose of any shares of the capital stock (or other
equity interests) of any Target Subsidiary. All of the shares of capital stock
(or other equity interests) of each Target Subsidiary held by a Target Entity
are fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the Target Entity free and clear of any Lien. Except as disclosed in Section
5.4 of the Target Disclosure Memorandum, each Target Subsidiary is a
corporation, and each such Subsidiary is duly incorporated, validly existing,
and (as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Target Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Target Material Adverse Effect. The minute books and other organizational
documents for each Target Subsidiary have been made available to Buyer for its
review, and, except as disclosed in Section 5.4 of the Target Disclosure
Memorandum, are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors and
stockholders thereof.
5.5 SEC Filings; Financial Statements. (a) Except as disclosed in Section
5.5 of the Target Disclosure Memorandum, Target has timely filed and made
available to Buyer all SEC Documents required to be filed by Target since
December 31, 1993 (the "Target SEC Reports"). The Target SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in such
Target SEC Reports or necessary in order to make the statements in such Target
SEC Reports, in light of the circumstances under which they were made, not
misleading; provided, that any pro forma financial statements contained in the
Target SEC Reports are not necessarily indicative of the consolidated financial
position of the Target Entities as of the respective dates thereof and the
consolidated results of operations and cash flows of the Target Entities for the
periods indicated. No Target Subsidiary is required to file any SEC Documents.
(b) Each of the Target Financial Statements (including, in each case, any
related notes) contained in the Target SEC Reports, including any Target SEC
Reports filed after the date of this Agreement until the
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Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited interim statements, as permitted by Form 10-Q of
the SEC), and fairly presented in all material respects the consolidated
financial position of Target and its Subsidiaries as at the respective dates and
the consolidated results of operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount or effect and that any pro forma financial statements
contained in the Target SEC Reports are not necessarily indicative of the
consolidated financial position of the Target Entities as of the respective
dates thereof and the consolidated results of operations and cash flows of the
Target Entities for the periods indicated.
5.6 Absence of Undisclosed Liabilities. Except as disclosed in Section 5.6
of the Target Disclosure Memorandum, no Target Entity has any Liabilities that
are reasonably likely to have, individually or in the aggregate, a Target
Material Adverse Effect, other than Liabilities or allowances which are
disclosed or accrued or reserved against in the consolidated balance sheets of
Target as of December 31, 1996 and June 30, 1997, included in the Target
Financial Statements delivered prior to the date of this Agreement or reflected
in the notes thereto. Except as disclosed in Section 5.6 of the Target
Disclosure Memorandum, no Target Entity has incurred or paid any Liability since
June 30, 1997, except for such Liabilities incurred or paid (i) in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect or (ii) in connection with the transactions contemplated by this
Agreement. Except as disclosed in Section 5.6 of the Target Disclosure
Memorandum, no Target Entity is directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability of any Affiliate (other than
another Target Entity) for any amount, individually or in the aggregate, in
excess of $100,000.
5.7 Absence of Certain Changes or Events. Since June 30, 1997, except as
disclosed in the Target Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.7 of the Target Disclosure Memorandum,
(a) there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect, (b) the Target Entities have conducted their respective
businesses only in the ordinary course consistent with past practice and (c)
none of the Target Entities has taken any action which, if taken after the date
hereof, would constitute a breach of any provision of Section 7.2.
5.8 Tax Matters. (a) All Tax Returns required to be filed by or on behalf
of any of the Target Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1996, except to the extent that all such failures to file,
taken together, are not reasonably likely to have a Target Material Adverse
Effect, and all Tax Returns filed are complete and accurate in all material
respects, or except as disclosed in Section 5.8 of the Target Disclosure
Memorandum. All Taxes shown on filed Tax Returns have been paid. As of the date
of this Agreement, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Target
Material Adverse Effect, except as reserved against in the Target Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 5.8 of the Target Disclosure Memorandum. The applicable statutes of
limitations with respect to Target's federal income Tax Returns have expired
through December 31, 1992. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid. There
are no Liens with respect to Taxes upon any of the Assets of the Target
Entities, except for any such Liens which are not reasonably likely to have a
Target Material Adverse Effect.
(b) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
none of the Target Entities has executed an extension or waiver of any statute
of limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
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(c) The provision for any Taxes due or to become due for any of the Target
Entities for the period or periods through and including the date of the
respective Target Financial Statements that has been made and is reflected on
such Target Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the Target Entities have been provided for in
accordance with GAAP.
(e) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
since March 27, 1989, and to the Knowledge of Target prior to March 27, 1989,
none of the Target Entities is a party to any Tax allocation or sharing
agreement and none of the Target Entities has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Target), has any Liability for Taxes of any Person
(other than Target and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign Law) as a
transferee or successor or by Contract or otherwise.
(f) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
each of the Target Entities is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
none of the Target Entities has made any payments, is obligated to make any
payments, or is a party to any Contract that could obligate it to make any
payments that would be disallowed as a deduction under Section 280G or 162(m) of
the Internal Revenue Code.
(h) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
there has not been an ownership change, as defined in Internal Revenue Code
Section 382(g), of the Target Entities that occurred during or after any Taxable
Period in which the Target Entities incurred a net operating loss that carries
over to any Taxable Period ending after December 31, 1996.
(i) Except as disclosed in Section 5.8 of the Target Disclosure Memorandum,
no Target Entity has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
5.9 Assets. (a) Except as disclosed in Section 5.9 of the Target
Disclosure Memorandum or as disclosed or reserved against in the Target
Financial Statements delivered prior to the date of this Agreement, the Target
Entities have good and marketable title, free and clear of all Liens, to all of
their respective Assets, except for any such Liens or other defects of title
which are not reasonably likely to have a Target Material Adverse Effect.
(b) All items of inventory of the Target Entities reflected on the most
recent balance sheet included in the Target Financial Statements delivered prior
to the date of this Agreement and prior to the Effective Time, except as
reserved for in the Target Financial Statements, consisted and will consist, as
applicable, of items of a quality and quantity usable and saleable in the
ordinary course of business and conform to generally accepted standards in the
industry in which the Target Entities are a part.
(c) The accounts receivable of the Target Entities as set forth on the most
recent balance sheet included in the Target Financial Statements delivered prior
to the date of this Agreement or arising since the date thereof are valid and
genuine; have arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the ordinary course
of business consistent with past practice; are not subject to valid defenses,
set-offs or counterclaims; and are collectible at the full recorded amount
thereof less, in the case of accounts receivable appearing on the most recent
balance sheet included in the Target Financial Statements delivered prior to the
date of this Agreement, the recorded allowance for collection losses, returns
and allowances on such balance sheet. The allowance for collection losses on
such balance sheet has been determined in accordance with GAAP.
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(d) The Target Entities currently maintain insurance similar in amounts,
scope, and coverage as Target believes is adequate to conduct its business.
Except as disclosed in Section 5.9 of the Target Disclosure Memorandum, there
are presently no claims for amounts exceeding in any individual case $250,000
pending under such policies of insurance and no notices of claims in excess of
such amounts have been given by any Target Entity under such policies.
(e) The Assets of the Target Entities include all Assets required to
operate the businesses of the Target Entities as presently conducted.
5.10 Intellectual Property. Except as disclosed in Section 5.10 of the
Target Disclosure Memorandum, (i) each Target Entity owns or has a valid and
binding license to use all of the Intellectual Property used by such Target
Entity in the course of its business, (ii) each Target Entity is the owner of or
has a valid and binding license to any Intellectual Property sold or licensed to
a third party by such Target Entity in connection with such Target Entity's
business operations, and such Target Entity has the right to convey by sale or
license any Intellectual Property so conveyed and (iii) no Target Entity is in
Default under any of its Intellectual Property licenses and no proceedings have
been instituted, or are pending or to the Knowledge of Target threatened, which
challenge the rights of any Target Entity with respect to Intellectual Property
used, sold or licensed by such Target Entity in the course of its business, nor
to the Knowledge of Target has any person claimed or alleged any rights to such
Intellectual Property, except for any failure to own or license, Default or
proceeding which is not reasonably likely to have a Target Material Adverse
Effect. All Intellectual Property owned by a Target Entity is owned free and
clear of any Liens, and none of such Intellectual Property is subject to any
outstanding Order or Contract restricting the scope of the use thereof, and
there are no claims or demands of any other Person pertaining to Intellectual
Property owned or used by any Target Entity or any license with respect thereto,
and no actions or proceedings, judicial or administrative or otherwise, have
been instituted, are pending or, to the Knowledge of Target, are threatened
which challenge or affect the rights of any Target Entity in respect thereof,
except for any Liens, Orders, Contracts, claims, demands, actions or proceedings
which are not reasonably likely to have a Target Material Adverse Effect. Except
as disclosed in Section 5.10 of the Target Disclosure Memorandum, to the
Knowledge of Target, the conduct of the business of the Target Entities does not
infringe any Intellectual Property of any other person. Except as disclosed in
Section 5.10 of the Target Disclosure Memorandum, no Target Entity is obligated
to pay any recurring royalties to any Person with respect to any such
Intellectual Property.
5.11 Environmental Matters. (a) Each Target Entity and its Operating
Properties are, and have been, in compliance with all Environmental Laws, except
for violations which are not reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect or except as disclosed in Section
5.11 of the Target Disclosure Memorandum.
(b) Except as disclosed in Section 5.11 of the Target Disclosure
Memorandum, there is no Litigation pending or, to the Knowledge of Target,
threatened before any court, governmental agency, or authority or other forum in
which any Target Entity or any of its Operating Properties (or Target in respect
of such Operating Property) has been or, with respect to threatened Litigation,
may be named as a defendant (nor to the Knowledge of Target are there any facts
or circumstances reasonably likely to give rise to any such Litigation) (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any Target Entity or any of its Operating Properties, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Target Material Adverse Effect.
(c) Except as disclosed in Section 5.11 of the Target Disclosure
Memorandum, during the period of (i) any Target Entity's ownership or operation
of any of their respective current properties, (ii) any Target Entity's
participation in the management of a Participation Facility or (iii) any Target
Entity's holding of a security interest in an Operating Property there have been
no releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, adjacent to, or affecting (or potentially affecting) any property owned
by a
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Target Entity, except such as are not reasonably likely to have, individually or
in the aggregate, a Target Material Adverse Effect.
(d) Each of the Target Entities has obtained all licenses, permits,
authorizations, approvals and consents from Regulatory Authorities which are
required under any applicable Environmental Law in respect of its business or
operations ("Environmental Permits") and each of such Environmental Permits is
in full force and effect, except for such failures to have Environmental Permits
which, individually or in the aggregate, could not reasonably be expected to
have a Target Material Adverse Effect and each of the Target Entities is in
compliance with the terms and conditions of all such Environmental Permits,
except for such failure to be in compliance which, individually or in the
aggregate, is not reasonably likely to have a Target Material Adverse Effect.
5.12 Compliance With Laws. Each Target Entity has in effect all Permits
necessary for it to own, lease, or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect. Except as disclosed in Section 5.12
of the Target Disclosure Memorandum, none of the Target Entities:
(a) is in Default under any of the provisions of its Certificate of
Incorporation or Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a
Target Material Adverse Effect.
5.13 Labor Relations. Except as disclosed in Section 5.13 of the Target
Disclosure Memorandum, no Target Entity is the subject of any Litigation
asserting that it or any other Target Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Target Entity to bargain with
any labor organization as to wages or conditions of employment, nor is any
Target Entity party to any collective bargaining agreement, nor is there any
strike involving any Target Entity, pending or threatened, or to the Knowledge
of Target, is there any activity involving any Target Entity's employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
5.14 Employee Benefit Plans. (a) Target has disclosed in Section 5.14 of
the Target Disclosure Memorandum, and has delivered or made available to Buyer
prior to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, and any related trust agreements,
service provider agreements, insurance contracts or agreements with investment
managers, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any Target Entity or ERISA Affiliate thereof for the benefit
of employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Target Benefit Plans"). Any of the Target
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "Target ERISA
Plan." Each Target ERISA Plan which is also a "defined benefit plan" (as defined
in Section 414(j) of the Internal Revenue Code) is referred to herein as a
"Target Pension Plan." No Target Pension Plan is or has been a multi-employer
plan within the meaning of Section 3(37) of ERISA. Target has also delivered or
made available to Buyer prior to the execution of this Agreement, with respect
to each Target Benefit Plan maintained by any Target Entity, copies of (i) the
current summary plan description (and/or any similar description), (ii) the most
recent Form 5500 series filing and schedules thereto, if such plan is subject to
ERISA reporting requirements, (iii) the most recent determination of the
Internal Revenue Service with respect to the qualified status of such plan, if
Section 401(a) of the Internal Revenue Code applies to such
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plan, (iv) the most recent accounting with respect to such plan if funded
through a trust, and (v) the most recent actuarial report of the qualified
actuary of such plan if actuarial valuations are conducted in respect of such
plan.
(b) Except as disclosed in Section 5.14 of the Target Disclosure
Memorandum, all Target Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect. Each Target ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received or has filed for a favorable determination letter from the Internal
Revenue Service, and Target is not aware of any circumstances likely to result
in revocation or denial of any such favorable determination letter. To the
Knowledge of Target, no Target Entity has engaged in a transaction with respect
to any Target Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject any Target Entity to a Tax imposed
by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA
in amounts which are reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect.
(c) No Target Entity currently maintains a Target Pension Plan. Neither any
Target Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Target
Entity, or the single-employer plan of any entity which is considered one
employer with Target under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA, which is
reasonably likely to have a Target Material Adverse Effect. Except as disclosed
in Section 5.14 of the Target Disclosure Memorandum, other than routine claims
for benefits, there are no pending or, to the Knowledge of Target, threatened
claims by or on behalf of any Target Benefit Plan, by any person covered
thereby, or otherwise, which allege violations of Law which could reasonably be
expected to result in a Target Material Adverse Effect, nor are there any
ongoing Internal Revenue Service, U.S. Department of Labor or other agency
audits or investigations of any Target Benefit Plans.
(d) Within the six-year period preceding the Effective Time, no Liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by any Target Entity with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA Affiliate, which
Liability is reasonably likely to have a Target Material Adverse Effect.
(e) Except as disclosed in Section 5.14 of the Target Disclosure
Memorandum, no Target Entity has any Liability for retiree health and life
benefits under any of the Target Benefit Plans which Liability is reasonably
likely to have a Target Material Adverse Effect.
(f) Except as disclosed in Section 5.14 of the Target Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Target Entity
from any Target Entity under any Target Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any Target Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit, where
such payment, increase, or acceleration is reasonably likely to have,
individually or in the aggregate, a Target Material Adverse Effect.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any Target Entity and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Target Financial Statements to the extent
required by and in accordance with GAAP. No Target Entity is in Default in
performing any of its contractual obligations under any Target Benefit Plan or
any related trust agreement or insurance contract or its obligations under an
agreement with any Regulatory Authority, except for such Defaults which are not
reasonably likely to have a Target Material Adverse Effect. Except as disclosed
in Section 5.14 of the Target Disclosure Memorandum,
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no employer securities, employer real property or other employer property is
included in the assets of any funded Target Benefit Plan.
5.15 Material Contracts. Except as disclosed in Section 5.15 of the Target
Disclosure Memorandum or as set forth in the Target SEC Reports, none of the
Target Entities, nor any of their respective Assets, businesses, or operations,
is a party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any Target Entity or the
guarantee by any Target Entity of any such obligation (other than Contracts
evidencing trade payables and Contracts relating to borrowings or guarantees
made in the ordinary course of business), (iii) any Contract which prohibits or
restricts any Target Entity from engaging in any business activities in any
geographic area, line of business or otherwise in competition with any other
Person, (iv) any Contract between or among Target Entities, (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the purchase or sale of any goods or services (other than
Contracts entered into in the ordinary course of business and involving payments
under any individual Contract not in excess of $250,000 per year), and (vii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by Target with the SEC as of the date of this
Agreement (together with all Contracts referred to in Section 5.14(a), the
"Target Contracts"). With respect to each Target Contract and except as
disclosed in Section 5.15 of the Target Disclosure Memorandum: (i) the Contract
is in full force and effect; (ii) no Target Entity is in Default thereunder,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Target Material Adverse Effect; (iii) no Target Entity has
repudiated or waived any material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of Target, in Default in
any respect, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Target Material Adverse Effect, or has
repudiated or waived any material provision thereunder. Except as disclosed in
Section 5.15 of the Target Disclosure Memorandum, all of the indebtedness of any
Target Entity for money borrowed in excess of $100,000 in any single instrument,
is prepayable at any time by such Target Entity without penalty or premium.
5.16 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of Target, threatened against any Target Entity, or against any
director, employee or employee benefit plan of any Target Entity, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Target Material Adverse Effect, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Target Entity, that are reasonably likely
to have, individually or in the aggregate, a Target Material Adverse Effect.
5.17 Reports. Since January 1, 1994, or the date of organization if later,
each Target Entity has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except for failures to file which are not
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied with all applicable Laws, except where the failure to comply is not
reasonably likely to have a Target Material Adverse Effect. As of its respective
date, each such report and document did not contain any untrue statement of a
fact or omit to state a fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading, except for such untrue statements or omissions which are
not reasonably likely to have a Target Material Adverse Effect.
5.18 Statements True and Correct. No statement or certificate furnished or
to be furnished by any Target Entity to Buyer pursuant to this Agreement or any
other document referred to herein contains or will contain any untrue statement
of material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any Target
Entity for inclusion in the Joint Proxy Statement to be mailed to each Party's
stockholders in connection with the Stockholders' Meetings, and any other
documents to be filed by a Target Entity with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to
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the Joint Proxy Statement, when first mailed to the stockholders of Target and
Buyer, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Stockholders' Meetings, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meetings. All documents that any Target Entity is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
5.19 Tax and Regulatory Matters. No Target Entity or, to Target's
Knowledge, any Affiliate thereof has taken or agreed or failed to take any
action and Target does not have any Knowledge of any fact or circumstance that
is reasonably likely to (i) prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
5.20 State Takeover Laws. Each Target Entity has taken all necessary
action to exempt the transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Section 203 of the
DGCL.
5.21 Charter Provisions. Each Target Entity has taken all action so that
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement do not and will not result in
the grant of any rights to any Person under the Certificate of Incorporation,
Bylaws or other governing instruments of any Target Entity or restrict or impair
the ability of Buyer or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a stockholder with respect to, shares of any Target
Entity that may be directly or indirectly acquired or controlled by them.
5.22 Opinion of Financial Advisor. Target has received the opinion of
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, dated the date of this
Agreement, to the effect that the Exchange Ratio is fair, from a financial point
of view, to such holders, a signed copy of which has been delivered to Buyer.
5.23 Affiliate Transactions. Except as disclosed in Section 5.23 of the
Target Disclosure Memorandum, (i) there is no indebtedness outstanding between
any Target Entity, on the one hand, and any Affiliate of any Target Entity, on
the other hand, (ii) no Affiliate of any Target Entity provides or causes to be
provided any assets, services or facilities to any Target Entity, (iii) no
Target Entity provides or causes to be provided any assets, services or
facilities to any Affiliate of any Target Entity and (iv) no Target Entity
beneficially owns, directly or indirectly, any Investment Assets (as defined
below) issued by any Affiliate of any Target Entity (other than another Target
Entity). Except as disclosed in Section 5.23 of the Target Disclosure
Memorandum, each of the transactions disclosed thereon was incurred or engaged
in, as the case may be, on an arm's-length basis and, since December 31, 1996,
all settlements of liabilities between any Target Entity, on the one hand, and
any Affiliate of any Target Entity (other than another Target Entity), on the
other hand, have been made in the ordinary course of business consistent with
past practice. For purposes hereof, the term "Investment Assets" shall mean
debentures, notes and other evidences of indebtedness, stocks, securities
(including rights to purchase and securities convertible into or exchangeable
for other securities), interests in joint ventures and general and limited
partnerships, mortgage loans and other investment or portfolio assets.
ARTICLE 6
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Target as follows:
6.1 Organization, Standing, and Power. Buyer is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of Delaware, and has the corporate power and authority to carry
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on its business as now conducted and to own, lease and operate its material
Assets. Buyer is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect.
6.2 Authority; No Breach By Agreement. a) Buyer has the corporate power
and authority necessary to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Buyer, subject to the approval of the issuance of the shares of Buyer
Common Stock pursuant to the Merger by a majority of the votes cast at the Buyer
Stockholders' Meeting (assuming for such purpose that the votes cast in respect
of such proposal represent a majority of the outstanding Buyer Common Stock),
which is the only stockholder vote required for approval of this Agreement and
consummation of the merger by Buyer. This Agreement has been duly executed and
delivered by Buyer, and subject to such requisite stockholder approval, this
Agreement represents a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of Buyer's Certificate of Incorporation or Bylaws, or
(ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any Buyer Entity
under, any Contract or Permit of any Buyer Entity, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, or, (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b),
constitute or result in a Default under, or require any Consent pursuant to, any
Law or Order applicable to any Buyer Entity or any of their respective Assets
where such Default, or any failure to obtain such Consent is reasonably likely
to have, individually or in the aggregate, in a Buyer Material Adverse Effect.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities as
described in Section 6.2 of the Buyer Disclosure Memorandum, and other than
notices to or filings with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect to any employee benefit plans, or under the
HSR Act, and other than Consents, filings, or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Buyer of the Merger and the other transactions contemplated in this Agreement.
6.3 Capital Stock. (a) The authorized capital stock of Buyer consists of
(i) 60,000,000 shares of Buyer Common Stock, par value $0.025 per share, of
which 21,013,117 shares are issued and outstanding as of the date of this
Agreement, and (ii) 1,000,000 shares of Buyer Preferred Stock, par value $.001
per share, of which 7,100 shares are issued and outstanding. All of the issued
and outstanding shares of Buyer Capital Stock are, and all of the shares of
Buyer Common Stock to be issued in exchange for shares of Target Common Stock
upon consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the DGCL. None of the outstanding shares of Buyer
Capital Stock has been, and none of the shares of Buyer Common Stock to be
issued in exchange for shares of Target Common Stock upon consummation of the
Merger will be, issued in violation of any preemptive rights of the current or
past stockholders of Buyer.
(b) Except as set forth in Section 6.3(a), or as provided pursuant to the
Buyer Rights Agreement, or as disclosed in Section 6.3 of the Buyer Disclosure
Memorandum, there are no shares of capital stock or other
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equity securities of Buyer outstanding and no outstanding Equity Rights relating
to the capital stock of Buyer, and all shares of Buyer Common Stock issuable
upon the exercise or conversion of such outstanding Equity Rights will, when so
issued, be duly and validly issued and outstanding and fully paid and
nonassessable under the DGCL.
6.4 Buyer Subsidiaries. Buyer has disclosed in Section 6.4 of the Buyer
Disclosure Memorandum all of the Buyer Subsidiaries as of the date of this
Agreement that are corporations (identifying its jurisdiction of incorporation,
each jurisdiction in which the character of its Assets or the nature or conduct
of its business requires it to be qualified and/or licensed to transact
business, and the number of shares owned and percentage ownership interest
represented by such share ownership) and all of the Buyer Subsidiaries that are
general or limited partnerships or other non-corporate entities (identifying the
Law under which such entity is organized, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the amount and nature of
the ownership interest therein). Except as disclosed in Section 6.4 of the Buyer
Disclosure Memorandum, Buyer or one of its Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests) of each
Buyer Subsidiary. No capital stock (or other equity interest) of any Buyer
Subsidiary are or may become required to be issued (other than to another Buyer
Entity) by reason of any Equity Rights, and there are no Contracts by which any
Buyer Subsidiary is bound to issue (other than to another Buyer Entity)
additional shares of its capital stock (or other equity interests) or Equity
Rights or by which any Buyer Entity is or may be bound to transfer any shares of
the capital stock (or other equity interests) of any Buyer Subsidiary (other
than to another Buyer Entity). There are no Contracts relating to the rights of
any Buyer Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any Buyer Subsidiary. All of the shares of capital
stock (or other equity interests) of each Buyer Subsidiary held by a Buyer
Entity are fully paid and nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the Buyer Entity free and clear of any Lien. Each Buyer Subsidiary is a
corporation, and is duly incorporated, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease and operate its Assets and to carry on its business as now
conducted. Each Buyer Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect.
6.5 SEC Filings; Financial Statements. (a) Buyer has timely filed and made
available to Target all SEC Documents required to be filed by Buyer since
December 31, 1993 (the "Buyer SEC Reports"). The Buyer SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in such
Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC
Reports, in light of the circumstances under which they were made, not
misleading; provided, that any pro forma financial statements contained in the
Buyer SEC Reports are not necessarily indicative of the consolidated financial
position of the Buyer Entities as of the respective dates thereof and the
consolidated results of operations and cash flows of the Buyer Entities for the
periods indicated. No Buyer Subsidiary is required to file any SEC Documents.
(b) Each of the Buyer Financial Statements (including, in each case, any
related notes) contained in the Buyer SEC Reports, including any Buyer SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Buyer
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that (i) the
unaudited
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interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect and (ii) any pro forma financial statements contained in the Buyer SEC
Reports are not necessarily indicative of the consolidated financial position of
the Buyer Entities as of the respective dates thereof and the consolidated
results of operations and cash flows of the Buyer Entities for the periods
indicated.
6.6 Absence of Undisclosed Liabilities. No Buyer Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, except Liabilities which are accrued
or reserved against in the consolidated balance sheets of Buyer as of December
31, 1996 and June 30, 1997, included in the Buyer Financial Statements delivered
prior to the date of this Agreement or reflected in the notes thereto. Except as
reflected in the Buyer SEC Reports, no Buyer Entity has incurred or paid any
Liability since June 30, 1997, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Buyer Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
6.7 Absence of Certain Changes or Events. Since December 31, 1996, except
as disclosed in the Buyer Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 6.7 of the Buyer Disclosure
Memorandum, (a) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect, (b) the Buyer Entities have conducted their respective
businesses only in the ordinary course consistent with past practice and (c)
none of the Buyer Entities has taken any action which, if taken after the date
hereof, would constitute a breach of any provision of Section 7.3.
6.8 Tax Matters. (a) All Tax Returns required to be filed by or on behalf
of any of the Buyer Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1996, except to the extent that all such failures to file,
taken together, are not reasonably likely to have a Buyer Material Adverse
Effect, and all Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. As of the date of
this Agreement, there is no audit examination, deficiency, or refund Litigation
with respect to any Taxes that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Buyer Material Adverse
Effect, except as reserved against in the Buyer Financial Statements delivered
prior to the date of this Agreement or as disclosed in Section 6.8 of the Buyer
Disclosure Memorandum. Buyer's federal income Tax Returns have not been audited
for over ten years. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) None of the Buyer Entities has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) The provision for any Taxes due or to become due for any of the Buyer
Entities for the period or periods through and including the date of the
respective Buyer Financial Statements that has been made and is reflected on
such Buyer Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the Buyer Entities have been provided for in
accordance with GAAP.
(e) None of the Buyer Entities is a party to any Tax allocation or sharing
agreement and none of the Buyer Entities has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Buyer) or has any Liability for Taxes of any Person
(other than Buyer and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign Law) as a
transferee or successor or by Contract or otherwise.
6.9 Assets. (a) Except as disclosed in Section 6.9 of the Buyer Disclosure
Memorandum or as disclosed or reserved against in the Buyer Financial Statements
delivered prior to the date of this Agreement, the Buyer Entities have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for any such Liens or other defects of title which are not
reasonably likely to have a Buyer Material Adverse Effect.
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(b) All items of inventory of the Buyer Entities reflected on the most
recent balance sheet included in the Buyer Financial Statements delivered prior
to the date of this Agreement and prior to the Effective Time consisted and will
consist, as applicable, of items of a quality and quantity usable and saleable
in the ordinary course of business and conform to generally accepted standards
in the industry in which the Buyer Entities are a part.
(c) The accounts receivable of the Buyer Entities as set forth on the most
recent balance sheet included in the Buyer Financial Statements delivered prior
to the date of this Agreement or arising since the date thereof are valid and
genuine; have arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the ordinary course
of business consistent with past practice; are not subject to valid defenses,
set-offs or counterclaims; and are collectible at the full recorded amount
thereof less, in the case of accounts receivable appearing on the most recent
balance sheet included in the Buyer Financial Statements delivered prior to the
date of this Agreement, the recorded allowance for collection losses on such
balance sheet. The allowance for collection losses on such balance sheet has
been determined in accordance with GAAP.
(d) The Buyer Entities currently maintain insurance similar in amounts,
scope and coverage as Buyer believes adequate to conduct its business. Except as
disclosed in Section 6.9 of the Buyer Disclosure Memorandum, there are presently
no claims for amounts exceeding in any individual case $250,000 pending under
such policies of insurance and no notices of claims in excess of such amounts
have been given by any Buyer Entity under such policies.
(e) The Assets of the Buyer Entities include all assets required to operate
the business of the Buyer Entities as presently conducted.
6.10 Intellectual Property. Each Buyer Entity owns or has a valid and
binding license to use all of the Intellectual Property used by such Buyer
Entity in the course of its business. Each Buyer Entity is the owner of or has a
valid and binding license to any Intellectual Property sold or licensed to a
third party by such Buyer Entity in connection with such Buyer Entity's business
operations, and such Buyer Entity has the right to convey by sale or license any
Intellectual Property so conveyed. No Buyer Entity is in Default under any of
its Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Buyer threatened, which challenge the rights of
any Buyer Entity with respect to Intellectual Property used, sold or licensed by
such Buyer Entity in the course of its business, nor to the Knowledge of Buyer
has any person claimed or alleged any rights to such Intellectual Property,
except for any failure to own or license, Default or proceeding which is not
reasonably likely to have a Buyer Material Adverse Effect. All Intellectual
Property owned by a Buyer Entity is owned free and clear of any Liens, and none
of such Intellectual Property is subject to any outstanding Order or Contract
restricting the scope of the use thereof, and there are no claims or demands of
any other Person pertaining to the Intellectual Property owned or used by any
Buyer Entity or any license with respect thereto, and no actions or proceedings,
judicial or administrative or otherwise, have been instituted, are pending or to
the Knowledge of Buyer are threatened which challenge or affect the rights of
any Buyer Entity in respect thereof, except for any Liens, Orders, Contracts,
claims, demands, actions or proceedings which are not reasonably likely to have
a Buyer Material Adverse Effect. To the Knowledge of Buyer the conduct of the
business of the Buyer Entities does not infringe any Intellectual Property of
any other person. Except as disclosed in Section 6.10 of the Buyer Disclosure
Memorandum, no Buyer Entity is obligated to pay any recurring royalties to any
Person with respect to any such Intellectual Property.
6.11 Environmental Matters. (a) Each Buyer Entity, its Participation
Facilities, and its Operating Properties are, and have been, in compliance with
all Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Buyer Material Adverse Effect or
except as disclosed in Section 6.11 of the Buyer Disclosure Memorandum.
(b) Except as disclosed in Section 6.11 of the Buyer Disclosure Memorandum,
there is no Litigation pending or, to the Knowledge of Buyer, threatened before
any court, governmental agency, or authority or other forum in which any Buyer
Entity or any of its Operating Properties or Participation Facilities (or Buyer
in respect of such Operating Property or Participation Facility) has been or,
with respect to threatened Litigation, may be named as a defendant (nor, to the
Knowledge of Buyer, are there any facts or
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circumstances reasonably likely to give rise to any such litigation), (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any Buyer Entity or any of its Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect.
(c) Except as disclosed in Section 6.11 of the Buyer Disclosure Memorandum,
during the period of (i) any Buyer Entity's ownership or operation of any of
their respective current properties, (ii) any Buyer Entity's participation in
the management of any Participation Facility, or (iii) any Buyer Entity's
holding of a security interest in an Operating Property, there have been no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, adjacent to, or affecting (or potentially affecting) such properties,
except such as are not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
(d) Each of the Buyer Entities has obtained all licenses, permits,
authorizations, approvals and consents from Regulatory Authorities which are
required under any applicable Environmental Law in respect of its business or
operations ("Environmental Permits") and each of such Environmental Permits is
in full force and effect, except for such failures to have Environmental Permits
which, individually or in the aggregate, could not reasonably be expected to
have a Buyer Material Adverse Effect and each of the Buyer Entities is in
compliance with the terms and conditions of all such Environmental Permits,
except for such failure to be in compliance which, individually or in the
aggregate, is not reasonably likely to have a Buyer Material dverse Effect.
6.12 Compliance With Laws. Each Buyer Entity has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect. Except as disclosed in Section 6.12
of the Buyer Disclosure Memorandum, none of the Buyer Entities:
(a) is in Default under its Certificate of Incorporation or Bylaws (or
other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a
Buyer Material Adverse Effect.
6.13 Labor Relations. No Buyer Entity is the subject of any Litigation
asserting that it or any other Buyer Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Buyer Entity to bargain with any
labor organization as to wages or conditions of employment, nor is any Buyer
Entity party to any collective bargaining agreement, nor is there any strike
involving any Buyer Entity, pending or threatened, or to the Knowledge of Buyer,
is there any activity involving any Buyer Entity's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
6.14 Employee Benefit Plans. (a) Buyer has delivered or made available to
Target prior to the execution of this Agreement copies in each case of all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other incentive
plan, all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, and any related
trust agreements, service provider agreements, insurance contracts or agreements
with investment managers, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any Buyer Entity or ERISA Affiliate thereof
for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Buyer Benefit
Plans"). Any of the Buyer Benefit
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Plans which is an "employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA, is referred to herein as a "Buyer ERISA Plan." Each Buyer
ERISA Plan which is also a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code) is referred to herein as a "Buyer Pension Plan."
No Buyer Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA. Buyer has also delivered or made available to Target
prior to the execution of this Agreement, with respect to each Buyer Benefit
Plan maintained by any Buyer Entity, copies of (i) the current summary plan
description (and/or any similar description), (ii) the most recent Form 5500
series filing and schedules thereto, if such plan is subject to ERISA reporting
requirement, (iii) the most recent determination of the Internal Revenue Service
with respect to the qualified status of such plan, if Section 401(a) of the
Internal Revenue Code applies to such plan, (iv) the most recent accounting with
respect to such plan if funded through a trust, and (v) the most recent
actuarial report of the qualified actuary of such plan if actuarial valuations
are conducted in respect of such plan.
(b) All Buyer Benefit Plans are in compliance with the applicable terms of
ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect. Each Buyer ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
Buyer is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. To the Knowledge of Buyer, no Buyer Entity
has engaged in a transaction with respect to any Buyer Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Buyer Entity to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Buyer Material Adverse
Effect.
(c) Except as disclosed in Section 6.14 of the Buyer Disclosure Memorandum,
no Buyer Pension Plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, based on actuarial assumptions set
forth for such plan's most recent actuarial valuation. Since the date of the
most recent actuarial valuation, there has been (i) no material change in the
financial position of a Buyer Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Buyer Pension Plan, and (iii) no increase in
benefits under any Buyer Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect or materially adversely affect the
funding status of any such plan. Neither any Buyer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Buyer Entity, or the single-employer
plan of any ERISA Affiliate has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a Buyer Material Adverse Effect. Except as
disclosed in Section 6.14 of the Buyer Disclosure Memorandum, other than routine
claims for benefits, there are no pending or, to the Knowledge of Buyer,
threatened claims by or on behalf of any Buyer Benefit Plan, by any person
covered thereby, or otherwise, which allege violations of Law which could
reasonably be expected to result in a Buyer Material Adverse Effect, nor are
there any ongoing Internal Revenue Service, U.S. Department of Labor or other
agency audits or investigations of any Buyer Benefit Plans.
(d) Within the six-year period preceding the Effective Time, no Liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by any Buyer Entity with respect to any ongoing, frozen or terminated
single-employer plan or the single-employer plan of any ERISA Affiliate, which
Liability is reasonably likely to have a Buyer Material Adverse Effect. No Buyer
Entity has incurred any withdrawal Liability with respect to a multi-employer
plan under Subtitle B of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate), which Liability is reasonably likely to
have a Buyer Material Adverse Effect. No notice of a "reportable event," within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Buyer Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date hereof.
6.15 Material Contracts. Except as disclosed in Section 6.15 of the Buyer
Disclosure Memorandum or as set forth in the Buyer SEC Reports, none of the
Buyer Entities, nor any of their respective Assets, businesses, or operations,
is a party to, or is bound or affected by, or receives benefits under, (i) any
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employment, severance, termination, consulting or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any Buyer Entity or the
guarantee by any Buyer Entity of any such obligation (other than Contracts
evidencing trade payables and Contracts relating to borrowings or guarantees
made in the ordinary course of business), or (iii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Buyer with the SEC as of the date of this Agreement that has not
been filed as an exhibit to Buyer's Form 10-K filed for the fiscal year ended
December 31, 1996, or in an SEC Document and identified to Target (together with
all Contracts referred to in Sections 6.9 and 6.14(a), the "Buyer Contracts").
With respect to each Buyer Contract and except as disclosed in Section 6.15 of
the Buyer Disclosure Memorandum: (i) the Contract is in full force and effect;
(ii) no Buyer Entity is in Default thereunder, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect; (iii) no Buyer Entity has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Buyer, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. Except as reflected in the Buyer SEC Reports, all of the
indebtedness of any Buyer Entity for money borrowed in excess of $100,000 is
prepayable at any time by such Buyer Entity without penalty or premium.
6.16 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of Buyer, threatened against any Buyer Entity, or against any
director, employee or employee benefit plan of any Buyer Entity, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Buyer Entity, that are reasonably likely to
have, individually or in the aggregate, a Buyer Material Adverse Effect.
6.17 Reports. Since January 1, 1994, or the date of organization if later,
each Buyer Entity has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except for failures to file which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied with all applicable Laws, except where the failure to comply is not
reasonably likely to have a Buyer Material Adverse Effect. As of its respective
date, each such report and document did not contain any untrue statement of a
fact or omit to state a fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading, except for such untrue statements or omissions which are
not reasonably likely to have a Buyer Material Adverse Effect.
6.18 Statements True and Correct. No statement or certificate furnished or
to be furnished by any Buyer Entity to Target pursuant to this Agreement or any
other document referred to herein contains or will contain any untrue statement
of material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any Buyer
Entity for inclusion in the Registration Statement to be filed by Buyer with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the information
supplied or to be supplied by any Buyer Entity or any Affiliate thereof for
inclusion in the Joint Proxy Statement to be mailed to each Party's stockholders
in connection with the Stockholders' Meetings, and any other documents to be
filed by any Buyer Entity with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy Statement,
when first mailed to the stockholders of Target and Buyer, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Stockholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Stockholders' Meetings. All documents that any Buyer Entity is responsible
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for filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.19 Authority of Sub. Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware as a
wholly owned Subsidiary of Buyer. The authorized capital stock of Sub shall
consist of 100 shares of Sub Common Stock, all of which is validly issued and
outstanding, fully paid and nonassessable and is owned by Buyer free and clear
of any Lien. Sub has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Sub. This Agreement
represents a legal, valid, and binding obligation of Sub, enforceable against
Sub in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). Buyer, as the sole stockholder of Sub, has voted
prior to the Effective Time the shares of Sub Common Stock in favor of adoption
of this Agreement, as and to the extent required by applicable Law.
6.20 Tax and Regulatory Matters. No Buyer Entity or, to Buyer's Knowledge,
any Affiliate thereof has taken or agreed or failed to take any action and
Target does not have any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
6.21 Rights Agreement. Execution of this Agreement and consummation of the
Merger and the other transactions contemplated by this Agreement will not result
in the grant of any rights to any Person under the Buyer Rights Agreement (other
than as contemplated by Section 3.1) or enable or require the Buyer Rights to be
exercised, distributed or triggered. No "Shares Acquisition Date" or
"Distribution Date" (as such terms are defined in the Buyer Rights Agreement)
has occurred. No event or sequence of events has occurred that has resulted in
or may result in any Person becoming an Acquiring Person, as such term is
defined in the Buyer Rights Agreement.
6.22 Affiliate Transactions. Except as disclosed in Section 6.22 of the
Buyer Disclosure Memorandum, (i) there is no indebtedness outstanding between
any Buyer Entity, on the one hand, and any Affiliate of any Buyer Entity, on the
other hand, (ii) no Affiliate of any Buyer Entity provides or causes to be
provided any assets, services or facilities to any Buyer Entity, (iii) no Buyer
Entity provides or causes to be provided any assets, services or facilities to
any Affiliate of any Buyer Entity and (iv) no Buyer Entity beneficially owns,
directly or indirectly, any Investment Assets (as defined below) issued by any
Affiliate of any Buyer Entity. Except as disclosed in Section 6.22 of the Buyer
Disclosure Memorandum, each of the transactions disclosed thereon was incurred
or engaged in, as the case may be, on an arm's-length basis and, since December
31, 1996, all settlements of liabilities between any Buyer Entity, on the one
hand, and any Affiliate of any Buyer Entity, on the other hand, have been made
in the ordinary course of business consistent with past practice.
6.23 Vote Required. The affirmative vote of a majority of the votes cast
by the holders of the outstanding shares of Buyer Capital Stock entitled to vote
and voting as a single class is the only vote of the holders of any class or
series of the capital stock of Buyer required to approve the issuance of shares
of Buyer Common Stock pursuant to the Merger (including the shares to be issued
in connection with the performance of the obligations set forth in Section 3.5),
as and to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NYSE.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Target. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Buyer shall have been obtained (which consent shall
not be unreasonably withheld), and except as otherwise expressly contemplated
herein, Target shall and shall cause each of its Subsidiaries to (a) operate its
business only in the usual, regular, and ordinary course, (b) preserve intact
its business organization and Assets and maintain its rights and franchises, and
(c) take no action which would (i) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby, or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement.
7.2 Negative Covenants of Target. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Buyer shall have been obtained (which consent shall
not be unreasonably withheld), and except as otherwise expressly contemplated
herein, or as disclosed in Section 7.2 of the Target Disclosure Memorandum,
Target covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of any Target Entity, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than (i) indebtedness of a Target Entity to another
Target Entity and (ii) indebtedness under any of the Target Entities'
existing credit facilities up to $5.0 million more than the indebtedness
currently outstanding under such facilities as of the date hereof) (for the
Target Entities on a consolidated basis) or impose, or suffer the
imposition, on any Asset of any Target Entity of any Lien or permit any
such Lien to exist (other than in connection with Liens in effect as of the
date hereof that are disclosed in the Target Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any Target Entity, or declare or pay any dividend or
make any other distribution in respect of Target's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or as disclosed in Section 7.2 of the
Target Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Target Common Stock or any other capital stock of any
Target Entity, or any stock appreciation rights, or any option, warrant, or
other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of any
Target Entity or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Target Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any Target Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Target Entity) or any Asset having
a book value in excess of $100,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned Target Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) the creation of new wholly owned
Subsidiaries organized to conduct or continue activities
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otherwise permitted by this Agreement, or (iii) investments in connection
with cash management activities consistent with past practices; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Target Entity, except as required by Law; or enter into or
amend any severance agreements with officers of any Target Entity; grant
any material increase in fees or other increases in compensation or other
benefits to directors of any Target Entity; or
(h) enter into or amend any employment Contract between any Target
Entity and any Person having a salary thereunder in excess of $100,000 per
year (unless such amendment is required by Law) that the Target Entity does
not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the
Effective Time; or
(i) adopt any new employee benefit plan of any Target Entity or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Target Entity other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except as
required by Law, the terms of such plans or consistent with past practice;
or
(j) make any material change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) enter into any Contract or amend or modify any existing Contract,
or engage in any new transaction outside the ordinary course of business
consistent with past practice or not on an arm's-length basis, with any
Affiliate of any Target Entity; or
(l) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets not in the
ordinary course of business consistent with past practice (excluding any
capital expenditures required to be made by Irving Tanning Company arising
in connection with the upgrade of the water/waste treatment facility
operated by the Town of Hartland, Maine); or
(m) make any change in the lines of business in which it participates
or is engaged; or
(n) except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract or waive, release, compromise or
assign any material rights or claims.
7.3 Covenants of Buyer. From the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement, unless the prior
written consent of Target shall have been obtained (which consent shall not be
unreasonably withheld), and except as otherwise expressly contemplated herein,
Buyer shall and shall cause each of its Subsidiaries to (x) operate its business
only in the usual, regular, and ordinary course, (y) preserve intact its
business organization and Assets and maintain its rights and franchises, and (z)
take no action which would (i) materially adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby,
or (ii) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any Buyer Entity from discontinuing or disposing of any of its
Assets or business if such action is, in the judgment of Buyer, desirable in the
conduct of the business of Buyer and its Subsidiaries. Buyer further covenants
and agrees that it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of Target, which consent shall not be unreasonably
withheld:
(a) amend the Certificate of Incorporation or Bylaws of Buyer or the
Buyer Rights Agreement, in each case, in any manner adverse to the holders
of Target Common Stock, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Buyer Entity to another Buyer
Entity) except (i) in the ordinary course of the business consistent with
past practices, (ii) in order to finance the purchase price, including
related expenses, of acquisitions (including the Merger) and joint
ventures, (iii) pursuant to the Buyer's credit facilities as in
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effect on the date hereof, (iv) in order to finance the construction of an
additional facility in Canada, or (v) in order to finance additional Buyer
Express facilities; or impose, or suffer the imposition, on any Asset of
any Buyer Entity of any Lien or permit any such Lien to exist (other than
in connection with Liens in effect as of the date hereof that are disclosed
in the Buyer Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of Buyer (other than in connection with the conversion of
currently outstanding shares of Buyer Preferred Stock) , or declare or pay
any dividend or make any other distribution in respect of Buyer's capital
stock (other than regularly scheduled dividends payable on the outstanding
shares of Buyer Preferred Stock); or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof or granted after the date hereof in the
ordinary course consistent with past practice, or as disclosed in Section
7.3 of the Buyer Disclosure Memorandum or in connection with acquisitions
or upon the conversion of currently outstanding shares of Buyer Preferred
Stock or warrants to purchase Buyer Common Stock, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise permit
to become outstanding, any additional shares of Buyer Common Stock or any
other capital stock of any Buyer Entity, or any stock appreciation rights,
or any option, warrant, conversion, or other right to acquire any such
stock, or any security convertible into any such stock; or
(e) adjust, split, combine or reclassify any shares of Buyer Capital
Stock or issue or authorize the issuance of any other securities in respect
of or in substitution for shares of Buyer Capital Stock (other than in
connection with the conversion of currently outstanding shares of Buyer
Preferred Stock or the exercise of currently outstanding warrants to
purchase Buyer Common Stock) or sell, lease, mortgage or otherwise dispose
of or otherwise encumber any shares of capital stock of any Buyer
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Buyer Entity) or any Asset having a book value in
excess of $1,000,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) make any material change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in applicable Tax Laws or regulatory accounting
requirements or GAAP; or
(g) make any single acquisition of capital stock or assets of any
entity or enter into any joint venture in which the total consideration
paid or contributed by Buyer or any Buyer Entity exceeds $25 million or any
combination of acquisitions of capital stock or assets of one or more
entities or joint ventures in which the aggregate consideration paid or
contributed exceeds $50 million.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect or a Buyer Material Adverse Effect,
as applicable, or (ii) would cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material); provided, that any
pro forma financial statements contained in such reports filed with the SEC are
not
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necessarily indicative of the consolidated financial position of the Target
Entities or the Buyer Entities, as the case may be, as of the respective dates
thereof and the consolidated results of operations and cash flows of the Target
Entities or the Buyer Entities, as the case may be, for the periods indicated.
As of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in all material respects in accordance with Laws applicable to such
reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Stockholder Approval. As soon
as reasonably practicable after execution of this Agreement, Buyer shall prepare
and file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action reasonably required to be taken under the applicable
state Blue Sky or securities Laws in connection with the issuance of the shares
of Buyer Common Stock upon consummation of the Merger. Target shall cooperate in
the preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as Buyer may
reasonably request in connection with such action. Target shall call a
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC (and, to the extent
practicable, on the same day as Buyer's Stockholders' Meeting), for the purpose
of voting upon adoption of this Agreement and such other related matters (with
the consent of Buyer which shall not be unreasonably withheld) as it deems
appropriate. Buyer shall call a Stockholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon the issuance of shares of Buyer Common
Stock pursuant to the Merger, and such other related matters as it deems
appropriate (including, without limitation, the adoption of an amendment to
increase the number of shares that may be issued under the Buyer's Incentive
Program by 1,500,000). In connection with the Stockholders' Meetings, (i) Target
and Buyer shall prepare and file with the SEC a Joint Proxy Statement and mail
such Joint Proxy Statement to their respective stockholders, (ii) the Parties
shall furnish to each other all information concerning them that they may
reasonably request in connection with such Joint Proxy Statement, (iii) the
Board of Directors of Target and Buyer shall recommend to their respective
stockholders the approval of the matters submitted for approval (subject to the
Board of Directors of Target, after having consulted with and based on the
written opinion of outside counsel (a copy of which shall be furnished to
Buyer), reasonably determining in good faith that the making of such
recommendation, or the failure to withdraw or modify its recommendation, would
be reasonably likely to constitute a breach of fiduciary duties of the members
of such Board of Directors to Target's stockholder under applicable law), and
(iv) the Board of Directors and officers of Target and Buyer shall use their
reasonable efforts to obtain such stockholders' approval (subject to the Board
of Directors of Target, after having consulted with and based on the written
opinion of outside counsel (a copy of which shall be furnished to Buyer),
reasonably determining in good faith that the taking of such actions would be
reasonably likely to constitute a breach of fiduciary duties of the members of
such Board of Directors to Target's stockholder under applicable law). Buyer and
Target shall make all necessary filings with respect to the Merger under the
Securities Laws.
8.2 Exchange Listing. Buyer shall use its reasonable efforts to list,
prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of Buyer Common Stock to be issued to the holders of Target
Common Stock pursuant to the Merger, and Buyer shall give all notices and make
all filings with the NYSE required in connection with the transactions
contemplated herein.
8.3 Applications; Antitrust Notification. Buyer shall promptly prepare and
file, and Target shall cooperate in the preparation and, where appropriate,
filing of, applications with all Regulatory Authorities having jurisdiction over
the transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. To the
extent required by the
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HSR Act, each of the Parties will promptly file with the United States Federal
Trade Commission and the United States Department of Justice the notification
and report form required for the transactions contemplated hereby and any
supplemental or additional information which may reasonably be requested in
connection therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, Target shall execute and file the Certificate of
Merger with the Secretary of State of the State of Delaware in connection with
the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable 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 to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Without limiting the
generality of the foregoing, each Party agrees to use all reasonable efforts to
cause the Effective Time to occur not later than the first business day
following the last to occur of (i) the Effective Date (including expiration of
any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of Target and Buyer approve this Agreement to
the extent such approval is required by applicable Law or the rules of the NYSE.
Each Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality. (a) Prior to the Effective Time,
each Party shall keep the other Party advised of all material developments
relevant to its business and to consummation of the Merger and shall permit the
other Party to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No
investigation by a Party shall affect the representations and warranties of the
other Party.
(b) The Parties' respective obligations under the Confidentiality
Agreements, which are hereby reaffirmed and adopted, and incorporated by
reference herein, shall apply to all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions pursuant to this Agreement.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant or agreement of the other Party or which
has had or is reasonably likely to have a Target Material Adverse Effect or a
Buyer Material Adverse Effect, as applicable.
8.7 Press Releases. Prior to the Effective Time, Target and Buyer shall
consult and cooperate with each other as to the timing, form and substance of
any press release or other public disclosure related to this Agreement or any
other transaction contemplated hereby, and will not issue any such press release
or make any such public disclosure without the prior consent of the other, which
consent shall not be unreasonably withheld; provided, that nothing in this
Section 8.7 shall be deemed to prohibit any Party from making any disclosure
which its outside counsel deems necessary or advisable in order to satisfy such
Party's disclosure obligations imposed by Law.
8.8 No Solicitations, Etc. (a) Except with respect to this Agreement and
the transactions contemplated hereby, no Target Entity nor any Affiliate thereof
nor any Representatives thereof retained by any
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Target Entity shall directly or indirectly solicit, initiate or encourage the
making of any Acquisition Proposal by any Person. No Target Entity or any
Affiliate or Representative thereof shall furnish any non-public information to
any Person or engage in any discussions or negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Proposal, but Target Company
may communicate information about an unsolicited Acquisition Proposal to its
stockholders if and to the extent that it is required to do so, based on the
advice of outside counsel, in order to comply with its legal obligations. Target
Company shall promptly (i) cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons (other than Buyer) with
respect to any Acquisition Proposal and (ii) notify Buyer in the event that it
receives any Acquisition Proposal.
(b) During the period from the date of this Agreement through the Effective
Time (or earlier termination hereof), none of the Target Entities shall
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it is a party. During such period, the Target
Entities shall enforce, to the fullest extent permitted under applicable law,
the provisions of any such agreement, including, but not limited to, by
obtaining injunctions to prevent any breaches of any such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action or fail to take
any action which would cause the Merger not, to qualify for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes.
8.10 State Takeover Laws. Each Target Entity shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary to challenge the applicability of, any applicable Takeover Law,
including Section 203 of the DGCL.
8.11 Agreement of Affiliates. Target has disclosed in Section 8.11 of the
Target Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of Target for purposes of Rule 145 under the 1933 Act. Target shall
use its reasonable efforts to cause each such Person to deliver to Buyer not
later than 30 days after the date of this Agreement, a written agreement,
substantially in the form of Exhibit 3. Buyer shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Buyer Common Stock by such affiliates.
8.12 Employee Benefits and Contracts. Following the Effective Time, Buyer
shall provide generally to officers and employees of the Target Entities
employee benefits under employee benefit and welfare plans (other than stock
option or other plans involving the potential issuance of Buyer Common Stock),
on terms and conditions which when taken as a whole are substantially similar to
those currently provided by the Buyer Entities to their similarly situated
officers and employees; provided, that, for a period of 12 months after the
Effective Time, Buyer shall provide generally to officers and employees of
Target Entities severance benefits in accordance with the policies of either (i)
Target as disclosed in Section 8.12 of the Target Disclosure Memorandum, or (ii)
Buyer, whichever of (i) or (ii) will provide the greater benefit to the officer
or employee. For purposes of participation, vesting and (except in the case of
Buyer retirement plans) benefit accrual under Buyer's employee benefit plans,
the service of the employees of the Target Entities prior to the Effective Time
shall be treated as service with a Buyer Entity participating in such employee
benefit plans. Buyer also shall cause the Surviving Corporation and its
Subsidiaries to honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts disclosed in Section 8.13 of the
Target Disclosure Memorandum to Buyer between any Target Entity and any current
or former director, officer, or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Time
under the Target Benefit Plans.
8.13 Indemnification. (a) Buyer shall, and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
directors and officers of the Target Entities (each, an "Indemnified Party")
against all Liabilities arising out of actions or omissions arising out of the
Indemnified Party's service or services as directors or officers of Target or,
at Target's request, of another corporation, partnership, joint venture, trust
or other enterprise affiliated with Target occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the fullest extent permitted under Delaware Law and by
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Target's Certificate of Incorporation and Bylaws as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any Litigation and whether or not any Buyer Entity is insured against
any such matter. Without limiting the foregoing, in any case in which approval
by the Surviving Corporation is required to effectuate any indemnification, the
Surviving Corporation shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between Buyer and the Indemnified Party.
(b) Buyer, shall, or shall cause the Surviving Corporation to, maintain in
effect for the Indemnified Parties for not less than seven years after the
Effective Time policies of directors' and officers' liability insurance with
respect to matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement) providing
substantially the same coverage and containing terms and conditions which are no
less advantageous, in any material respect, to these currently maintained by
Target for the benefit of the Company's present or former directors, employees
or agents covered by such insurance policies prior to the Effective Time;
provided, however, that Buyer may, in lieu of maintaining such existing
insurance as provided above, cause comparable coverage to be provided with any
policy maintained for the benefit of Buyer or any of the Buyer Subsidiaries, so
long as the material terms are no less advantageous than such existing
insurance.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.13, upon learning of any such Liability or Litigation,
shall promptly notify Buyer thereof. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Buyer or the Surviving
Corporation shall have the right to assume the defense thereof and neither Buyer
nor the Surviving Corporation shall be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if Buyer or the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises that there are substantive issues
which raise conflicts of interest between Buyer or the Surviving Corporation and
the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to them, and Buyer or the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that Buyer and the Surviving Corporation shall
be obligated pursuant to this paragraph (c) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction, unless such Indemnified Parties
shall have been advised in writing by counsel that there exist conflicts of
interest among such Indemnified Parties that preclude one firm of counsel from
representing the interests of all such Indemnified Parties, (ii) Buyer, the
Surviving Corporation and the Indemnified Parties will cooperate in the defense
of any such Litigation, and (iii) neither Buyer nor the Surviving Corporation
shall be liable for any settlement effected without its prior written consent,
which consent shall not be unreasonably withheld; and provided further that
neither Buyer nor the Surviving Corporation shall have any obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(d) If Buyer or the Surviving Corporation or any successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of Buyer or
the Surviving Corporation shall assume the obligations set forth in this Section
8.13.
(e) The provisions of this Section 8.13 shall survive the Effective Time
are intended expressly to be for the benefit of and shall be enforceable by,
each Indemnified Party and their respective heirs and representatives. Buyer
hereby guarantees the performance by the Surviving Corporation of the
indemnification obligations of the Surviving Corporation pursuant to this
Section 8.13.
8.14 Related Party Contracts and Transactions. Except as contemplated by
this Agreement and the transactions contemplated hereby and except as set forth
in Section 8.14 of the Target Disclosure Memorandum, any and all Contracts and
transactions between any of the Target Entities, on the one hand, and an
Affiliate of any of the Target Entities (other than another Target Entity), on
the other hand, shall be
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canceled by the Closing Date (at no expense to the Target Entities) such that
the Target Entities will have no rights to any Assets of any such Affiliate or
obligations whatsoever with respect to such Contracts and transactions, and no
such Affiliate will have any rights to any Assets of any of the Target Entities
or obligations whatsoever with respect to such Contracts or transactions.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6:
(a) Stockholder Approval. The stockholders of Target shall have
adopted this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law, by the provisions of any governing instruments, or by the rules of the
NYSE. The stockholders of Buyer shall have approved the issuance of shares
of Buyer Common Stock pursuant to the Merger (including the shares to be
issued in connection with the performance of the obligations set forth in
Section 3.5), as and to the extent required by Law, by the provisions of
any governing instrument, or by the rules of the NYSE.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger (other than Consents and filing, registration
and notice requirements which if not obtained, made or complied with are
not reasonably likely to have, individually or in the aggregate, a Target
Material Adverse Effect or a Buyer Material Adverse Effect, as applicable
("Excluded Consents")) shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired (other than waiting periods the failure to comply with is not
reasonably likely to have a Target Material Adverse Effect or a Buyer
Material Adverse Effect, as applicable).
(c) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this Agreement.
(d) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of Buyer Common Stock issuable pursuant
to the Merger shall have been received.
(e) Exchange Listing. The shares of Buyer Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(f) Tax Matters. Each Party shall have received a written opinion of
counsel from Buyer's Counsel, in form reasonably satisfactory to such
Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of Target Common
Stock for Buyer Common Stock will not give rise to gain or loss to the
stockholders of Target with respect to such exchange (except to the extent
of any cash received in lieu of fractional shares), and (iii) none of
Target, Sub or Buyer will recognize gain or loss as a result of the Merger
(except for amounts resulting from any required change in accounting
methods and any income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Target and Buyer reasonably satisfactory in
form and substance to such counsel.
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9.2 Conditions to Obligations of Buyer. The obligations of Buyer to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Buyer pursuant to Section 11.6(a):
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Target set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties set forth in Sections 5.3 and 11.3 shall be true and correct
(except for inaccuracies which are de minimis in amount). The
representations and warranties set forth in Sections 5.19, 5.20, 5.21 and
5.23 shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of Target set
forth in this Agreement (including the representations and warranties set
forth in Sections 5.3, 5.19, 5.20, 5.21 and 5.23) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Target
Material Adverse Effect.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Target to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Target shall have delivered to Buyer (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 9.1 as relates to Target and in Section
9.2(a) and 9.2(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Target's Board of Directors and stockholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby.
9.3 Conditions to Obligations of Target. The obligations of Target to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Target pursuant to Section 11.6(b):
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Buyer set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties set forth in Sections 6.3 and 11.3 shall be true and correct
(except for inaccuracies which are de minimis in amount). The
representations and warranties of Buyer set forth in Sections 6.20, 6.21,
6.22 and 6.23 shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of Buyer
set forth in this Agreement (including the representations and warranties
set forth in Section 6.20) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Buyer Material Adverse
Effect.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Buyer to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Buyer shall have delivered to Target (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 9.1 as relates to Buyer and in Section
9.3(a) and 9.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Buyer's Board of Directors and stockholders and
Sub's Board of Directors and sole stockholder evidencing the taking of all
corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby.
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(d) Exchange Agent Certification. The Exchange Agent shall have
delivered to Target a certificate, dated as of the Effective Time, to the
effect that the Exchange Agent has received from Buyer appropriate
instructions and authorization for the Exchange Agent to issue a sufficient
number of shares of Buyer Common Stock in exchange for outstanding shares
of Target Common Stock.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of Target
and Buyer or both, this Agreement may be terminated and the Merger abandoned at
any time prior to the Effective Time:
(a) By mutual consent of Buyer and Target; or
(b) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any representation or warranty contained in this
Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach and which
breach is reasonably likely, in the opinion of the non-breaching Party, to
have, individually or in the aggregate, a Target Material Adverse Effect or
a Buyer Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of Target or Buyer fail to vote their approval of the matters
relating to this Agreement and the transactions contemplated hereby at the
Stockholders' Meetings where such matters were presented to such
stockholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall not have been
consummated by March 31, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by
any breach of this Agreement by the Party electing to terminate pursuant to
this Section 10.1(e); or
(f) By Target, in the event (i) of the acquisition, by any person or
group of persons, of beneficial ownership of 50% or more of the outstanding
shares of Buyer Common Stock (the terms "person," "group" and "beneficial
ownership" having the meanings ascribed thereto in Section 13(d) of the
Exchange Act and the regulations promulgated thereunder), or (ii) the Board
of Directors of Buyer accepts or publicly recommends acceptance of an offer
from a third party (including, without limitation, BIL (Far East Holdings)
Limited or BIL Securities (Offshore) Ltd. or their respective Affiliates)
to acquire 50% or more of the outstanding shares of Buyer Common Stock or
of Buyer's consolidated assets; or
(g) By Target, in the event Buyer terminates, amends, modifies or
novates in any way the standstill provisions contained in that certain
Amended and Restated Stockholder Agreement by and among BIL (Far East
Holdings) Limited, Buyer and Xxxxx Xxxxxxxx, as amended on May 1, 1997.
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10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c),
10.1(d), 10.1(e), 10.1(f) or 10.1(g) shall not relieve the breaching Party from
Liability for an uncured willful breach of a representation, warranty, covenant,
or agreement giving rise to such termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 1, 2, 3, 4 and 11 and Sections 8.12 and 8.13.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. (a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or the acquisition of
a substantial equity interest in, or a substantial portion of the assets
of, such Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"Buyer Capital Stock" shall mean, collectively, the Buyer Common
Stock, the Buyer Preferred Stock and any other class or series of capital
stock of Buyer.
"Buyer Common Stock" shall mean the $0.025 par value common stock of
Buyer.
"Buyer Disclosure Memorandum" shall mean the written information
entitled "Xxxxxx-Field Health Products, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Target describing in
reasonable detail the matters contained therein.
"Buyer Entities" shall mean, collectively, Buyer and all Buyer
Subsidiaries.
"Buyer Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Buyer as of June
30, 1997, and as of December 31, 1996 and 1995, and the related statements
of operations, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) for the six months ended June 30,
1997, and for each of the three fiscal years ended December 31, 1996, 1995
and 1994, as filed by Buyer in SEC Documents, and (ii) the consolidated
balance sheets of Buyer (including related notes and schedules, if any) and
related statements of
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operations, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to June 30, 1997.
"Buyer Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Buyer and its Subsidiaries, taken as
a whole, or (ii) the ability of Buyer to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles, (c)
actions and omissions of Buyer (or any of its Subsidiaries) taken with the
prior informed written Consent of Target in contemplation of the
transactions contemplated hereby, and (d) the direct effects of compliance
with this Agreement on the operating performance of Buyer, including
expenses incurred by Buyer in consummating the transactions contemplated by
this Agreement.
"Buyer Preferred Stock" shall mean the preferred stock, $0.01 par
value per share, of Buyer and shall include the Series A Junior
Participating Preferred Stock, the Series B Cumulative Convertible
Preferred Stock and the Series C Cumulative Convertible Preferred Stock.
"Buyer Rights Agreement" shall mean that certain Rights Agreement,
dated as of September 3, 1996, between Buyer and American Stock Transfer &
Trust Company, as Rights Agent.
"Buyer Rights" shall mean the preferred stock purchase rights issued
pursuant to the Buyer Rights Agreement.
"Buyer Stock Plan" shall mean the existing stock option plan of Buyer
designated as follows: the Incentive Program, as amended through the date
hereof.
"Buyer Subsidiaries" shall mean the Subsidiaries of Buyer, which
shall include the Buyer Subsidiaries described in Section 6.4 and any
corporation or other organization acquired as a Subsidiary of Buyer in the
future and held as a Subsidiary by Buyer at the Effective Time.
"Certificate of Merger" shall mean the Certificate of Merger to be
executed by Target and filed with the Secretary of State of the State of
Delaware relating to the Merger as contemplated by Section 1.1.
"Closing Date" shall mean the date on which the Closing occurs.
"Confidentiality Agreements" shall mean that certain Confidentiality
Agreement, dated June 20, 1997, between Target and Buyer and that certain
Confidentiality Agreement, dated August 19, 1997, between Target and Buyer.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or
Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right of any
Person to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to
increase or impose any Liability under, any Contract, Law, Order, or
Permit.
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"DGCL" shall mean the Delaware General Corporation Law.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"Equity Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of
the capital stock of a Person or by which a Person is or may be bound to
issue additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" 1 through 3, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental Laws)
and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum
products, or oil (and specifically shall include asbestos requiring
abatement, removal, or encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the Xxxxxxx Act, as added by Title
II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source or
object codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used by Target
and Buyer to solicit the approval of their respective stockholders of the
transactions contemplated by this Agreement, which shall include the
prospectus of Buyer relating to the issuance of the Buyer Common Stock to
holders of Target Common Stock.
"Knowledge" as used with respect to any Target Entity (including
references to any such Target Entity being aware of a particular matter)
shall mean the actual knowledge of X.X. Xxxxx, J. Xxx Xxxxx, Xxxxxxxx X.
Xxxxxx, Xxxx X. Xxxxx, Xx. or Xxxxx X. Xxxxxxxx, Xx. and as used with
respect to any Buyer Entity (including references to such Buyer Entity
being aware of a particular matter) shall mean the actual knowledge of
Xxxxx Xxxxxxxx, Xxxx X. Xxxxxx or Xxxxxxx X. Xxxxxxx.
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"Law" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) Liens which do not materially
impair the use of or title to the Assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination
or investigation, hearing, administrative or other proceeding relating to
or affecting a Party, its business, its Assets (including Contracts related
to it), or the transactions contemplated by this Agreement.
"Material" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries, and, where
required by the context, includes the owner or operator of such property,
but only with respect to such property.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"Party" shall mean either Target or Buyer, and "Parties" shall mean
both Target and Buyer.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Buyer under the 1933 Act with respect to the shares of Buyer Common Stock
to be issued to the stockholders of Target in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC, the NYSE,
the Federal Trade Commission, the United States Department of Justice, and
all other federal, state, county, local or other
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governmental or regulatory agencies, authorities (including self-regulatory
authorities), instrumentalities, commissions, boards or bodies having
jurisdiction over the Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative engaged by a
Person.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents (and all amendments and
supplements thereto) filed, or required to be filed, by a Party or any of
its Subsidiaries with any Regulatory Authority pursuant to the Securities
Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Stockholders' Meetings" shall mean the respective meetings of the
stockholders of Target and Buyer to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
"Sub Common Stock" shall mean the $0.01 par value common stock of Sub.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly
or through an unbroken chain of entities as to each of which 50% or more of
the outstanding equity securities is owned directly or indirectly by its
parent (provided, there shall not be included any such entity the equity
securities of which are owned or controlled in a fiduciary capacity), (ii)
in the case of partnerships, serves as a general partner, (iii) in the case
of a limited liability company, serves as a managing member, or (iv)
otherwise has the ability to elect a majority of the directors, trustees or
managing members thereof.
"Surviving Corporation" shall mean Target as the surviving corporation
resulting from the Merger.
"Target Common Stock" shall mean the $2.50 par value common stock of
Target.
"Target Disclosure Memorandum" shall mean the written information
entitled "Xxxxx Enterprises, Inc. Disclosure Memorandum" delivered prior to
the date of this Agreement to Buyer describing in reasonable detail the
matters contained therein.
"Target Entities" shall mean, collectively, Target and all Target
Subsidiaries.
"Target Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Target as of June
30, 1997, and as of December 31, 1996 and 1995, and the related statements
of income, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) for the six months ended June 30,
1997, and for each of the three fiscal years ended December 31, 1996, 1995
and 1994, as filed by Target in SEC Documents, and (ii) the consolidated
balance sheets of Target (including related notes and schedules, if any)
and related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to June 30, 1997.
"Target Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Target and its Subsidiaries, taken as
a whole, or (ii) the ability of Target to perform its obligations under
this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles, (c)
actions and omissions of Target (or any of its Subsidiaries) taken with the
prior informed written Consent of Buyer in contemplation of the
transactions contemplated hereby, and (d) the direct effects of compliance
with this Agreement on the operating performance of Target, including
expenses incurred by Target in consummating the transactions contemplated
by this Agreement and any demonstrable losses of revenues of Target that
are directly attributable to the acquisition of Medical Supplies of
America, Inc. by Buyer.
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"Target Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of Target designated as follows: 1989 Stock
Option Plan, 1992 Stock Option Plan, the 1995 Long-Term Incentive Plan and
the 1995 Stock Option Plan for Outside Directors.
"Target Subsidiaries" shall mean the Subsidiaries of Target, which
shall include the Target Subsidiaries described in Section 5.4 and any
corporation or other organization acquired as a Subsidiary of Target in the
future and held as a Subsidiary by Target at the Effective Time.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign taxes, fees or other assessments, including, income, excise, sales,
use, transfer, payroll, franchise, real property or personal property,
including any interest and penalties thereon or with respect thereto.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Average Closing Price............................................... Section 3.1(c)
Base Exchange Ratio................................................. Section 3.1(c)
Business Combination................................................ Section 11.2
Buyer Benefit Plans................................................. Section 6.14
Buyer Contracts..................................................... Section 6.15
Buyer ERISA Plan.................................................... Section 6.14
Buyer Pension Plan.................................................. Section 6.14
Buyer SEC Reports................................................... Section 6.5(a)
Certificates........................................................ Section 4.1
Closing............................................................. Section 1.2
Common Stock Trust.................................................. Section 3.4
Effective Time...................................................... Section 1.3
ERISA Affiliate..................................................... Section 5.14(c)
Exchange Agent...................................................... Section 4.1
Exchange Ratio...................................................... Section 3.1(c)
Excess Shares....................................................... Section 3.4
Excluded Consents................................................... Section 9.1(b)
Indemnified Party................................................... Section 8.14
Investment Assets................................................... Section 5.23
Lower Threshold Price............................................... Section 3.1(c)
Merger.............................................................. Section 1.1
Takeover Laws....................................................... Section 5.20
Target Benefit Plans................................................ Section 5.14
Target Contracts.................................................... Section 5.15
Target ERISA Plan................................................... Section 5.14
Target Options...................................................... Section 3.5
Target Pension Plan................................................. Section 5.14
Target SEC Reports.................................................. Section 5.5(a)
Tax Opinion......................................................... Section 9.1(g)
Upper Threshold Price............................................... Section 3.1(c)
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses. Except for filing fees associated with filings under the
HSR Act, which shall be split equally between the Parties, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration and
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application fees, printing fees, and fees and expenses of its own financial or
other consultants, investment bankers, accountants, and counsel, except that
each of the Parties shall bear and pay one-half of the filing fees payable in
connection with the Registration Statement and the Joint Proxy Statement and
printing costs incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement.
11.3 Brokers and Finders. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation as to Target and except for Xxxxx Xxxxxx Inc. as to
Buyer, each of the Parties represents and warrants that neither it nor any of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by Target or by Buyer, each of
Target and Buyer, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b), for the Confidentiality Agreements). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, other than as provided in Section 8.13.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after stockholder approval of this
Agreement has been obtained; provided, that after any such approval by the
holders of Target Common Stock, there shall be made no amendment that pursuant
to Section 251(d) of the DGCL requires further approval by such stockholders
without the further approval of such stockholders; and further provided, that
after any such approval by the holders of Buyer Common Stock, the provisions of
this Agreement relating to the manner or basis in which shares of Target Common
Stock will be exchanged for shares of Buyer Common Stock shall not be amended
after the Stockholders' Meetings in a manner adverse to the holders of Buyer
Common Stock without any requisite approval of the holders of the issued and
outstanding shares of Buyer Common Stock entitled to vote thereon.
11.6 Waivers. (a) Prior to or at the Effective Time, Buyer, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Target, to waive or extend the time for the compliance or
fulfillment by Target of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of Buyer
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Buyer.
(b) Prior to or at the Effective Time, Target, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Buyer, to waive or extend the time for the compliance or fulfillment by Buyer of
any and all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of Target under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Target.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law
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or otherwise) without the prior written consent of the other Party. 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.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Target: Xxxxx Enterprises, Inc.
One Atlantic Center
Suite 5000
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: J. Xxx Xxxxx
Copy to Counsel: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxxxx
Buyer: Xxxxxx-Field Health Products, Inc.
000 Xxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
Copy to Counsel: Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions; Articles and Sections. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
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11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.14 Enforcement of Agreement. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specified terms or was 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
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
XXXXXX-FIELD HEALTH PRODUCTS, INC.
By: /s/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
GFHP ACQUISITION CORP.
By: /s/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
XXXXX ENTERPRISES, INC.
By: /s/ J. XXX XXXXX
------------------------------------
J. Xxx Xxxxx
Chairman of the Board of Directors
Chief Executive Officer
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