EXHIBIT 99.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 25, 2004
BY AND AMONG
EDELBROCK HOLDINGS, INC.,
EDELBROCK MERGER SUB, INC.
AND
EDELBROCK CORPORATION
Table of Contents
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ARTICLE 1. THE MERGER..................................................................................... 1
1.1 Merger of Merger Sub into the Company................................................. 1
1.2 Effect of the Merger.................................................................. 1
1.3 Closing; Effective Time............................................................... 1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers....................... 2
1.5 Conversion of Shares.................................................................. 2
1.6 Company Stock Options and Warrants.................................................... 3
1.7 Surrender of Stock Certificates; Stock Transfer Books................................. 4
1.8 Dissenting Shares..................................................................... 6
1.9 Further Action........................................................................ 6
ARTICLE 2. Representations and Warranties of the Company.................................................. 7
2.1 Capitalization and Related Matters.................................................... 7
2.2 SEC Filings; Financial Statements..................................................... 8
2.3 Title to Assets....................................................................... 8
2.4 Intellectual Property................................................................. 9
2.5 Undisclosed Liabilities............................................................... 9
2.6 Compliance with Legal Requirements.................................................... 9
2.7 Legal Proceedings..................................................................... 9
2.8 Authority; Inapplicability of Anti-Takeover Statutes; Binding Nature
of this Agreement..................................................................... 10
2.9 Non-Contravention; Consents........................................................... 10
2.10 Absence of Certain Changes............................................................ 11
2.11 Opinion of the Financial Advisor; Recommendation of the Special
Committee............................................................................. 11
2.12 Brokers............................................................................... 11
2.13 Proxy Statement and Schedule 13E-3.................................................... 11
ARTICLE 3. Representations and Warranties of Parent and Merger Sub........................................ 12
3.1 Valid Existence....................................................................... 12
3.2 Authority; Binding Nature of Agreement................................................ 12
3.3 Non-Contravention; Consents........................................................... 12
3.4 Disclosure............................................................................ 12
3.5 Ownership of Merger Sub and Parent.................................................... 13
3.6 Parent and Merger Sub's Operations.................................................... 13
3.7 Brokers............................................................................... 13
3.8 No Knowledge of Breach or Inaccuracy.................................................. 13
3.9 Financial Arrangements................................................................ 13
ARTICLE 4. Certain Covenants of the Company............................................................... 13
4.1 Access and Investigation.............................................................. 13
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Table of Contents
(continued)
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4.2 Interim Operations of the Company..................................................... 14
4.3 Acquisition Proposals; No Solicitation................................................ 15
ARTICLE 5. Additional Covenants of the Parties............................................................ 18
5.1 Proxy Statement; Schedule 13E-3....................................................... 18
5.2 Company Stockholders' Meeting......................................................... 19
5.3 Regulatory Approvals.................................................................. 20
5.4 Indemnification of Officers and Directors............................................. 20
5.5 Additional Agreements................................................................. 20
5.6 Public Disclosure..................................................................... 21
5.7 Notification of Certain Matters....................................................... 21
5.8 Agreement with the Edelbrock Entites.................................................. 21
5.9 Stockholder Litigation................................................................ 21
5.10 Financing............................................................................. 21
ARTICLE 6. Conditions Precedent to Obligations of Parent and Merger Sub................................... 22
6.1 Accuracy of Representations........................................................... 22
6.2 Performance of Obligation............................................................. 22
6.3 Stockholder Approval.................................................................. 22
6.4 Consents.............................................................................. 23
6.5 No Material Adverse Effect............................................................ 23
6.6 No Restraints......................................................................... 23
6.7 Financing............................................................................. 23
6.8 Dissenting Shares..................................................................... 23
ARTICLE 7. Conditions Precedent to Obligation of the Company.............................................. 23
7.1 Accuracy of Representations........................................................... 23
7.2 Performance of Obligations............................................................ 24
7.3 Stockholder Approval.................................................................. 24
7.4 No Restraints......................................................................... 24
7.5 Insurance............................................................................. 24
ARTICLE 8. Termination.................................................................................... 24
8.1 Termination........................................................................... 24
8.2 Effect of Termination................................................................. 25
8.3 Termination Fee....................................................................... 25
8.4 Expenses.............................................................................. 26
ARTICLE 9. Miscellaneous Provisions....................................................................... 26
9.1 Amendment............................................................................. 26
9.2 Waiver................................................................................ 27
9.3 No Survival of Representations and Warranties......................................... 27
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Table of Contents
(continued)
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9.4 Entire Agreement; Counterparts........................................................ 27
9.5 Applicable Law; Jurisdiction; Specific Performance.................................... 27
9.6 Disclosure Schedule................................................................... 28
9.7 Assignment of this Agreement; Parties in Interest..................................... 28
9.8 Notices............................................................................... 28
9.9 Severability.......................................................................... 29
9.10 Construction.......................................................................... 29
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Table of Defined Terms
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Acquisition................................................................................................... 15
Acquisition Proposal.......................................................................................... 15
Adverse Recommendation Change................................................................................. 15
Agreement..................................................................................................... 1
Beneficial Ownership.......................................................................................... 1
Board......................................................................................................... 1
Closing....................................................................................................... 1
Closing Date.................................................................................................. 2
Company....................................................................................................... 1
Company Board Recommendation.................................................................................. 19
Company Common Stock.......................................................................................... 2
Company Disclosure Schedule................................................................................... 7
Company SEC Documents......................................................................................... 8
Company Stock Certificate..................................................................................... 4
Company Stockholders' Meeting................................................................................. 18
Consent....................................................................................................... 1
Contract...................................................................................................... 1
Delaware Law.................................................................................................. 1
Dissenting Shares............................................................................................. 6
Edelbrock Entities............................................................................................ 15
Effective Time................................................................................................ 2
Encumbrance................................................................................................... 8
Entity........................................................................................................ 1
Exchange Act.................................................................................................. 1
Financing..................................................................................................... 13
Financing Commitments......................................................................................... 13
Financial Advisor............................................................................................. 11
Governmental Authorization.................................................................................... 1
Governmental Body............................................................................................. 1
Indemnified Persons........................................................................................... 20
Knowledge..................................................................................................... 10
Legal Proceeding.............................................................................................. 9
Legal Requirement............................................................................................. 1
Material Adverse Effect....................................................................................... 1
Merger........................................................................................................ 1
Merger Consideration.......................................................................................... 3
Merger Sub.................................................................................................... 1
Mr. Edelbrock................................................................................................. 3
Option........................................................................................................ 3
Outside Termination Date..................................................................................... 24
Parent........................................................................................................ 1
Paying Agent.................................................................................................. 4
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Table of Defined Terms
(continued)
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Person........................................................................................................ 2
Pre-Closing Period............................................................................................ 13
Proprietary Assets............................................................................................ 9
Proxy Statement............................................................................................... 18
Representatives............................................................................................... 2
Required Company Stockholder Vote............................................................................. 16
Schedule 13E-3................................................................................................ 18
SEC........................................................................................................... 11
Securities Act................................................................................................ 2
Special Committee............................................................................................. 1
Stock Option Plans............................................................................................ 3
Subsidiary.................................................................................................... 2
Superior Proposal............................................................................................. 16
Surviving Corporation......................................................................................... 1
Outside Termination Date...................................................................................... 24
Warrants...................................................................................................... 3
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of June 25, 2004, by and among Edelbrock Holdings, Inc., a
Delaware corporation ("Parent"); Edelbrock Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
Edelbrock Corporation, a Delaware corporation (the "Company").
Certain capitalized terms used in this Agreement are defined in Exhibit
A.
BACKGROUND
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub with and into the Company (the "Merger") in accordance with this
Agreement and the Delaware General Corporation Law (the "Delaware Law"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. The respective boards of directors of Parent, Merger Sub and the
Company have approved, adopted and declared advisable this Agreement and the
Merger upon the terms and subject to the conditions set forth in this Agreement
and in accordance with the Delaware Law. The actions of the Company's Board of
Directors (the "Board") were taken following the recommendation of a Special
Committee of the Board (the "Special Committee").
C. Parent, Merger Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
STATEMENT OF AGREEMENT
The parties to this Agreement hereby agree as follows:
ARTICLE 1.
THE MERGER
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. Following the Effective
Time, the Company shall be the surviving corporation in the Merger (the
"Surviving Corporation"), and the separate existence of Merger Sub shall cease.
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all of the properties, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxx & Xxxxx, 1801 Century
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Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 9:00 a.m. Pacific Time, on a date
to be designated by the parties (the "Closing Date"), which shall be as soon as
practicable, but in no event later than the second business day after the
satisfaction or waiver of the last unsatisfied or unwaived condition set forth
in Articles 6 and 7 (other than those conditions set forth in Sections 6.1, 6.2,
7.1 and 7.2 of this Agreement that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions) unless
another time or date is agreed to by the parties. Subject to the provisions of
this Agreement, a certificate of merger satisfying the applicable requirements
of the Delaware Law shall be duly executed by the Company and, concurrently with
or as soon as practicable on the date of the Closing, filed with the Secretary
of State of the State of Delaware. The Merger shall become effective upon the
date and time of the filing of such certificate of merger with the Secretary of
State of the State of Delaware or at such subsequent date or time as Parent and
the Company shall agree and specify in the Certificate of Merger (the date and
time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. Unless otherwise determined by Parent prior to the Effective Time:
(a) Effective upon and as part of the Merger, the
Certificate of Incorporation of the Company shall be amended in its entirety to
be the same as the Restated Certificate of Incorporation that is attached to
this Agreement as Exhibit B and, as so amended, shall be the Certificate of
Incorporation of the Company following the Merger until thereafter amended in
accordance with its terms and the terms of the Delaware Law;
(b) The Bylaws of the Company shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time except that the Company's name
shall be the name of the Surviving Corporation; and
(c) The directors of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals who are
directors of Merger Sub immediately prior to the Effective Time.
1.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or any
stockholder of the Company or Merger Sub:
(i) Any and all shares of the common stock,
$0.01 par value per share, of the Company ("Company Common Stock") then held by
the Company or any wholly owned Subsidiary of the Company (or held in the
Company's treasury) shall be canceled and shall cease to exist, and no
consideration shall be delivered in exchange for such shares;
(ii) Any and all shares of Company Common Stock
then held by Parent or Merger Sub shall be canceled and shall cease to exist,
and no consideration shall be delivered in exchange for such shares;
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(iii) Except as provided in clauses (i) and (ii)
above and subject to Section 1.5(b), each share of Company Common Stock then
outstanding (other than Dissenting Shares as provided in Section 1.8) shall be
converted into the right to receive Sixteen Dollars and Seventy-Five Cents
($16.75) in cash, without interest (the "Merger Consideration"); and
(iv) Each share of the common stock, $0.01 par
value per share, of Merger Sub then outstanding shall be converted into one
share of common stock of the Surviving Corporation.
(b) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock are changed into
a different number or class of shares by reason of any stock split, division or
subdivision of shares, stock dividend, reverse stock split, consolidation of
shares, reclassification, recapitalization or other similar transaction, then
the Merger Consideration shall be correspondingly adjusted to reflect such
change.
(c) The parties to this Agreement acknowledge and agree
that (i) family trusts of which O. Xxxxxx Xxxxxxxxx, Xx. ("Mr. Edelbrock") is a
trustee will receive approximately $7,000,000 of Merger Consideration as a
result of their ownership of Company Common Stock as of the Effective Time that
they have not contributed to Parent, and (ii) the Company Common Stock that Mr.
Edelbrock owns through the Company's 401(k) plan will not be contributed to
Parent and, as a result, will also be exchanged for Merger Consideration.
1.6 COMPANY STOCK OPTIONS AND WARRANTS.
(a) For purposes of this Agreement, the term "Option"
means each outstanding unexercised option to purchase Company Common Stock or
preferred stock of the Company, whether or not then vested or fully exercisable,
granted at any time to any current or former director, officer or employee of
the Company or to any other Person, including, without limitation, stock options
granted under the Company's 1994 Incentive Equity Plan and the Company's 1994
Stock Option Plan for Non-Employee Directors (jointly referred to in this
Agreement as the "Stock Option Plans"). The outstanding warrants to purchase
Company Common Stock granted by the Company to RICOR Racing and Development
L.P., JG Engine Dynamics, Inc. and Automotive Systems Group, Inc. are referred
to herein as the "Warrants."
(b) Immediately prior to the Effective Time, the Company
shall take such action as is necessary to cause each unvested Option that is
then outstanding to become fully vested and exercisable. Prior to the Closing
Date, the Company shall use its reasonable efforts to (i) obtain the consent of
each holder of Options to the written cancellation immediately prior to the
Effective Time of each then-outstanding Option in exchange for an amount in cash
(less any applicable withholding required by law) payable at or as soon as
practicable after the Effective Time, equal to the product of (A) the total
number of shares of Company Common Stock underlying such Option and (B) the
excess, if any, of the Merger Consideration over the per share exercise price of
such Option, and (ii) make any amendments to the Stock Option Plans and/or
agreements relating to the Options that may be necessary or desirable to
implement the foregoing.
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(c) The Company shall take such action as is necessary so
that the Stock Option Plans shall terminate as of the Effective Time.
(d) Prior to the Effective Time, the Company shall
approve in advance in accordance with the procedures set forth in Rule 16b-3
promulgated under the Exchange Act any dispositions by each officer or director
of the Company who is subject to Section 16 of the Exchange Act of Company
Common Stock to the Company (including, without limitation, derivative
securities with respect to Company Common Stock) resulting from the transactions
contemplated by this Agreement.
1.7 SURRENDER OF STOCK CERTIFICATES; STOCK TRANSFER BOOKS.
(a) At the Effective Time (i) all shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
shall automatically be canceled and shall cease to exist and, subject to Section
1.8, all holders of certificates representing shares of Company Common Stock
that were outstanding immediately prior to the Effective Time shall cease to
have any rights as stockholders of the Company other than the right to receive
the Merger Consideration, and (ii) the stock transfer books of the Company shall
be closed with respect to all shares of Company Common Stock outstanding
immediately prior to the Effective Time. No further transfer of any such shares
of Company Common Stock shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a valid certificate representing
any shares of Company Common Stock (a "Company Stock Certificate") is presented
to the Paying Agent (as defined in Section 1.7(b)) or to the Surviving
Corporation or Parent, such Company Stock Certificate shall be canceled and
shall be exchanged for the Merger Consideration as provided in this Section 1.7.
(b) Prior to the Effective Time, Parent shall enter into
an agreement with the Company's registrar and transfer agent or with a reputable
bank or trust company reasonably acceptable to the Company to act as agent (the
"Paying Agent") pursuant to which the Paying Agent shall agree to receive and
disburse the funds to which the holders of shares of Company Common Stock shall
become entitled under Section 1.5 at the Effective Time and the funds to which
holders of Options shall become entitled under Section 1.6. Prior to the
Effective Time, Parent shall deposit with the Paying Agent an aggregate amount
of cash sufficient to enable the Paying Agent to make payments pursuant to
Section 1.5 to holders of Company Common Stock issued and outstanding
immediately prior to the Effective Time and pursuant to Section 1.6 to holders
of Options outstanding immediately prior to the Effective Time.
(c) As soon as reasonably practicable, and in no event
later than three business days, after the Effective Time, the Paying Agent shall
mail to the record holders of Company Common Stock entitled to receive the
Merger Consideration (i) a letter of transmittal in customary form and
containing such provisions as Parent may reasonably specify (including, without
limitation, a provision confirming that delivery of the Company Stock
Certificates shall be effected, and risk of loss and title to Company Stock
Certificates shall pass, only upon delivery of such Company Stock Certificates
to the Paying Agent), and (ii) instructions for use in effecting the surrender
of Company Stock Certificates in exchange for the Merger Consideration. Upon
surrender of a Company Stock Certificate to the Paying Agent for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by
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the Paying Agent or Parent, (1) the holder of such Company Stock Certificate
shall be entitled to receive, in exchange for each share of Company Common Stock
previously represented by such Company Stock Certificate, the Merger
Consideration with respect to each share of Company Common Stock represented by
such Company Stock Certificate, and (2) the Company Stock Certificate so
surrendered shall be canceled. Until surrendered as contemplated by this Section
1.7(c), each Company Stock Certificate other than Dissenting Shares (as defined
in Section 1.8(c)) shall be deemed, from and after the Effective Time, to
represent only the right to receive the Merger Consideration with respect to
each share of Company Common Stock represented by such Company Stock
Certificate. If any Company Stock Certificate shall have been lost, stolen or
destroyed, Parent may, in its discretion and as a condition precedent to the
payment of the Merger Consideration, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Paying Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(d) At any time following one year after the Effective
Time, the Surviving Corporation may require the Paying Agent to deliver to it
any funds which had been made available to the Paying Agent and not disbursed to
the holders of Company Stock Certificates, and any holder of Company Stock
Certificates who has not theretofore surrendered its Company Stock Certificates
in accordance with this Section 1.7 shall thereafter look only to Parent and the
Surviving Corporation with respect to the cash amounts payable upon surrender of
the Company Stock Certificates held by such holder.
(e) If any portion of the Merger Consideration is to be
paid to a person other than the registered holder of the shares represented by
the Company Common Stock Certificate or Certificates surrendered in exchange, it
shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the Paying
Agent any transfer or other taxes required as a result of such payment to a
person other than the registered holder of such shares or establish to the
satisfaction of the Paying Agent that such tax has been paid or is not payable.
(f) Each of the Paying Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock or Options such amounts as may be required
to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as
amended, or any provision of state, local or foreign tax law or under any other
applicable Legal Requirement. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been
paid. All transfer, documentary, sales, use, registration and other such taxes
(including, without limitation, any applicable real estate transfer or gains
tax) and related fees (including, without limitation, penalties, interest, and
additions to tax) incurred in connection with the Merger shall be paid by Parent
or the Surviving Corporation.
(g) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock or to any other
Person with respect to any Merger
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Consideration that may be payable upon due surrender of any Company Stock
Certificate that is delivered to any public official pursuant to any applicable
abandoned property law, escheat law or similar Legal Requirement. If any Company
Stock Certificate has not been surrendered by the earlier of (i) the fifth
anniversary of the date on which the Merger becomes effective and (ii) the date
immediately prior to the date on which the cash amount that such Company Common
Stock Certificate represents the right to receive would otherwise escheat to or
become the property of any Governmental Body, then such cash amount shall, to
the extent permitted by applicable Legal Requirements, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
1.8 DISSENTING SHARES.
(a) Notwithstanding anything to the contrary contained in
this Agreement, any shares of Company Common Stock that constitute Dissenting
Shares shall not be converted into or represent the right to receive the Merger
Consideration in accordance with Section 1.5, and each holder of Dissenting
Shares shall be entitled only to such rights with respect to such Dissenting
Shares as may be granted to such holder in Section 262 of the Delaware Law. From
and after the Effective Time, a holder of Dissenting Shares shall not have and
shall not be entitled to exercise any of the voting rights or other rights of a
stockholder of the Surviving Corporation. If any holder of Dissenting Shares
shall fail to perfect or shall otherwise lose such holder's right of appraisal
under Section 262 of the Delaware Law, then such Dissenting Shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such
Dissenting Shares) the Merger Consideration in accordance with Section 1.5.
(b) The Company (i) shall give Parent prompt written
notice of any demand received by the Company from any stockholder of the Company
for appraisal of such stockholder's Company Common Stock pursuant to the
Delaware Law, (ii) shall keep Parent informed as to, and permit Parent to
participate in, negotiations and proceedings by the Company with such
stockholder with respect to any such demand, and (iii) shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demand for appraisal.
(c) For purposes of this Agreement, "Dissenting Shares"
refers to any shares of Company Common Stock outstanding immediately prior to
the Effective Time that are held by stockholders who are entitled to demand, and
who demand, appraisal of such Company Common Stock pursuant to Section 262 of
the Delaware Law.
1.9 FURTHER ACTION. At and after the Effective Time, the Surviving
Corporation shall take all action as shall be required in connection with the
Merger, including, but not limited to, the execution and delivery of any further
deeds, assignments, instruments or documentation as are necessary or desirable
to carry out the provisions of this Agreement.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the disclosure schedule delivered to Parent on or prior
to the date of this Agreement (the "Company Disclosure Schedule"):
2.1 CAPITALIZATION AND RELATED MATTERS.
(a) The authorized capital stock of the Company consists
of 15,000,000 shares of Company Common Stock, of which 5,485,392 shares have
been issued and are outstanding as of the date of this Agreement, and 1,000,000
shares of preferred stock, none of which have been issued and are outstanding as
of the date of this Agreement. The Company holds 320,806 shares of its capital
stock in its treasury. All of the outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 2.1(a) of the Company Disclosure
Schedule: (i) none of the outstanding shares of Company Common Stock is entitled
or subject to any preemptive right, right of participation or any similar right;
(ii) none of the outstanding shares of Company Common Stock is subject to any
right of first refusal in favor of the Company; and (iii) the Company is not a
party to any Contract relating to the voting or registration of, or restricting
any Person from purchasing, selling, pledging or otherwise disposing of (or
granting any option or similar right with respect to), any shares of Company
Common Stock. The Company is not under any obligation, and is not bound by any
Contract pursuant to which it may become obligated, to repurchase, redeem or
otherwise acquire any outstanding shares of Company Common Stock.
(b) As of the date of this Agreement, (1) 327,387 shares
of Company Common Stock are subject to issuance pursuant to Options granted and
outstanding under the Stock Option Plans, and (2) 154,000 shares of Company
Common Stock are subject to issuance pursuant to the Warrants. Section 2.1(b) of
the Company Disclosure Schedule sets forth the following information with
respect to each Option that is outstanding as of the date of this Agreement: (i)
the name of the optionee; (iii) the number of shares of Company Common Stock
subject to such Option; (iv) the exercise price of such Option; and (v) the date
on which the Option was granted. In addition, Section 2.1(b) of the Company
Disclosure Schedule shall identify any outstanding Option that was not granted
pursuant to a Stock Option Plan of the Company. The Company has made available
to Parent accurate and complete copies of all plans and agreements pursuant to
which the Company has issued outstanding Options.
(c) Except for Options referred to in Section 2.1(b),
there is no (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of the Company, (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Company, or (iii)
stockholder rights plan (or similar plan commonly referred to as a "poison
pill") or Contract under which the Company is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities.
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2.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all required reports,
schedules, forms, statements and documents with the SEC since January 1, 2001
(the "Company SEC Documents"). All statements, reports, schedules, forms, and
other documents required to have been filed by the Company with the SEC have
been so filed on a timely basis. As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the Company SEC Documents complied in
all material respects with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be) and, to the extent not included in the
Exchange Act or the Securities Act, the Xxxxxxxx-Xxxxx Act of 2002; and (ii)
none of the Company SEC Documents when filed, and giving effect to any
amendments or supplements filed prior to the date of this Agreement, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Except to the extent stated therein, the financial
statements (including, without limitation, any related notes) contained in the
Company SEC Documents: (i) when filed, complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto;
(ii) when filed, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered, except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC and except that the
unaudited financial statements may not contain footnotes and are subject to
normal year-end adjustments; and (iii) fairly present, in all material respects,
the financial position of the Company as of the respective dates thereof and the
results of operations and cash flows of the Company for the periods covered
thereby, except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC
and except that the unaudited financial statements may not contain footnotes and
are subject to normal year-end adjustments.
2.3 TITLE TO ASSETS.
(a) The Company owns, and has good and valid title to,
all tangible real property and personal property assets reflected on the balance
sheet that is included in the Company's Report on Form 10-Q filed with the SEC
for the quarter ended March 25, 2004 (except for tangible assets sold or
disposed of in the ordinary course of business since March 25, 2004) free and
clear of any Encumbrances as defined in Section 2.3(b), except that such
tangible assets may be subject to (i) liens for taxes not yet due and payable,
(ii) Encumbrances listed in the Company Disclosure Schedule, (iii) Encumbrances
relating to liabilities reflected in the financial statements (including,
without limitation, any related notes) contained in the Company's SEC documents,
and (iv) Encumbrances that would not in the aggregate have a Material Adverse
Effect on the Company.
(b) For purposes of this Agreement, "Encumbrance" means
any (i) lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim, infringement, interference, option, right of first refusal,
preemptive right or restriction of any nature (including, without limitation,
any restriction on the voting of any security, any restriction on the transfer
of
8
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset) or (ii) obligation to make any royalty payment,
milestone payment success payment or maintenance fee.
2.4 INTELLECTUAL PROPERTY. The Company owns and has good and valid
title to, or has a right to use, license and otherwise exploit, all patents,
patent applications, trademarks, trademark applications, copyrights, copyright
applications and trade secrets (collectively, "Proprietary Assets") that are
necessary to enable the Company to conduct its business substantially in the
manner in which its business is currently being conducted, except where the
failure to own, have good and valid title to, or have a right to use, license
and otherwise exploit such Proprietary Assets would not individually or in the
aggregate have a Material Adverse Effect on the Company.
2.5 UNDISCLOSED LIABILITIES. The Company does not have any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, except for (i) liabilities identified as such in the "liabilities"
column of the Company's balance sheet as of March 25, 2004 (or in the notes
thereto) included in the Company's Report on Form 10-Q filed with the SEC for
the quarter ended Xxxxx 00, 0000, (xx) normal and recurring current liabilities
that have been incurred by the Company since March 25, 2004 in the ordinary
course of business and consistent with past practices, (iii) liabilities
described in Section 2.5 of the Company Disclosure Schedule, (iv) liabilities
incurred in connection with this Agreement or the transactions contemplated
hereunder, and (v) liabilities that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
2.6 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is in
compliance with all applicable Legal Requirements, except where the failure to
comply with such Legal Requirements would not individually or in the aggregate
have a Material Adverse Effect on the Company.
2.7 LEGAL PROCEEDINGS.
(a) Except as set forth in Section 2.7(a) of the Company
Disclosure Schedule, there is no pending Legal Proceeding and, to the Knowledge
of the Company, no Person has threatened to commence any Legal Proceeding (i)
that involves the Company or any of the assets owned or used by the Company that
individually or in the aggregate would have a Material Adverse Effect on the
Company if resolved adversely to the Company, or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other transactions contemplated by
this Agreement. Except in relation to litigation set forth in the Company
Disclosure Schedule there is no order, writ, injunction, judgment or decree to
which the Company, or any of the assets owned or used by the Company, is subject
which would have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(b) For purposes of this Agreement, (i) a "Legal
Proceeding" means any action, suit, litigation, arbitration, proceeding
(including, without limitation, any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
9
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel located in or outside the United States, and (ii) the Company shall be
deemed to have "Knowledge" of any fact or other matter if such fact or other
matter is within the actual knowledge of any member of the Board or any
executive officer of the Company listed on Section 2.7(b) of the Company
Disclosure Schedule, excluding Mr. Edelbrock, Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxxxxxxxx and/or Xxxxx Xxxxxxxxx.
2.8 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING
NATURE OF THIS AGREEMENT. The Company is a corporation duly organized, validly
existing and in good standing under the Delaware Law. The Company has the
requisite right, power and authority to enter into, and to perform its
obligations under, this Agreement, subject to, with respect to the Merger, the
adoption and approval of this Agreement by the Required Stockholder Vote. The
Board has, upon the recommendation of the Special Committee and by the vote of
the directors of the Company, (i) determined that this Agreement and the
transactions contemplated hereby, including, without limitation, the Merger, are
advisable and fair to, and in the best interests of, the Company and the holders
of Company Common Stock other than the Edelbrock Entities, (ii) approved and
adopted this Agreement and the transactions contemplated hereby, including,
without limitation, the Merger, in accordance with the requirements of the
Delaware Law, (iii) authorized and approved the execution, delivery and
performance of this Agreement by the Company, (iv) resolved to recommend that
the stockholders of the Company approve and adopt this Agreement, and (v) to the
extent necessary, taken all action necessary to ensure that Section 203 of
Delaware Law does not apply to Parent or Merger Sub in connection with the
Merger or any of the other transactions contemplated by this Agreement. No other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement other than, with respect to the Merger, the adoption and approval of
this Agreement by the Required Stockholder Vote and the filing and recordation
of the appropriate merger documents as required by the Delaware Law. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by
Parent and Merger Sub, constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditor's rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
2.9 NON-CONTRAVENTION; CONSENTS. Except as would not individually
or in the aggregate result in a Material Adverse Effect on the Company, the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement will not (i)
violate any of the provisions of the certificate of incorporation or bylaws of
the Company, (ii) cause a violation by the Company of any Legal Requirement
applicable to the Company, or (iii) cause a default on the part of the Company
under any Contract. Except as may be required by the Exchange Act, the Delaware
Law and the rules of the Nasdaq National Stock Market, Inc., the Company is not
required to make any filing with or give any notice to, or to obtain any consent
from, any Person at or prior to the Closing in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except
10
where the failure to make any such filing, give any such notice or obtain any
such consent would not individually or in the aggregate have a Material Adverse
Effect on the Company.
2.10 ABSENCE OF CERTAIN CHANGES. Between March 25, 2004 and the
date of this Agreement, the Company has not, individually or in the aggregate:
(a) Suffered any adverse change with respect to its
business or financial condition which has had a Material Adverse Effect on the
Company; or
(b) Suffered any loss, damage or destruction to any of
its assets that has had a Material Adverse Effect on the Company.
2.11 OPINION OF THE FINANCIAL ADVISOR; RECOMMENDATION OF THE SPECIAL
COMMITTEE.
(a) The Company has received the opinion of Xxxxxx
Capital Group, LLC (the "Financial Advisor") to the effect that, as of the date
of this Agreement, the Merger Consideration to be received by the holders of
Company Common Stock (other than the Edelbrock Entities) is fair, from a
financial point of view, to such holders (other than the Edelbrock Entities).
The Company has received the Financial Advisor's approval to include a copy of
their written opinion in the Proxy Statement that is described in Section
5.1(a).
(b) The Special Committee, at a meeting duly called and
held, unanimously (i) determined that this Agreement and the transactions
contemplated by this Agreement are advisable and fair to, and in the best
interests of, the holders of Company Common Stock who will receive the Merger
Consideration (other than the Edelbrock Entities), and (ii) recommended the
approval and adoption of this Agreement and the Merger by the Board.
2.12 BROKERS. No broker, finder or investment banker (other than
the Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
2.13 PROXY STATEMENT AND SCHEDULE 13E-3. The Proxy Statement
described in Section 5.1(a), as of the date it is mailed to the Company's
stockholders and at the time of the special meeting described in the Proxy
Statement, (i) will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading and (ii) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder, except
that no representation is made by the Company with respect to statements made in
the Proxy Statement based on information supplied to the Company by Parent or
Merger Sub for inclusion in the Proxy Statement. None of the information
provided by the Company specifically for use in the Schedule 13E-3 described in
Section 5.1(a) that is required to be filed with the Securities and Exchange
Commission (the "SEC") under the Exchange Act in connection with the Merger will
at the time the Schedule 13E-3 or any amendments thereto are so filed contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading,
11
except that no representation is made by the Company with respect to statements
made in the Schedule 13E-3 based on information supplied to the Company by
Parent or Merger Sub for inclusion in the Schedule 13E-3.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 VALID EXISTENCE. Parent and Merger Sub are corporations duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and have the corporate power and authority to own, operate and lease
their properties and to carry on their businesses.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub
have the requisite right, power and authority to perform their obligations under
this Agreement, and the execution, delivery and performance by Parent and Merger
Sub of this Agreement have been duly authorized by all necessary action on the
part of Parent and Merger Sub and their respective boards of directors. No vote
of the holders of any of the outstanding shares of capital stock or any other
securities of Parent is necessary to approve this Agreement or the Merger. This
Agreement constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against them in accordance with its terms, except to the
extent that the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditor's rights generally, and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding at law or in equity).
3.3 NON-CONTRAVENTION; CONSENTS. Except as would not result in a
Material Adverse Effect on Parent or Merger Sub, the execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated by this Agreement will not (i)
violate any of the provisions of the certificate of incorporation or bylaws of
Parent or Merger Sub, (ii) cause a violation by Parent or Merger Sub of any
Legal Requirement applicable to Parent or Merger Sub, or (iii) cause a default
on the part of Parent or Merger Sub under any Contract.
3.4 DISCLOSURE. None of the information supplied or to be supplied
by or on behalf of Parent or Merger Sub for inclusion in the Proxy Statement
will, at the time the Proxy Statement is mailed to the holders of Company Common
Stock or at any time between the time the Proxy Statement is mailed to the
holders of Common Stock Company and the special meeting of stockholders
contemplated by the Proxy Statement, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion
in the Schedule 13E-3 will, at the time the Schedule 13E-3 is filed with the
SEC, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
12
3.5 OWNERSHIP OF MERGER SUB AND PARENT. Merger Sub is a wholly
owned subsidiary of Parent. Mr. Edelbrock is Parent's controlling stockholder.
The capitalization of, and the identity of the persons who own the equity
interests in, Parent is set forth on Schedule 3.5 hereto.
3.6 PARENT AND MERGER SUB'S OPERATIONS. Parent and Merger Sub were
formed solely for the purpose of engaging in the Merger and have not engaged in
any business activities or conducted any operations other than in connection
with the Merger.
3.7 BROKERS. No broker, finder or investment banker (other than
Banc of America Securities LLC) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
3.8 NO KNOWLEDGE OF BREACH OR INACCURACY. Neither Parent, Merger
Sub nor any of their respective Representatives has actual knowledge of any
breach of, or inaccuracy in, any of the representations or warranties of the
Company in this Agreement.
3.9 FINANCIAL ARRANGEMENTS. Mr. Edelbrock has received, and
previously delivered to the Company and the Special Committee, (i) copies of a
fully executed commitment letter dated June 23, 2004 from Bank of America, N.A.
and (ii) a copy of a fully executed commitment letter dated June 23, 2004 from
City National Bank, pursuant to which such persons have agreed, subject to the
terms and conditions set forth therein, to provide financing to Parent and
Merger Sub in connection with the Merger and the transactions contemplated by
this Agreement. The commitment letters referred to in the foregoing clauses (i)
and (ii) are referred to herein as the "Financing Commitments." The Financing
Commitments are in full force and effect on the date hereof and have not been
amended or modified in any respect. There are no facts and circumstances
actually known to Parent, Merger Sub, any of the Edelbrock Entities or any of
their respective Representatives that any of them believes is likely to (i)
prevent the conditions described in the Financing Commitments from being
satisfied, (ii) prevent Parent or Merger Sub from receiving financing pursuant
to the terms of the Financing Commitments or (iii) make any of the assumptions
set forth in the Financing Commitments unreasonable. The funds contemplated to
be provided by the Financing Commitments, together with the Company's available
cash, will be sufficient to enable Parent and Merger Sub to pay the full amounts
required to be paid pursuant to Sections 1.5 and 1.6 and all other amounts
required to be paid by Parent or Merger Sub under this Agreement and to pay all
of the related fees and expenses (such amount of funds, the "Financing").
ARTICLE 4.
CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of
this Agreement through the Effective Time (the "Pre-Closing Period"), upon
reasonable notice and during normal business hours, the Company shall, and shall
cause its Representatives to (i) provide Parent's Representatives with
reasonable access to the Company' Representatives, personnel, facilities and
assets and to all existing books, records, tax returns, work papers and other
documents and information relating to the Company; and (ii) provide Parent and
Parent's
13
Representatives with such copies of the existing books, records, tax returns,
work papers and other documents and information relating to the Company, and
with such additional financial, operating and other data and information
regarding the Company, as Parent may reasonably request. Any non-public document
or other non-public information provided by the Company to Parent or Merger Sub
under this Section 4.1 shall be subject to the terms of any written
confidentiality agreement that may be entered into among Parent, Merger Sub and
the Company.
4.2 INTERIM OPERATIONS OF THE COMPANY. During the Pre-Closing
Period, the Company shall use its reasonable efforts to preserve its business
and to preserve the goodwill of customers, suppliers and others having business
relations with the Company. Furthermore, the Company agrees that, during the
Pre-Closing Period, except (i) to the extent Parent shall otherwise give its
prior consent in writing, (ii) as contemplated or permitted by this Agreement,
or (iii) as may be required to facilitate compliance with any Legal Requirement,
the Company shall not:
(a) Conduct its business in a manner that departs
materially from the manner in which such business was being conducted prior to
the date of this Agreement;
(b) Amend its certificate of incorporation or bylaws;
(c) Split, combine or reclassify any shares of the
Company's capital stock;
(d) Declare, set aside or pay any dividend (whether
payable in cash, stock or property) with respect to any shares of the Company's
capital stock;
(e) Form any Subsidiary or acquire a greater than fifteen
percent equity interest in any other Entity;
(f) Issue, sell or grant any additional shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock,
other than in the ordinary course of business and other than Company Common
Stock issuable upon exercise of Options that are outstanding as of the date of
this Agreement;
(g) Transfer, lease or license to any third party, or
encumber, any material assets other than (i) in the ordinary course of business,
or (ii) as security for any borrowings permitted by Section 4.2(i);
(h) Repurchase, redeem or otherwise acquire any shares of
the capital stock of the Company, except for acquisitions of Company Common
Stock for a purchase price per share that does not exceed the Merger
Consideration;
(i) Incur any indebtedness for borrowed money or
guarantee any such indebtedness, except for (A) short-term borrowings incurred
in the ordinary course of business, (B) borrowings pursuant to existing credit
facilities, or pursuant to any modifications, renewals or replacements of any
such credit facilities, and (C) borrowings of up to $1,000,000 under any new
credit facility which the Company may enter into;
14
(j) Adopt or materially amend any material bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, pension, retirement, deferred compensation or other
employee benefit agreements or plans, for the benefit of any director, officer
or employee of the Company or (except for normal increases in the ordinary
course of business that are consistent with past practices or that, in the
aggregate, do not result in a material increase in benefits or compensation
expense) increase the compensation or fringe benefits of any director, officer
or employee or pay any benefit not required by any existing agreement or plan;
(k) Amend or prematurely terminate any Contracts or
waive, release or assign any material rights or claims under any Contracts,
except in the ordinary course of business or where the amendment or termination
of the Contracts would not individually or in the aggregate have a Material
Adverse Effect on the Company;
(l) Change any of its methods of accounting or accounting
practices in any material respect, except as required or recommended by
applicable law or generally accepted accounting principles;
(m) Make any material tax election, except for elections
made in the ordinary course of business or consistent with the Company's past
practices;
(n) Make any capital expenditure which, when added to all
other capital expenditures made since the date of this Agreement, would exceed
$500,000 in the aggregate; or
(o) Enter into an agreement to take any of the actions
described in clauses "(a)" through "(n)" of this Section 4.2.
4.3 ACQUISITION PROPOSALS; NO SOLICITATION.
(a) For purposes of this Agreement:
(i) An "Acquisition Proposal" means any bona
fide proposal, whether or not in writing, for the (A) direct or indirect
acquisition or purchase of a business or assets that constitutes fifteen percent
or more of the net revenues, net income or the assets (based on the fair market
value thereof) of the Company and its Subsidiaries, taken as a whole, (B) direct
or indirect acquisition or purchase of fifteen percent or more of any class of
equity securities or capital stock of the Company or any of its Subsidiaries
whose business constitutes fifteen percent or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, or (C) a
merger, consolidation, restructuring, transfer of assets or other business
combination, sale of shares of capital stock, tender offer, exchange offer,
recapitalization, stock repurchase program or other similar transaction that if
consummated would result in any Person or Persons beneficially owning fifteen
percent or more of any class of equity securities of the Company or any of its
Subsidiaries whose business constitutes fifteen percent or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, other than the transactions contemplated by this Agreement (any of the
transactions referred to in clauses (A) through (C) being referred to as an
"Acquisition");
15
(ii) "Superior Proposal" means any bona fide
written Acquisition Proposal that was not solicited by the Company or any of its
Representatives that is made by a third party to purchase all or substantially
all of the Company's assets or up to all of the outstanding equity securities of
the Company pursuant to a tender offer, exchange offer or merger on terms that
the Special Committee and a majority of the Board determine in good faith to be
superior to the Company and its stockholders (in their capacity as stockholders)
from a financial point of view as compared to the transactions contemplated by
this Agreement and to any alternative transaction or changes to the terms of
this Agreement proposed by Parent, after consultation with their financial
advisors and after taking into account all financial, legal and regulatory terms
and conditions of the Acquisition Proposal and this Agreement, and for which all
requisite financing is likely to be obtained;
(iii) "Required Company Stockholder Vote" means
the affirmative vote of the holders of a majority of the shares of Company
Common Stock outstanding on the record date for the Company Stockholder's
Meeting.
(b) The Company agrees that, from and after the date of
this Agreement until the earlier of the Effective Time or the termination of
this Agreement and except as expressly permitted by this Agreement, neither the
Company nor any of its Subsidiaries shall (and the Company shall cause its
Representatives not to) (i) directly or indirectly initiate, solicit, knowingly
encourage or facilitate (including, without limitation, by way of furnishing
information) any inquiries or the making or submission of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal,
(ii) participate or engage in discussions with, or disclose any non-public
information relating to the Company or afford access to the properties, books or
records of the Company to, any Person that has made an Acquisition Proposal or
to any Person in contemplation of an Acquisition Proposal, or (iii) accept an
Acquisition Proposal or enter into any agreement (including, without limitation,
any letter of intent) other than a confidentiality agreement in circumstances
contemplated in Section 4.3(c), that provides for or relates to an Acquisition
Proposal or enter into any agreement (including, without limitation, any letter
of intent) that would require, or would have the effect of causing, the Company
to abandon, terminate or fail to consummate the Merger or the other transactions
contemplated by this Agreement.
(c) Notwithstanding anything to the contrary in this
Agreement, the Company, the Board and the Special Committee may conduct any
actions described in Section 4.3(b)(ii) with respect to a third party if at any
time prior to obtaining the Required Company Stockholder Vote (i) the Company
receives an unsolicited written Acquisition Proposal from such third party, (ii)
the Board or the Special Committee determines in good faith that such proposal
constitutes, or is reasonably likely to result in, a Superior Proposal, after
receiving the advice of its financial advisors (and such Acquisition Proposal
was not solicited, knowingly encouraged or facilitated by the Company or any of
Representatives), and (iii) the Board or the Special Committee determines in
good faith, after consultation with its outside counsel, that the failure to
participate in such discussions or to furnish such information to such third
party would be reasonably expected to result in a breach of the Board's or the
Special Committee's fiduciary duties under applicable Legal Requirements,
provided that the Company shall not deliver any information to such third party
without entering into a confidentiality agreement having customary terms and
conditions. Nothing contained in this Section 4.3 shall
16
prohibit the Company or the Board from taking and disclosing to the Company's
stockholders a position with respect to an Acquisition Proposal pursuant to Rule
14d-9 or 14e-2(a) promulgated under the Exchange Act.
(d) Except as specifically permitted by Section 4.3(e),
neither the Board nor the Special Committee shall directly or indirectly:
(i) Withdraw (or amend or modify in a manner
adverse to Parent), or publicly propose to withdraw (or amend or modify in a
manner adverse to Parent), the approval, recommendation or declaration of
advisability by the Board or the Special Committee of this Agreement, the Merger
or the other transactions contemplated by this Agreement (an "Adverse
Recommendation Change");
(ii) Recommend, adopt or approve, or propose
publicly to recommend, adopt or approve, any Acquisition Proposal; or
(iii) Approve or recommend, or publicly propose to
approve or recommend, or allow the Company to execute or enter into, any
agreement (including, without limitation, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition agreement,
or other similar agreement, arrangement or understanding) (A) that constitutes
or relates to, or that is intended to or could reasonably be expected to lead
to, any Acquisition Proposal other than a confidentiality agreement permitted
pursuant to Section 4.3(c), or (B) that requires the Board, the Special
Committee or the Company to abandon, terminate or fail to consummate the Merger
or any other transaction contemplated by this Agreement.
(e) Notwithstanding Section 4.3(d), at any time prior to
obtaining the Required Company Stockholder Vote, and subject to the Company's
compliance at all times with the provisions of this Section 4.3 and Section 5.1,
the Board or the Special Committee may make an Adverse Recommendation Change if,
but only if the Special Committee has determined, based on a material event or
events relating to the Company, this Agreement (or the transactions contemplated
by this Agreement) or a Superior Proposal occurring subsequent to the date
hereof, after receipt of advice from its financial advisors and legal counsel,
that the circumstances or the Board's failure to make an Adverse Recommendation
Change are reasonably likely to entail a breach of its or the Board's fiduciary
duties under applicable Legal Requirements.
(f) Notwithstanding anything to the contrary in Section
4.3(e) or in any other provision of this Agreement, the receipt by the Board or
the Special Committee of an Acquisition Proposal shall not (i) permit the
Company to enter into any agreement with respect to an Acquisition Proposal
other than a confidentiality agreement, or (ii) affect any other obligation of
the Company under this Agreement.
(g) The Company agrees that, in addition to the
obligations of the Company set forth in the preceding paragraphs of this Section
4.3, as promptly as practicable after receipt of an Acquisition Proposal (but in
no event more than the later of forty-eight hours after the receipt of the
Acquisition Proposal by the Company, by the Board or by any member of the
Special Committee), the Company shall advise Parent in writing of any request
for information
17
or any Acquisition Proposal received from any Person, or any inquiry,
discussions or negotiations with respect to any Acquisition Proposal, and the
terms and conditions of such request, Acquisition Proposal, inquiry, discussions
or negotiations, and the identity of the Person or group making any such
request, Acquisition Proposal or inquiry or with whom any discussions or
negotiations are taking place. The Company agrees that it shall simultaneously
provide to Parent any non-public information concerning the Company provided to
any other Person or group in connection with any Acquisition Proposal which was
not previously provided to Parent. The Company shall keep Parent fully informed
of the status of any Acquisition Proposal (including, without limitation, the
identity of the parties and price involved and any changes to any terms and
conditions thereof).
(h) Within twenty-four hours after the execution and
delivery of this Agreement, the Company shall, and shall instruct its
Representatives to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any possible
Acquisition Proposal. The Company agrees that it shall (i) take the necessary
steps to promptly inform its Representatives involved in the transactions
contemplated by this Agreement of the obligations undertaken in this Section 4.3
and (ii) request each Person who has heretofore executed a confidentiality
agreement in connection with such Person's consideration of acquiring the
Company or any portion thereof to return or destroy all confidential information
heretofore furnished to such Person by or on its behalf, as provided in such
confidentiality agreement.
ARTICLE 5.
ADDITIONAL COVENANTS OF THE PARTIES
5.1 PROXY STATEMENT; SCHEDULE 13E-3.
(a) For purposes of this Agreement, (i) the "Proxy
Statement" means the proxy statement (including all amendments and supplements
thereto) that is to be sent to the holders of Company Common Stock in connection
with a meeting of such holders to be held to vote on the adoption of this
Agreement (the "Company Stockholders' Meeting"), and (ii) the "Schedule 13E-3"
means the Rule 13E-3 Transaction Statement on Schedule 13E-3 (including all
amendments and supplements thereto) that is to be filed with the SEC in
connection with the Merger and this Agreement.
(b) As promptly as practicable after the date of this
Agreement, the Company shall prepare and file the Proxy Statement with the SEC.
The Company shall use all reasonable efforts to cause the Proxy Statement to
comply with the rules and regulations promulgated by the SEC and to respond
promptly to any comments of the SEC or its staff. The Company agrees to provide
Parent and its counsel with copies of any comments that the Company or its
counsel may receive from the staff of the SEC promptly after receipt thereof.
The Company shall use all reasonable efforts to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable. Parent shall
promptly furnish to the Company all information concerning Parent, Merger Sub,
the Edelbrock Entities and their affiliates that may be required or reasonably
requested in connection with any action contemplated by this Section 5.1. Parent
shall use all reasonable efforts to ensure that none of the information supplied
or to be supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in the
18
Schedule 13E-3 will, at the time the Schedule 13E-3 is filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. If Parent becomes aware of any information relating to Parent,
Merger Sub, the Edelbrock Entities or their affiliates that should be disclosed
in an amendment or supplement to the Proxy Statement, then Parent shall promptly
inform the Company thereof and shall cooperate with the Company in filing such
amendment or supplement with the SEC. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Proxy Statement and each
supplement or amendment to the Proxy Statement or response to comments with
respect thereto prior to its being filed with or delivered to the SEC, and the
Company shall consider any such comments in good faith.
(c) Concurrently with the filing of the Proxy Statement
with the SEC, Parent and its affiliates (to the extent required by Legal
Requirements) shall prepare and file with the SEC, together with the Company,
the Schedule 13E-3. Parent shall use all reasonable efforts to cause the
Schedule 13E-3 to comply with the rules and regulations promulgated by the SEC
and to respond promptly to any comments of the SEC or its staff. Parent agrees
to provide the Company and its counsel with copies of any comments that Parent
or its counsel may receive from the staff of the SEC promptly after receipt
thereof. The Company shall promptly furnish to Parent all information concerning
the Company and its executive officers and directors as may reasonably be
requested in connection with the preparation of the Schedule 13E-3. The Company
shall promptly supplement, update and correct any information provided by it for
use in the Schedule 13E-3 if and to the extent that such information is or shall
have become incomplete, false or misleading. The Company shall use all
reasonable efforts to ensure that none of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Schedule 13E-3 will, at the time the Schedule 13E-3 is filed
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. In any such event, Parent shall take all reasonable steps
necessary to cause the Schedule 13E-3 as so supplemented, updated or corrected
to be filed with the SEC. The Company and its counsel shall be given an
opportunity to review and comment on the Schedule 13E-3 and each supplement,
amendment or response to comments with respect thereto prior to its being filed
with or delivered to the SEC, and Parent shall consider any such comments in
good faith.
5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall promptly take all action reasonably
necessary under all applicable Legal Requirements to call, give notice of and
hold the Company Stockholders' Meeting. The Company Stockholders' Meeting shall
be held on a date selected by the Company in consultation with Parent as
promptly as practicable after the Proxy Statement and the Schedule 13E-3 are
cleared by the staff of the SEC.
(b) (i) The Proxy Statement shall include a statement to
the effect that the Board and the Special Committee recommend that the Company's
stockholders vote to adopt this Agreement at the Company Stockholders' Meeting
(the recommendation of the Board that the Company's stockholders vote to adopt
this Agreement being referred to as the "Company
19
Board Recommendation"); (ii) the Proxy Statement shall include a statement to
the effect that the Board and the Special Committee have determined that the
Merger is fair to the Company's stockholders other than the Edelbrock Entities;
(iii) the Company Board Recommendation shall not be withdrawn or modified in a
manner adverse to Parent; and (iv) the Board and the Company's officers shall
use their reasonable efforts to solicit and obtain the Required Company
Stockholder Vote. The Company Stockholders' Meeting shall be held as provided in
Section 5.2(a), and this Agreement shall be submitted by the Board to the
Company's stockholders for approval at the Company Stockholders' Meeting.
5.3 REGULATORY APPROVALS. Each party shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed by such party with any
Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Each of the Company and
Parent shall (i) give the other party prompt notice of the commencement or
threat of commencement of any Legal Proceeding with respect to the Merger or any
of the other transactions contemplated by this Agreement, (ii) keep the other
party generally informed as to the status of any such Legal Proceeding or
threat, and (iii) promptly inform the other party of any communication to or
from any Governmental Body regarding the Merger or any of the other transactions
contemplated by this Agreement. Except as may be prohibited by any Governmental
Body or by any Legal Requirement, in connection with any such Legal Proceeding
each of the Company and Parent will permit authorized Representatives of the
other party to be present at each meeting or conference relating to any such
Legal Proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding.
5.4 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) The Surviving Corporation shall honor all of the
Company's obligations to indemnify and hold harmless (including any obligations
to advance funds for expenses) the present and former directors and officers of
the Company (the "Indemnified Persons") in respect of acts or omissions
occurring prior to the Effective Time to the fullest extent required by the
Delaware Law and the Company's certificate of incorporation and/or bylaws (as in
effect as of the date of this Agreement) and as provided in any indemnification
agreements between the Company and the Indemnified Persons (as in effect as of
the date of this Agreement) in the forms disclosed by the Company to Parent
prior to the date of this Agreement, and such obligations shall survive the
Merger and shall continue in full force and effect from the Effective Time until
the date that is six years after the Effective Time.
(b) The provisions of this Section 5.4 are intended for
the benefit of, and are enforceable by, each Indemnified Person, who shall be a
third-party beneficiary of the provisions of this Section 5.4.
5.5 ADDITIONAL AGREEMENTS. Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions that are necessary
or advisable to consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, each party to this Agreement
(i) shall make all filings (if any) and give all notices (if any) that
20
are required to be made and given by such party in connection with the Merger
and the other transactions contemplated by this Agreement, (ii) shall use all
reasonable efforts to obtain each Consent that is required to be obtained
pursuant to any applicable Legal Requirement or Contract or otherwise by such
party in connection with the Merger or any of the other transactions
contemplated by this Agreement, and (iii) shall use all reasonable efforts to
lift any restraint, injunction or other legal bar to the Merger and each of the
other transactions contemplated by this Agreement. The Company shall promptly
deliver to Parent a copy of each such filing made, each such notice given and
each such Consent obtained by the Company during the Pre-Closing Period.
5.6 PUBLIC DISCLOSURE. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or any of the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, neither Parent nor the Company shall, and neither shall permit any of
its Representatives to, make any disclosure regarding the Merger or any of the
other transactions contemplated by this Agreement unless (i) the other parties
hereto shall have approved such disclosure, which approval shall not be
unreasonably withheld or delayed, or (ii) Parent or the Company, respectively,
shall have determined after consultation with its outside legal counsel that
such disclosure is required by applicable Legal Requirements.
5.7 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give
prompt notice to the other parties of the discovery by such party of (i) any
material inaccuracy in any representation or warranty of any party hereto, (ii)
any material failure on the part of any party hereto to comply with any of its
covenants contained in this Agreement, or (iii) the occurrence of any event or
the existence of any circumstances that would make satisfaction of any of the
conditions set forth in Section 6 or Section 7 impossible or unlikely on or
prior to the Outside Termination Date (as defined in Section 8.1(a)).
5.8 AGREEMENT WITH THE EDELBROCK ENTITIES. Concurrently with the
execution of this Agreement, Parent and the Edelbrock Entities entering into an
Agreement with the Company in the form attached hereto as Exhibit C regarding
certain matters related to the Merger and this Agreement.
5.9 STOCKHOLDER LITIGATION. Each party to this Agreement shall
give the other parties the reasonable opportunity to participate in the defense
of any stockholder litigation against the Company, Parent or Merger Sub (or
their directors or officers) relating to the Merger or this Agreement. No party
to this Agreement shall settle any such litigation without the prior written
consent of the other two parties, which shall not be unreasonably withheld. The
Company and its Representatives shall not voluntarily cooperate with any third
party that seeks to restrain or prohibit or otherwise oppose the Merger.
5.10 FINANCING.
(a) Parent and Merger Sub agree to use their reasonable
efforts to complete the transactions contemplated by the Financing Commitments
and to obtain the Financing prior to the Effective Time. Without limiting the
generality of the foregoing, in the event that at any time any or all of the
Financing is not or has not been, or is not reasonably likely to be, obtained
21
or made available pursuant to and on the terms set forth in the Financing
Commitments so as to enable Parent or Merger Sub to proceed with the Closing in
a timely manner, each of Mr. Edelbrock, Parent and Merger Sub shall (i) use his
or its reasonable efforts to obtain alternative funding in an amount at least
equal to the Financing on terms and conditions substantially comparable to those
provided in the Financing Commitments and (ii) shall continue to comply with all
of his or its other obligations that are contained in this Agreement or in the
agreement with the Edelbrock Entities that is referred to in Section 5.8.
(b) Following the date hereof, any information which
becomes actually known to Mr. Edelbrock, Parent, Merger Sub or their respective
Representatives which makes it reasonably unlikely that the Financing will be
obtained on the terms set forth in the Financing Commitments shall be promptly
disclosed to the Special Committee. None of Mr. Edelbrock, Parent, Merger Sub or
any of their respective Representatives will knowingly attempt, directly or
indirectly, to induce or encourage the lenders under the Financing Commitments
to not fund the Financing as provided for in the Financing Commitments.
ARTICLE 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, provided that any of such conditions may be waived in
writing by Parent and Merger Sub unless prohibited by applicable Legal
Requirements:
6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of the Company that are contained in this Agreement shall be accurate
in all respects as of the Closing Date as if made on and as of the Closing Date
(except that any representation or warranty that, by its express terms, speaks
only as of an earlier date need only have been accurate as of such earlier
date), except that any inaccuracies in such representations and warranties will
be disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and would not have, a Material
Adverse Effect on the Company; provided, however, that, for purposes of
determining the accuracy of such representations and warranties for purposes of
this Section 6.1, any update of or modification to the Company Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded. Parent and Merger Sub shall have received a certificate
from the Company's Executive Vice President and Corporate Secretary to the
effect that the conditions described in this Section 6.1 and in Section 6.2 have
been satisfied.
6.2 PERFORMANCE OF OBLIGATION. Each obligation that the Company is
required to comply with or to perform at or prior to the Closing shall have been
complied with and performed in all material respects or the compliance therewith
or performance thereof shall have been waived in the sole discretion of Parent.
6.3 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted by the Required Company Stockholder Vote.
22
6.4 CONSENTS. Except for those Consents the failure of which to
obtain would not, individually or in the aggregate, have a Material Adverse
Effect on the Company, all Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including,
without limitation, the Consents identified in the Company Disclosure Schedule)
shall have been obtained and shall be in full force and effect.
6.5 NO MATERIAL ADVERSE EFFECT. Since the date of this Agreement,
there shall not have occurred any event or events which individually or in the
aggregate had or would have a Material Adverse Effect on the Company other than
any Material Adverse Effect resulting from any stockholder litigation that has
been filed as of the date of this Agreement or any other proceeding relating to
the proposed transactions, the Merger, and this Agreement that has been filed as
of the date of this Agreement.
6.6 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement that makes consummation of
the Merger illegal.
6.7 FINANCING. Parent shall have received the cash proceeds of the
Financing, in an amount that is sufficient to pay the full amounts required to
be paid by Parent and Merger Sub pursuant to Sections 1.5 and 1.6 and all other
amounts required to be paid by Parent or Merger Sub under this Agreement and to
pay all of the related fees and expenses; provided that this condition shall be
deemed satisfied (and Parent and Merger Sub shall be obligated to consummate the
Merger) in the event that the Financing is not available because any of Mr.
Edelbrock, Parent, Merger Sub or any of their respective Representatives is in
breach of Section 3.9 or 5.10 of this Agreement.
6.8 DISSENTING SHARES. The total number of Dissenting Shares shall
not exceed ten percent of the outstanding Company Common Stock as of the
Effective Time.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, at or prior to the Closing, of the following conditions, provided
that any of such conditions may be waived in writing by the Company unless
prohibited by applicable Legal Requirements:
7.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of Parent and Merger Sub that are contained in this Agreement shall
be accurate in all respects as of the Closing Date as if made on and as of the
Closing Date (except that any representation or warranty that, by its express
terms, speaks only as of an earlier date need only have been accurate as of such
earlier date), except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not have, a
Material Adverse Effect on the Company. The Company shall have received a
certificate from the Chief Executive Officer and
23
Corporate Secretary of Parent and Merger Sub to the effect that the conditions
described in this Section 7.1 and in Section 7.2 have been satisfied.
7.2 PERFORMANCE OF OBLIGATIONS. All of the obligations that Parent
and Merger Sub that are required to be complied with or performed at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted by the Required Company Stockholder Vote.
7.4 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
the Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement that makes
consummation of the Merger by the Company illegal.
7.5 INSURANCE. Prior to the Effective Time, the Company shall have
purchased and paid for in full directors' and officers' liability insurance for
a period of six years from the Effective Time (which policy shall be of at least
the same coverage, with carriers comparable to the Company's existing carriers,
containing terms and conditions which are no less favorable to those covered in
the Company's existing directors' and officers' liability policy), to cover the
Indemnified Persons with respect to those matters covered by the Company's
directors' and officers' liability policy in effect on the date hereof.
ARTICLE 8.
TERMINATION
8.1 TERMINATION.
(a) OPTIONAL TERMINATION. This Agreement may be
terminated prior to the Effective Time (whether before or after the adoption of
this Agreement by the Required Company Stockholder Vote):
(i) By the mutual written consent of Parent and
the Company;
(ii) By either Parent or the Company if the
Merger shall not have been consummated on or before the date which is nine
months after the date of this Agreement (the "Outside Termination Date");
provided, however, that a party shall not be permitted to terminate this
Agreement pursuant to this Section 8.1(b) if the failure to consummate the
Merger by such date is attributable to a failure on the part of such party to
perform any covenant in this Agreement required to be performed by such party at
or prior to the Effective Time;
(iii) By either Parent or the Company if a court
of competent jurisdiction or other Governmental Body shall have issued a final
and nonappealable order, decree or ruling that has the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
24
(iv) By either Parent or the Company if this
Agreement shall not have been adopted at the Company Stockholders' Meeting (and
shall not have been adopted at any adjournment or postponement thereof) by the
Required Company Stockholder Vote;
(v) By Parent if the Company or any of its
Representatives breach any material provision of Section 4.3;
(vi) By Parent if (A) any of the Company's
representations and warranties contained in this Agreement shall be inaccurate
as of the Closing Date such that the condition set forth in Section 6.1 would be
incapable of being satisfied on or before the Outside Termination Date, or (B)
any of the Company's covenants contained in this Agreement shall have been
breached such that the condition set forth in Section 6.2 would be incapable of
being satisfied on or before the Outside Termination Date; provided, however,
that if an inaccuracy in any of the Company's representations and warranties as
of a date subsequent to the date of this Agreement or a breach of a covenant by
the Company is curable by the Company and the Company is continuing to exercise
all reasonable efforts to cure such inaccuracy or breach, then Parent may not
terminate this Agreement under this Section 8.1(a)(vi) on account of such
inaccuracy or breach; and
(vii) By the Company if (A) any of Parent's
representations and warranties contained in this Agreement shall be inaccurate
as of the Closing Date, such that the condition set forth in Section 7.1 would
be incapable of being satisfied on or before the Outside Termination Date, or
(B) if any of Parent's covenants contained in this Agreement shall have been
breached such that the condition set forth in Section 7.2 would be incapable of
being satisfied on or before the Outside Termination Date; provided, however,
that if an inaccuracy in any of Parent's representations and warranties as of a
date subsequent to the date of this Agreement or a breach of a covenant by
Parent is curable by Parent and Parent is continuing to exercise all reasonable
efforts to cure such inaccuracy or breach, then the Company may not terminate
this Agreement under this Section 8.1(a)(vii) on account of such inaccuracy or
breach.
Any action by the Company to terminate this Agreement pursuant to this Section
8.1(a) shall require Board approval following the recommendation of the Special
Committee.
(b) AUTOMATIC TERMINATION. This Agreement shall
automatically terminate if the Board or the Special Committee makes an Adverse
Recommendation Change pursuant to Section 4.3(e).
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 8.2, Section 8.3,
Section 8.4 and Article 9 (other than Section 9.6) shall survive the termination
of this Agreement and shall remain in full force and effect, and (ii) the
termination of this Agreement shall not relieve any party from any liability for
any breach of any representation, warranty or agreement that is contained in
this Agreement.
8.3 TERMINATION FEE.
(a) If this Agreement terminates pursuant to Section
8.1(b) and the Company enters into a definitive Agreement with respect to a
Superior Proposal and the Acquisition that is
25
the subject of such Superior Proposal is consummated within twelve months
following such termination of this Agreement, the Company shall pay to Parent
the sum of Two Million Dollars ($2,000,000) less any amounts paid by the Company
to Parent in accordance with Section 8.4.
(b) The Company acknowledges that the agreements
contained in this Section 8.3 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent and
Merger Sub would not enter into this Agreement. Accordingly, if the Company
fails to pay any amounts owing pursuant to this Section 8.3 when due, the
Company shall in addition thereto pay to Parent all costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel)
incurred in collecting such amounts, together with interest on such amounts (or
any unpaid portion thereof) from the date such payment was required to be made
until the date such payment is received by Parent at the prime rate of Citibank,
N.A. as in effect from time to time during such period.
8.4 EXPENSES.
(a) Except as set forth in this Section 8.4, all fees and
expenses that are incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided, however,
that:
(i) The Company shall pay all fees and expenses,
other than the fees and expenses of Parent's counsel and other advisors, that
are incurred in connection with (A) the preparation, filing, printing and
mailing of the Proxy Statement and the Schedule 13E-3 and (B) the Company
Stockholders' Meeting; and
(ii) If this Agreement is terminated by Parent
pursuant to Section 8.1(a)(v) or 8.1(a)(vi) or this Agreement automatically
terminates pursuant to Section 8.1(b) at a time when there is no breach by
Parent, Merger Sub or any of the Edelbrock Entities of any of their
representations, warranties or covenants in this Agreement or the Stockholders
Support Agreement, the Company shall pay to Parent an amount equal to Parent's
actual, documented out-of-pocket expenses (including all attorneys' fees and
advisors' fees) incurred in connection with this Agreement and the transactions
contemplated by this Agreement, within five business days after the termination
of this Agreement, provided that the Company's obligation pursuant to this
Section 8.4(a)(ii) shall not exceed One Million Dollars ($1,000,000).
(b) If the Company fails to pay when due any amounts that
are owed to Parent under Section 8.4(a), the Company shall in addition thereto
pay to Parent all costs and expenses (including, without limitation, reasonable
fees and disbursements of counsel) incurred in collecting such amounts, together
with interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by
Parent at the prime rate of Citibank, N.A. as in effect from time to time during
such period.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of
the respective boards of directors of the Company and Parent at any time
(whether before or after the
26
adoption of this Agreement by the Company's stockholders); provided, however,
that (i) in the case of the Company, the Board and the Special Committee have
approved such amendment in writing, and (ii) after any such adoption of this
Agreement by the Required Company Stockholder Vote, no amendment shall be made
which by law requires further approval of the stockholders of the Company
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties that are contained in this Agreement or in any
certificates or other documents delivered prior to or as of the Effective Time
shall terminate as of the Effective Time and shall have no further force or
effect. Except for the agreements set forth in Article 1 and Sections 5.4, 8.3
and 8.4, and Article 9 (other than Section 9.6), the agreements of the parties
hereto (including the Surviving Corporation after the Merger) shall terminate as
of the Effective Time and shall have no further force or effect.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among or between any
of the parties with respect to the subject matter hereof and thereof; provided,
however, that any confidentiality agreement executed by Parent and the Company
prior to the date of this Agreement shall not be superseded and shall remain in
full force and effect. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
9.5 APPLICABLE LAW; JURISDICTION; SPECIFIC PERFORMANCE. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. In any action between any of
the parties arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement: (i) each of the parties irrevocably
and unconditionally consents and submits to the exclusive jurisdiction and venue
of the state and federal courts located in the State of Delaware; and (ii) each
of the parties irrevocably consents
27
to service of process by first-class certified mail, return receipt requested,
postage prepaid, to the address at which such party is to receive notice in
accordance with Section 9.8. The parties to this Agreement agree that
irreparable damage would occur in the event of a breach of any provision of this
Agreement, and that the non-breaching parties shall be entitled to specific
performance of the provisions of this Agreement in addition to other available
legal and equitable remedies.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall be
arranged in separate sections corresponding to the numbered and lettered
sections contained in Section 2, provided that any disclosure set forth in any
particular section of the Company Disclosure Schedule as an exception to a
specific representation or warranty contained in Section 2 will be deemed to be
an exception to other representations or warranties contained in Section 2 to
the extent that it is reasonably apparent from the face of the disclosure that
such disclosure is applicable to such other representations or warranties.
9.7 ASSIGNMENT OF THIS AGREEMENT; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of the rights hereunder may be assigned by a party hereto
without the prior written consent of the other parties, and any attempted
assignment of this Agreement or any of such rights by such party without such
consent shall be void and of no effect.
(b) Except as provided in Section 5.4 regarding the
Surviving Corporation's indemnification and insurance obligations and except as
provided in Section 9.7(a), nothing in this Agreement, express or implied, is
intended to, or shall, confer upon any Person other than Parent, Merger Sub or
the Company any rights, benefits or remedies of any nature.
9.8 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received (i) upon receipt when
delivered by hand, (ii) one business day after being sent by courier or express
delivery service or by facsimile, or (iii) two business days after being sent by
first-class certified mail, return receipt requested, provided that in each case
the notice or other communication is sent to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
If to Parent or Merger Sub: Edelbrock Holdings, Inc.
c/o Edelbrock Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: O. Xxxxxx Xxxxxxxxx, Xx.
Tel: (000) 000-0000
Fax: (000) 000-0000
28
With a copy to: Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx
Xxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Company: Edelbrock Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: The Special Committee of
the Board of Directors of
Edelbrock Corporation
c/o Xxxxx Xxxxxxxx, Chairman
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000 Ext. 210
Fax: (000) 000-0000
and
Xxxxx Day
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Xxxx X. XxXxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
9.9 SEVERABILITY. If any provision of this Agreement, or the
application of any such provision to any Person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such
29
provision to Persons or circumstances other than those as to which it is
determined to be invalid, unlawful, void or unenforceable, shall not be impaired
or otherwise affected and shall continue to be valid and enforceable to the
fullest extent permitted by law.
9.10 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits or Schedules to this Agreement.
(e) The bold-faced headings that are contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
[Signature page follows]
30
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
EDELBROCK HOLDINGS, INC.
By: /s/ O. Xxxxxx Xxxxxxxxx, Xx.
------------------------------------
O. Xxxxxx Xxxxxxxxx, Xx.
Chief Executive Officer
EDELBROCK MERGER SUB, INC.
By: /s/ O. Xxxxxx Xxxxxxxxx, Xx.
------------------------------------
O. Xxxxxx Xxxxxxxxx, Xx.
Chief Executive Officer
EDELBROCK CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Executive Vice President and Chief
Operating Officer
Signature Page to Merger Agreement
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including, without limitation, this
Exhibit A):
BENEFICIAL OWNERSHIP. The phrase "beneficially owning" securities and
similar phrases shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
CONSENT. "Consent" means any approval, consent, ratification,
permission, waiver or authorization (including, without limitation, any
Governmental Authorization).
CONTRACT. "Contract" means any written agreement, contract,
subcontract, lease, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan or other legally binding commitment
or undertaking.
EDELBROCK ENTITIES. "Edelbrock Entities" means Mr. Edelbrock, his wife,
his children and funds and trusts of which he is a trustee and which own Company
Common Stock.
ENTITY. "Entity" means any corporation (including, without limitation,
any non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, limited liability company,
joint stock company, firm or other enterprise, association or organization.
EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" means any
permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
GOVERNMENTAL BODY. "Governmental Body" means any (i) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction located in the United States and its territories, (ii) federal,
state, local, municipal, foreign or other government located in or outside the
United States, or (iii) governmental or quasi-governmental authority of any
nature (including, without limitation, any governmental division, department,
agency, commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or Entity and any court or other tribunal)
located in or outside the United States.
LEGAL REQUIREMENT. "Legal Requirement" means any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Stock Market, Inc.).
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" means (i) with
respect to the Company, an effect which (A) is materially adverse to the
business, assets, liabilities, prospects,
results of operations or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, other than resulting from changes in general
industry conditions or changes in general economic conditions, except, in each
case, to the extent any such condition affects the Company to a greater extent
than other similarly situated companies generally or (B) materially impairs the
ability of the Company to consummate the transactions contemplated by this
Agreement, and (ii) with respect to Parent or Merger Sub, any circumstance,
change, event or effect which materially impairs the ability of Parent or Merger
Sub to consummate the transactions contemplated by the Agreement.
PERSON. "Person" means any individual, Entity or Governmental Body.
REPRESENTATIVES. "Representatives" means officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SECURITIES ACT. "Securities Act" means the Securities Act of 1933, as
amended.
SUBSIDIARY. An Entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(i) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board or directors or other governing body, or (ii) at least fifty
percent of the outstanding equity interests or such Entity.
2
EXHIBIT B
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
[NOT INCLUDED]
3
EXHIBIT C
STOCKHOLDERS SUPPORT AGREEMENT
[NOT INCLUDED]
4