1
EXHIBIT 11(C)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 12, 1999, by and
among RSA Holdings Corp. of Delaware, a Delaware corporation ("Parent"), RSA
Acquisition Corp., a Delaware corporation and a subsidiary of Parent (the
"Purchaser") and American Safety Razor Company, a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all of the shares of
Common Stock, par value $0.01 per share, of the Company (the "Shares") at a
price per share of $14.125 net to the selling stockholders in cash (such price
as it may hereafter be increased, the "Share Offer Price") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to the Merger (as defined) Purchaser shall pay and
cash out all options outstanding on the date hereof issued and exercisable under
the Option Plan (as hereinafter defined) at a price per option net to the
selling stockholder in cash equal to the difference between the Share Offer
Price and the exercise price of such options under the Option Plan (the "Option
Offer Price");
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the Offer and the Merger as fair and advisable to the Company's
stockholders and is recommending that the Company's stockholders accept the
Offer;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth be low (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL") and upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding Share not owned directly or indirectly by Parent or the Company will
be converted into the right to receive the Share Offer Price applicable thereto
in cash;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, certain shareholders of the Company and certain executive
officers of the Company, including but not limited to the partners, principals,
officers, employees and affiliates of The Jordan Company ("TJC") (the "Principal
Holders"), have entered into a Shareholders Agreement dated as of the date
hereof in the form of Exhibit A hereto (the "Shareholders Agreement", and,
together with the Confidentiality Agreement (as hereinafter defined), the
"Related Agreements");
2
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as this agreement shall not have been terminated in
accordance with Section 8.01 and none of the events set forth in Annex I hereto
(as hereinafter provided) shall have occurred or exist, the Purchaser shall, and
Parent shall cause the Purchaser to, commence (within the meaning of Rule
14d-2(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as promptly as practicable after the date hereof, but in any event not
later than the fifth business day following the date hereof, the Offer for all
outstanding Shares at the Share Offer Price applicable to such Shares, net to
the seller in cash in accordance with this Agreement. The initial expiration
date for the Offer shall be the twentieth business day from and after the date
the Offer is commenced, including the date of commencement as the first business
day in accordance with Rule 14d-2 under the Exchange Act (the "Initial
Expiration Date"). As promptly as reasonably practicable, on the commencement
date of the Offer, the Parent and the Purchaser shall file with the Securities
and Exchange Commission (the "SEC"), with respect to the Offer, the Purchaser's
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") (together with
any supplements or amendments thereto, the "Offer Documents"), which shall
contain (as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") which shall be mailed to the holders of Shares with respect to the
Offer. The Company and its counsel shall be given an opportunity to review and
comment upon the Offer Documents and any amendment or supplement thereto prior
to the filing thereof with the SEC, and Parent and Purchaser shall consider such
comments in good faith. Parent and Purchaser agree to provide to the Company and
its counsel any comments which Parent, Purchaser or their counsel may receive
from the Staff of the SEC with respect to the Offer Documents promptly after
receipt thereof. The obligation of Parent to accept for payment or pay for any
Shares tendered pursuant to the Offer will be subject to the satisfaction or
waiver (to the extent permitted by this Agreement) of the conditions set forth
in Annex I hereto (the "Offer Conditions"). Without the prior written consent of
the Company, the Purchaser shall not decrease the price per Share or change the
form of consideration payable in the Offer, decrease the number of Shares sought
to be purchased in the Offer, change the conditions set forth in Annex I, waive
the Minimum Condition (as defined in Annex I), impose additional conditions to
the Offer, except as otherwise provided herein, extend the Initial Expiration
Date or amend any other term of the Offer in any
2
3
manner adverse to the holders of any Shares. Subject to the terms of the Offer
and this Agreement and the satisfaction or waiver (to the extent permitted by
this Agreement) of all the conditions of the Offer set forth in Annex I hereto
as of the Initial Expiration Date or any expiration date permitted by the
Agreement, Parent will accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
such expiration date of the Offer. Subject to Section 8.01, if the conditions
set forth in Annex I hereto are not satisfied or, to the extent permitted by
this Agreement, waived by the Parent, as of the Initial Expiration Date (or any
subsequently scheduled expiration date), Parent will extend the Offer from time
to time for the shortest time periods permitted by law and which it reasonably
believes are necessary until the consummation of the Offer; provided that
notwithstanding the satisfaction of the Offer Conditions the Parent and the
Purchaser shall have the right, after consultation with the Company, to extend
the Offer for up to 10 business days after the Initial Expiration Date,
notwithstanding the prior satisfaction of the Offer Conditions. Each of Parent
and the Purchaser shall use its reasonable best efforts to avoid the occurrence
of any event specified in Annex I or to cure any such event that shall have
occurred.
(b) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall promptly file with the SEC and mail to the
holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (together with any amendments or supplements thereto, the
"Schedule 14D-9"). The Schedule 14D-9 will set forth, and the Company hereby
represents and warrants, that the Board, at a meeting duly called and held, has
(i) determined that the Offer and the Merger are fair and advisable to and in
the best interests of the Company and its stockholders, (ii) approved the Offer,
the Merger and the Shareholders Agreement in accordance with Section 203 of the
GCL, and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of the Merger and this Agreement by the Company's stockholders (in
accordance with the requirements of the Company's certificate of incorporation
and of applicable law); provided, however, that prior to consummation of the
Offer such recommendation and approval may be withdrawn, modified or amended if
the Board by majority vote shall have determined in good faith, based upon the
3
4
advice of outside legal counsel to the Company, that such determination to
withdraw, modify or amend would be necessary in order to comply with the Board's
fiduciary duty under applicable law. The Company hereby further represents and
warrants that PaineWebber, Incorporated (the "Financial Advisor") has delivered
to the Board its written opinion that the consideration to be received by the
holders of the Shares pursuant to each of the Offer and the Merger is fair to
such holders from a financial point of view. The Company has been authorized by
the Financial Advisor to permit, subject to prior review and consent by such
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of such fairness opinion (or a reference thereto) in the Offer Documents and in
the Schedule 14D-9 referred to below and the Proxy Statement. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Board described in this Section 1.02(a).
(b) The Schedule 14D-9 and all amendments thereto will comply in all
material respects with the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by the Parent or Purchaser for inclusion in the Schedule 14D-9. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of them for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as and to the
extent required by applicable federal securities law.
(c) Parent and its counsel shall be given an opportunity to review and
comment upon the Schedule 14D-9 and any amendment or supplement thereto prior to
the filing thereof with the SEC, and the Company shall consider any such
comments in good faith. The Company agrees to provide to Parent and their
counsel any comments which the Company or its counsel may receive from the Staff
of the SEC with respect to the Schedule 14D-9 promptly after receipt thereof. In
connection with the Offer, the Company will, if reasonably requested by
Purchaser, promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish the Purchaser with
such additional information (including but not limited to updated lists of
stockholders, mailing labels, security position listing and non-objective
beneficial owner lists) and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Shares.
4
5
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board as is equal to the product of
the total number of directors on the Board (determined after giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Common Shares beneficially owned by Parent or its
affiliates bears to the total number of fully diluted Common Shares then
outstanding, and the Company shall, promptly take all actions necessary to cause
Parent's designees to be so elected, including, if necessary, seeking the
resignations of one or more existing directors or increasing the size of the
Board; provided, however, that prior to the Effective Time (as defined in
Section 2.02), the Board shall always have at least three members who are
neither officers, directors, stockholders or designees of the Purchaser or any
of its affiliates ("Purchaser Insiders"). At such times, the Company will use
its reasonable best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of the
Board, (ii) each board of directors of each subsidiary of the Company and (iii)
each committee of each such board, in each case only to the extent permitted by
law. If the number of directors who are not Purchaser Insiders is reduced below
three for any reason prior to the Effective Time, the remaining directors who
are not Purchaser Insiders (or if there is only one director who is not a
Purchaser Insider, the remaining director who is not a Purchaser Insider) shall
be entitled to designate a person (or persons) to fill such vacancy (or
vacancies) who is not an officer, director, stockholder or designee of the
Purchaser or any of its affiliates and who shall be a director not deemed to be
a Purchaser Insider for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply any information with respect to itself and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) From and after the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder, or any
other action taken by the Board in connection with this Agreement, will require
the concurrence of a majority of the directors of the Company then in office who
are not Purchaser Insiders.
5
6
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 2.02) the Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of the Purchaser shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"). At Parent's election, any direct or indirect subsidiary of Parent
other than Purchaser may he merged with and into the Company instead of the
Purchaser. In the event of such an election, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such an election.
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.01(a) and (b),
but subject to Section 7.01(c), the Company shall execute in the manner required
by the GCL and deliver to the Secretary of State of the State of Delaware a duly
executed and verified certificate of merger, or, if permitted, a certificate of
ownership and merger, and the parties shall take such other and further actions
as may be required by law to make the Merger effective. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the GCL.
SECTION 2.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.01 of this Agreement, the
by-laws of the Purchaser in effect at the Effective Time shall be the by-laws of
the Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and hereof and applicable law.
SECTION 2.05 Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal; provided that,
promptly upon the payment by the Purchaser for Shares pursuant to
6
7
the Offer, any partners, officers or affiliates of TJC who are also officers of
the Company immediately prior to the Effective Time shall resign as officers of
the Company.
SECTION 2.07 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be cancelled and retired and shall cease
to exist with no payment being made with respect thereto, and other than
Dissenting Shares (as defined in Section 3.01)) shall be converted into the
right to receive in cash the Share Offer Price applicable thereto (the "Merger
Price") payable to the holder thereof, and in the case of the Options, net of
taxes required by law to be withheld with respect thereto and without interest
thereon, upon surrender of the certificate formerly representing such Share.
SECTION 2.08 Conversion of Purchaser Common Stock. At the Effective
Time, each share of common stock, par value $0.01 per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
SECTION 2.09 Company Option Plan. Parent and the Company shall take all
actions necessary so that, immediately prior to the Effective Time, (A) each
outstanding option to purchase Common Shares (an "Option") granted under the
American Safety Razor Company Stock Option Plan (the "Option Plan"), whether or
not then exercisable or vested, shall become fully exercisable and vested, (B)
each Option which is then outstanding shall be cancelled and (C) in
consideration of such cancellation, and except to the extent that Parent or the
Purchaser and the holder of any such Option otherwise agree, immediately
following the Effective Time, the Company shall pay to such holders of Options
an amount in respect thereof equal to the product of (1) the excess of the
Merger Price over the exercise price thereof and (2) the number of Common Shares
subject thereto (such payment to be net of taxes required by law to be withheld
with respect thereto). The Company shall use its reasonable best efforts to take
all such action as is necessary prior to the Effective Time to terminate the
Option Plan so that on and after the Effective Time no current or former
employee or director shall have any Option to purchase shares of common stock or
any other equity interest in the Company under the Option Plan. The Company
shall use its reasonable best efforts to obtain any consents as may be necessary
to release the Company from any liability in respect of any Options.
SECTION 2.10 Stockholders' Meeting.
(a) If required by the Company's certificate of incorporation and/or
applicable law in order to consummate the Merger, the Company, acting through
the Board, shall, in accordance with applicable law:
7
8
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with and to use its reasonable best
efforts to have cleared by the SEC a preliminary proxy statement
relating to the Merger and this Agreement and use its reasonable best
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its stockholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as determined in good faith by a majority of the Board
based on the advice of independent outside legal counsel, (A) include
in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the Merger
and the adoption of this Agreement and the written opinion of the
Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is
fair to such stockholders and (B) use its reasonable best efforts to
obtain the necessary adoption of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement.
SECTION 2.11 Merger Without Meeting of Stockholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the outstanding shares of each outstanding
class of capital stock of the Company pursuant to the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and payment
for Shares by the Purchaser pursuant to the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the GCL.
SECTION 2.12 Fractional Shares and Payments. In the event that the
aggregate consideration to be received by a holder of Shares pursuant to the
Offer or the Merger for such holders Shares equals, when aggregated, an amount
that includes one-half of one cent, then such amount will be rounded up to the
nearest whole cent.
8
9
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES AND WARRANTS
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who demands in writing appraisal for such Shares in
accordance with Section 262 of the GCL, if such Section 262 provides for
appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Price as provided in Section
2.07 but shall be entitled to receive the consideration as shall be determined
pursuant to Section 262 of GCL, unless and until such holder fails to perfect or
withdraws or otherwise loses his right to appraisal and payment under the GCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses his right to appraisal, such Dissenting Shares shall thereupon be treated
as if they had been converted as of the Effective Time into the right to receive
the Merger Price, if any, to which such holder is entitled, without interest or
dividends thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, withdrawals of such demands and
any other instruments served pursuant to the GCL and received by the Company
and, prior to the Effective Time, Parent shall have the right to direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.02 Payment for Shares.
(a) From and after the Effective Time, a bank or trust company
designated by Parent and reasonably acceptable to the Company shall act as
paying agent (the "Paying Agent") in effecting the payment of the Merger Price
in respect of certificates (the "Share Certificates") that, prior to the
Effective Time, represented Shares entitled to payment of the Merger Price
pursuant to Section 2.07. When and as needed, Parent or the Purchaser shall
deposit, or cause to be deposited, in trust with the Paying Agent the aggregate
Merger Price to which holder of Shares shall be entitled at the Effective Time
pursuant to Section 2.07.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates that immediately prior to the Effective Time
represented Shares (other than Share Certificates representing Dissenting Shares
and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) (i) a form of letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and which shall be in such form and have such
other provisions as Parent and Purchaser may reasonably specify and (ii)
instructions for use in surrendering such Certificates and receiving the
aggregate Merger Price in respect thereof. Upon surrender of each such
Certificate together with such letter of transmittal duly completed and validly
executed in accordance with the instructions thereto, the
9
10
Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Shares formerly represented by such Certificate in
consideration therefor, and such Certificate shall forthwith be cancelled. Until
so surrendered, each such Certificate (other than Share Certificates
representing Dissenting Shares and Certificates representing Shares held by
Parent or the Purchaser, any wholly-owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly-owned subsidiary of the Company)
shall represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Shares
surrendered therefor is registered, it shall be a condition to such right to
receive such Merger Price, that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise be in proper form for transfer
and that the person surrendering such Certificates shall pay to the Paying Agent
any transfer or other taxes required by reason of the payment of the Merger
Price, to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable.
(c) Promptly following the date which is 270 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share shall
thereafter look only to the Surviving Corporation (as a general creditor
thereof) for payment of its claim for the Merger Price (without any interest or
dividends thereon).
(d) No Liability. None of Parent, Purchaser, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates representing Shares shall not have been surrendered prior to
one year after the Effective Time (or immediately prior to such earlier date on
which any Merger Price would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.05(b)), any such Merger Price
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(e) Investment in Exchange Fund. The Paying Agent shall invest the
Merger Price as directed by the Surviving Corporation (within guidelines
approved by the Company prior to the Closing Date, which approval shall not be
unreasonably withheld). Any interest resulting from such investment shall be
paid to the Surviving Corporation.
(f) After the Effective Time, there shall be no registrations of
transfers on the stock transfer books of the Surviving Corporation of any Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation or the Paying Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate Merger Price, relating
thereto, as provided in this Article III.
10
11
(g) No Further Ownership Rights in Shares Exchanged For Cash. All cash
paid upon the surrender for exchange of Certificates representing Shares in
accordance with the terms of this Article III shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the Shares
exchanged for cash theretofore represented by such Certificates in accordance
with the GCL.
(h) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable and customary amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to the
Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Price with respect thereto.
(i) Withholding Rights. In the case of the Options, the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Shares pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or under any provision of state, local or foreign Tax law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that
except as set forth in the Company's Form 10-K for the year ended December 31,
1997 and the Company's Form 10-Qs for each of the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998 (collectively, the "Recent SEC Reports")
filed with the SEC and except as set forth in the Company Disclosure Statement
delivered to Parent and Purchaser prior to the execution of this Agreement (the
"Company Disclosure Statement"):
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of the
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary; except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not reasonably
be expected to have a Material Adverse Effect on the Company. The term "Material
Adverse Effect on the Company" as used in this Agreement, means any change or
effect that would be materially adverse to the
11
12
assets, liabilities, business, operations or financial condition of the Company
and its subsidiaries, taken as a whole, except for any such change or effect
resulting from general economic, financial or market conditions in the United
States.
SECTION 4.02 Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the certificate of incorporation and the by-laws, each as amended to the
date hereof, of the Company and its subsidiaries. Such articles of incorporation
and by-laws are in full force and effect and no other organizational documents
are applicable to or binding upon the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries is in violation in any material
respect of any of the provisions of its certificate of incorporation or by-laws.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 25,000,000 Common Shares, 2,900,000 shares of Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock") of the Company,
and 1,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), of the Company. As of the date of this Agreement, the
Company had 12,110,049 Common Shares outstanding and no shares of Class B Common
Stock and no shares of Preferred Stock issued or outstanding. The Company has no
shares of capital stock reserved for issuance, except that, as of the date of
this Agreement, there were 750,000 Common Shares reserved for issuance pursuant
to the Option Plan (of which Options to purchase 464,400 Common Shares are
outstanding). The Company Disclosure Statement sets forth the identity of each
holder of Options, and the number of shares of Common Stock and the exercise
price with respect thereto. All the outstanding Common Shares are, and all
Common Shares which may be issued pursuant to the exercise of outstanding
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive (or similar) rights. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) ("Voting Debt") of the Company or any of its subsidiaries issued
and outstanding. Except as set forth above and except pursuant to the Option
Plan and except for the transactions contemplated by this Agreement, there are
no existing options, warrants, calls, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its subsidiaries, obligating the Company
or any of its subsidiaries to issue, transfer, or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except (i) as contemplated by this Agreement and (ii)
the Company's obligations under the Option Plan, there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem, or otherwise acquire any Common Shares or the capital stock of the
Company or any of its subsidiaries or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any such
subsidiary or any other entity. Each of the outstanding shares of capital stock
of each of the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and all such shares of the Company's
12
13
subsidiaries are owned by the Company or by another wholly owned subsidiary of
the Company and owned in each case free and clear of any lien, claim, option,
charge, security interest, limitation, encumbrance and restriction of any kind
(any of the foregoing being a "Lien"), except such as would not reasonably be
expected to have a Material Adverse Effect on the Company. The Company has
delivered to Parent prior to the date hereof a list of all subsidiaries and
associated entities of the Company which evidences, among other things, the
amount of capital stock or other equity interests owned by the Company, directly
or indirectly, in such subsidiaries or associated entities. No entity in which
the Company owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all such other entities, material to
the business of the Company and its subsidiaries taken as a whole.
SECTION 4.04 Authority Relative to this Agreement; Minimum Condition.
(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized and approved by the Board and no other corporate proceedings
on the part of the Company are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval and adoption of the Merger and this Agreement by
holders of the Shares to the extent required by the Company's certificate of
incorporation and by applicable law and the filing of appropriate merger
documents as required by the GCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
(b) Pursuant to GCL and the Company's Certificate of Incorporation and
By-Laws, the Shares purchased in satisfaction of the Minimum Condition are
sufficient to provide the stockholder vote required to consummate the Merger in
accordance with the Company's Certificate of Incorporation and By-Laws and
Section 251 of the GCL.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery of and performance of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will (i) conflict with or violate the certificate of incorporation or
by-laws of the Company or the comparable organizational documents of any of its
subsidiaries, (ii) conflict with or violate any law, regulation or order of any
governmental authority applicable to the Company or any of its subsidiaries, or
by which any of them or any of their respective properties or assets may be
bound or affected, or (iii) result in a violation or breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, (any of the foregoing referred to in clause (ii) or this
13
14
clause (iii) being a "Violation") pursuant to, any loan and credit agreement,
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, except (x) in the
case of clause (iii), with regard to the Company's Credit Agreement (as
hereinafter defined) and other indebtedness of the Company set forth in the
Company Disclosure Statement, and (y) in the case of the foregoing clause (ii)
or (iii) for any such Violations which would not reasonably be expected to have
a Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to perform its obligations and consummate the
transactions contemplated hereby.
(b) None of the execution, delivery and performance of this Agreement
by the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, court, commission, tribunal or
body, domestic, foreign or supranational (a "Governmental Entity"), except for
(i) compliance with any applicable requirements of the Exchange Act, (ii) the
filing of a certificate of merger, or, if permitted, a certificate of ownership
and merger, pursuant to the GCL, (iii) applicable state takeover and
environmental statutes listed on the Company Disclosure Statement, (iv)
compliance with the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended (the "HSR Act") and any requirements of any foreign or supranational
Anti-Trust Laws (as hereinafter defined) and (v) Consents the failure of which
to obtain or make would not reasonably be expected to have a Material Adverse
Effect on the Company or materially adversely effect the ability of the Company
to consummate the transactions contemplated hereby.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (the "SEC Reports")
required to be filed with the SEC since June 9, 1993. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Exchange Act or the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder applicable, as the case may be, to
such SEC Reports, and none of the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference therein)
contained when filed, or (except to the extent revised or superseded by a
subsequent filing with the SEC) contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1997 and 1996
and the related consolidated statements of income, common shareholders' equity
and cash flows for each of the three years in the period ended December 31, 1997
(including the related notes and schedules
14
15
thereto) of the Company contained in the Company's Form 10-K for the year ended
December 31, 1997 included in the SEC Reports present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries as of
the dates or for the periods presented therein in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved except as otherwise noted therein, including the
related notes.
(c) The consolidated balance sheets and the related statements of
income and cash flows (including in each case the related notes thereto) of the
Company contained in the Forms 10-Q for the periods ended September 30, 1998,
June 30, 1998 and March 31, 1998 included in the SEC Reports (collectively, the
"Quarterly Financial Statements") have been prepared in accordance with the
requirements for interim financial statements contained in Regulation S-X. The
Quarterly Financial Statements present fairly, in all material respects, the
consolidated financial position and consolidated results of operations and cash
flows of the Company and its consolidated subsidiaries as of the dates and for
the periods presented therein in conformity with GAAP applied on a consistent
basis during the periods involved, except as otherwise noted therein, including
the related notes, provided, that the Quarterly Financial Statements do not
reflect full year end adjustments, accruals, reserves and footnotes.
(d) There are no liabilities of the Company or any of its subsidiaries
of any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the consolidated
balance sheet of the Company and its subsidiaries at December 31, 1997,
including the notes thereto, (ii) liabilities disclosed in the Recent SEC
Reports, (iii) liabilities incurred on behalf of the Company in connection with
this Agreement and the contemplated Merger, (iv) liabilities incurred in the
ordinary course of business consistent with past practice since September 30,
1998, and (v) other liabilities, none of which (without giving effect to the
materiality qualifier contained in this Section 4.06(d)) would reasonably be
expected to have a Material Adverse Effect.
(e) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 4.07 Information. Neither the Schedule 14D-9, the Proxy
Statement, nor any of the information supplied by the Company in writing
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, or (ii) any other document to be filed with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
agreement and any amendment or supplement to any of the above (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to stockholders,
15
16
at the time of the Special Meeting (as herein defined) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Purchaser or any of their respective representatives which is contained in the
Schedule 14D-9 or the Proxy Statement. The Proxy Statement will comply as to
form 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 therein based on information supplied by
Parent or the Purchaser in writing specifically for inclusion in the Proxy
Statement.
SECTION 4.08 Litigation. The Company Disclosure Statement sets forth
each instance in which any of the Company and its subsidiaries or any of their
respective properties (a) is subject to any judgment, order, decree,
stipulation, injunction, or charge or (b) is a party to or the subject of any
material charge, complaint, action, suit, proceeding, hearing, or investigation
of or in any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction, or to the Knowledge of the Company, is
threatened to be a party to or the subject of any such action, except, in each
case, where the judgment, order, decree, stipulation, injunction, charge,
complaint, action, suit, proceeding, hearing, or investigation would not
reasonably be expected to have a Material Adverse Effect on the Company or
unreasonably delay or prevent the consummation of the transactions contemplated
hereby.
SECTION 4.09 Compliance with Applicable Laws. Neither the Company nor
any of its subsidiaries is in conflict with or in default or violation of (i)
any laws, regulations, rules, orders, judgment or decree of any Governmental
Entity applicable to it, such subsidiaries or any of their respective properties
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its subsidiaries have all permits, licenses, authorizations,
consents, approvals and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such permits,
licenses, authorizations, consents, approvals, and franchises the absence of
which would not reasonably be expected to have a Material Adverse Effect on the
Company. The business operations of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, would not reasonably
be expected to have a Material Adverse Effect on the Company.
SECTION 4.10 Employee Benefit Plans.
(a) The Company Disclosure Statement includes a complete list of all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of
16
17
1974, as amended ("ERISA"), including, without limitation, multiemployer plans
within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), providing benefits to any employee or former employee of the Company
and its subsidiaries sponsored or maintained by the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries contributes or
is obligated to contribute (collectively, the "Plans").
(b) With respect to each Plan, the Company has made available to Parent
a true, correct and complete copy of: (i) all material plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the three most recent Annual Reports (Form 5500 Series) and accompanying
schedules, if any; (iii) the current summary plan description, if any; (iv) the
three most recent annual financial reports, if any; (v) the three most recent
actuarial reports, if any; and (vi) the most recent determination letter from
the Internal Revenue Service (the "IRS"), if any.
(c) As to each single employer Plan, the Company and each of its
subsidiaries has complied, and is now in compliance, with all provisions of
ERISA, the Code and all laws and regulations applicable to each Plan, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect. With respect to each Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code ("Qualified Plans"), the
Company has obtained (or has timely applied for), and the IRS has issued, a
favorable determination letter and each such Plan is qualified except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect on the Company.
(d) All contributions required to be made to any Plan by applicable law
or regulation or by any Plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Plan, for
any period through the date hereof have been timely made or paid in full or, to
the extent not required to be made or paid on or before the date hereof, have
been fully reflected in the financial statements of the Company included in the
SEC Reports to the extent required under generally accepted accounting
principles, except such as would not reasonably be expected to have a Material
Adverse Effect on the Company.
(e) No Plan is subject to Title IV or Section 302 of ERISA or Section
412 or 4971 of the Code. No event has occurred, nor do any circumstances exist
that could result in, any liability under (i) Title IV of ERISA, (ii) Section
302 of ERISA, (iii) Sections 412 and 4971 of the Code, or (iv) the continuation
coverage requirements of section 601 et seq. of ERISA and Section 4980B of the
Code except, in each case, as would not reasonably be expected to have a
Material Adverse Effect on the Company.
(f) With respect to any multiemployer plan (within the meaning of ERISA
Section 4001(a)(3)) to which the Company, its subsidiaries or any member of
their Controlled Group
17
18
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code Section 414(b), (c), (m) or (o)) has
any liability or contributes (or has at any time within the six year period
prior to the date hereof, contributed or had an obligation to contribute): (i)
none of the Company, its subsidiaries or any member of their Controlled Group
has incurred any withdrawal liability under Title IV of ERISA; and, (ii) no such
multiemployer plan is in reorganization or insolvent (as those terms are defined
in ERISA Sections 4241 and 4245, respectively) except in each case as would not
reasonably be expected to have a Material Adverse Effect on the Company.
(g) With respect to any Plan, no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
Knowledge of the Company, threatened against the Company or any of its
subsidiaries, which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect on the Company.
(h) No Plan (other than the Option Plan) exists that could result in
the payment to any present or former employee of the Company or its subsidiaries
of any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or its subsidiaries as
a result of the transaction contemplated by this Agreement, whether or not such
payment would constitute a parachute payment within the meaning of Code Section
280G.
SECTION 4.11 Taxes.
(a) The Company has timely filed (or caused to be timely filed) all
Federal, state, local and foreign income and other tax returns regarding the
Company or its subsidiaries required by law to be filed prior to the date of
this Agreement, (b) such tax returns are correct and complete in all respects,
(c) the Company and its subsidiaries have paid all Federal, state, local or
foreign income and other taxes that are due and payable (including any interest,
penalties or additions to tax that are due with respect thereto) other than
taxes that are being contested in good faith and which have been reserved for in
accordance with GAAP, (d) no tax return of the Company or its subsidiaries is
currently under audit by any taxing authority and no deficiency in the payment
of any taxes by the Company or any subsidiary has been assessed, asserted or, to
the Knowledge of the Company, threatened against the Company or any subsidiary
that remains unsettled as of the date of this Agreement, (e) there are currently
no outstanding waivers of statutes of limitations with any taxing authority by
the Company or the subsidiaries, and (f) the Company has not at any time filed a
consolidated or combined Tax Return as a member of an affiliated group (within
the meaning of Section 1504 of the Code) other than as a group of which the
Company was the parent, except, in the case of clauses (a) through (f), where
any such failure or breach would not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.12 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights,
18
19
and any applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of the
Company and its subsidiaries as currently conducted by the Company or its
subsidiaries (the "Company Intellectual Property Rights").
(b) Either the Company or one of its subsidiaries is the sole and
exclusive owner of, or the exclusive or non-exclusive licensee of, with all
right, title and interest in and to (free and clear of any liens or
encumbrances), the Company Intellectual Property Rights, and, in the case of
Company Intellectual Property Rights owned by the Company or any of its
subsidiaries, has sole and exclusive rights (and is not contractually obligated
to pay any compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are being
used. No claims with respect to the Company Intellectual Property Rights have
been asserted or, to the Knowledge of the Company, are threatened by any person
that if adversely determined would reasonably be expected to have a Material
Adverse Effect on the Company (i) to the effect that the manufacture, sale,
licensing, or use of any of the products of the Company or any of its
subsidiaries as now manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company or any of its subsidiaries
infringes on any copyright, patent, trade xxxx, service xxxx or trade secret,
(ii) against the use by the Company or any of its subsidiaries of any
trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how and applications used in the business of the Company and
its subsidiaries are currently conducted, or (iii) challenging the ownership by
the Company or any of its subsidiaries or the validity of any of the Company
Intellectual Property Rights. All registered trademarks, service marks and
copyrights held by the Company are valid and subsisting, except to the extent
any failure does not constitute a Material Adverse Effect on the Company. To the
Knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, including any employee or former employee of the Company or any of its
subsidiaries, which would have Material Adverse Effect on the Company. No
Company Intellectual Property Rights or product of the Company or any of its
subsidiaries is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by the Company or
any of its subsidiaries, except to the extent any such restriction would not
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any of its subsidiaries has entered into any agreement (other
than exclusive distribution agreements) under which the Company or its
subsidiaries is restricted from selling, licensing or otherwise distributing any
of its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market, except to the extent any such
restriction would not reasonably be expected to have a Material Adverse Effect
on the Company.
SECTION 4.13 Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) the Company and
its subsidiaries are, and have been, in compliance with Environmental Law, (ii)
to the Knowledge of the Company, there has been no release of Hazardous
Substances at, about or under any real property currently or formerly owned or
operated by the Company or any current or former subsidiary thereof, (iii) no
19
20
judicial or administrative proceeding is pending or to the Knowledge of the
Company threatened relating to violation of or liability under or relating to
any Environmental Law, including without limitation violations or liabilities
relating to any off-site disposal or contamination, (iv) the Company and its
subsidiaries have not received in writing any claims or notices alleging any
violation of or liability under or relating to any Environmental Law, and (v)
none of the Company and its subsidiaries has entered into, has agreed to, or is
subject to any settlement judgment, decree, order or other similar obligation
under or relating to any Environmental Law. "Environmental Law" means any and
all applicable foreign, Federal, state or local law (including, without
limitation, common law), statute, regulation, order, decree or judicial opinion
or other governmental requirement having the force and effect of law and
relating to the use, storage, handling or disposal of Hazardous Substances or
the protection of the environment. "Hazardous Substance" means any toxic or
hazardous material or substance that is regulated by or under authority of any
Environmental Law or that could result in liability under Environmental Law,
including without limitation, any petroleum products, asbestos and
polychlorinated biphenyls.
SECTION 4.14 Material Adverse Change. Since September 30, 1998, except
as contemplated by this Agreement, the Company and its subsidiaries, taken as a
whole, have conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there has not been:
(i) any change in the assets, liabilities, results of operation, financial
condition or business of the Company or any of its subsidiaries that would
reasonably be expected to have a Material Adverse Effect on the Company; (ii)
any condition, event or occurrence which would reasonably be expected to have a
Material Adverse Effect on the Company; or (iii) any other action which, if it
had been taken after the date hereof, would have required the consent of Parent
under Section 6.01.
SECTION 4.15 Certain Approvals; Take-Over Laws. The Board has taken
appropriate action such that, assuming the accuracy of Parent's representation
in Section 5.06 of this Agreement, the provisions of Section 203 of the GCL will
not apply to any of the transactions contemplated by this Agreement or the
Shareholders Agreement. Other than Section 203 of the GCL, no foreign or state
takeover law is applicable to the transactions contemplated by this Agreement,
including the Offer and the Merger.
SECTION 4.16 Opinion of Financial Advisor. The Company has received the
written opinion of PaineWebber, Incorporated ("PaineWebber") to the effect that
the Share Offer Price to be received by holders pursuant to each of the Offer
and the Merger is fair to the holders of the applicable Shares from a financial
point of view.
SECTION 4.17 Brokers. Except for the engagement of PaineWebber and TJC
Management Corp., none of the Company, any of its subsidiaries, or any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. True and
correct copies of the Company's agreements with
20
21
PaineWebber and TJC Management Corp. have been provided to Parent prior to the
date of this Agreement.
SECTION 4.18 Insurance. The Company Disclosure Statement contains an
accurate and complete list as of the date of this Agreement of all material
policies of fire, liability, workmen's compensation and other forms of insurance
owned by the Company or its subsidiaries.
SECTION 4.19 Real Estate Matters. (a) The Company or its subsidiaries
has good, valid, and, in the case of Owned Properties (as defined below),
marketable fee title to: (i) all of the material real property and interests in
real property owned by the Company or its subsidiaries, except for properties
sold or otherwise disposed of in the ordinary course of business (the "Owned
Properties"), and (ii) all of the material leasehold estates in all real
properties leased by the Company or its subsidiaries, except leasehold interests
terminated in the ordinary course of business (the "Leased Properties"; the
Owned Properties and Leased Properties being sometimes referred to herein as the
"Real Properties"), in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way, subleases and other
similar restrictions and encumbrances ("Encumbrances"); except for (i) liens for
current property taxes and assessments or other governmental charges or levies
not yet due and payable or the validity of which is being contested in good
faith in appropriate proceedings; (ii) liens for mechanics, materialmen,
laborer, warehousemen, carriers and other similar common law or statutory liens
arising in the ordinary course of business which are not yet due and payable;
(iii) zoning, entitlement and other land use and environmental regulations by
governmental agencies provided that such regulations have not been violated;
(iv) Encumbrances which would not reasonably be expected to have a Material
Adverse Effect on the Company; and (v) Encumbrances under the Credit Agreement
(collectively the "Permitted Encumbrances").
(b) Except to the extent that the inaccuracy of any of the following
would not reasonably be expected to have a Material Adverse Effect: (i) each of
the agreements by which the Company has obtained a leasehold interest in each
Leased Property (individually, a "Lease" and collectively, the "Leases") is in
full force and effect in accordance with its respective terms and the Company or
its subsidiary is the holder of the lessee's or tenant's interest thereunder;
(ii) there exists no default by the Company or any of its subsidiaries and, to
the Knowledge of the Company, there exists no default by a landlord or third
party under any Lease and no circumstance exists which, with the giving of
notice, the passage of time or both, is reasonably likely to result in such a
default; (iii) there are no leases, subleases, licenses, concessions or any
other contracts or agreements granting to any person or entity other than the
Company or any of its subsidiaries any right to the possession, use, occupancy
or enjoyment of any Real Property or any portion thereof; and (iv) the current
operations and use of the Real Properties do not violate any statute, law,
regulation, rule, ordinance, permit, requirement, order or decree now in effect.
(c) Except as set forth in the Company Disclosure Statement, neither
the Company nor any of its subsidiaries is obligated under or bound by any
option, right of first refusal, purchase contract, or other contractual right to
sell or dispose of any Owned Property or any portions
21
22
thereof or interests therein which property, portions and interests,
individually or in the aggregate, are material to the Company and its
subsidiaries.
SECTION 4.20 Labor Matters; Compliance. Neither the Company nor any of
its subsidiaries is a party to any agreement pursuant to which a labor
organization is certified under applicable labor law as a bargaining agent for
any of the Company's or any of its subsidiaries' employees, and no such
agreement is being negotiated. There are no representation or certification
proceedings, petitions seeking a representation proceeding, strikes or
organizing activities pending or, to the Knowledge of the Company, threatened to
be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority (domestic or foreign); except for such
proceedings, petitions, activities or strikes that would not have a Material
Adverse Effect on the Company.
SECTION 4.21 Disclaimer of Other Representations and Warranties;
Disclosure.
(a) The Company does not make, and has not made, any representations or
warranties relating to the Company or any subsidiaries in connection with the
transactions contemplated hereby other than those expressly set forth in this
Article IV. It is understood that Purchaser has fully reviewed the SEC Reports,
Company Disclosure Statement, the materials referenced therein and in the "data
room" relating to the transactions contemplated by this Agreement. It is also
understood that any cost estimates, projections or other productions, any data,
any financial information or any memoranda or presentations are not and shall
not be deemed to be or to include representations or warranties of the Company,
except to the extent otherwise expressly covered by the representations and
warranties the Company hereunder. No person has been authorized by the Company
to make any representation or warranty relating to the Company or any
subsidiary, the businesses of the Company or any subsidiary or otherwise in
connection with the transactions contemplated hereby except as set forth in this
Article IV and, if made, such representation or warranty must not be relied upon
as having been authorized by the Company or any subsidiary of the Company.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Exhibits or the Company Disclosure Statement, any
information disclosed in one Exhibit or Company Disclosure Statement shall be
deemed to be disclosed for purposes of this Agreement. Certain information set
forth in the Company Disclosure Statement is included solely for informational
purposes and may not be required to be disclosed pursuant to this Agreement. The
disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection
with the representations and warranties made by the Company in this Agreement or
that it is material, nor shall such information be deemed to establish a
standard of materiality or Material Adverse Effect (and the actual standard of
materiality may be higher or lower than the matters disclosed by such
information).
22
23
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Parent and the Purchaser
each has the requisite corporate power and authority to own, operate or lease
its properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not reasonably
be expected to have a Material Adverse Effect on Parent. The term "Material
Adverse Effect on Parent", as used in this Agreement, means any change in or
effect on the business, operations or financial condition of Parent or any of
its subsidiaries that would reasonably be expected to prevent or materially
delay consummation of the Offer or Merger.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent and
the Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement and each of the Related Agreements to which it is a party
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and each of the Related Agreements to which it is a
party by Parent and the Purchaser and the consummation by Parent and the
Purchaser of the transactions contemplated hereby have been duly and validly
authorized and approved by the Boards of Directors of Parent and the Purchaser
and by Parent as stockholder of the Purchaser and no other corporate proceedings
on the part of Parent or the Purchaser are necessary to authorize or approve
this Agreement or each of the Related Agreements to which it is a party or to
consummate the transactions contemplated hereby. This Agreement and each of the
Related Agreements to which it is a party has been duly executed and delivered
by each of Parent and the Purchaser and, assuming the due and valid
authorization, execution and delivery by the Company, constitutes a valid and
binding obligation of each of Parent and the Purchaser enforceable against each
of them in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement and each of
the Related Agreements to which it is a party by the Parent or the Purchaser,
the consummation by the Parent or the Purchaser of the transactions contemplated
hereby or compliance by the Parent or the
23
24
Purchaser with any of the provisions contained in this Agreement and each of the
Related Agreements to which it is a party will (i) conflict with or violate the
organizational documents of the Parent or the Purchaser, (ii) conflict with or
violate any law, regulation or order applicable to Parent or the Purchaser or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the Parent
or the Purchaser, or any of their respective subsidiaries, is a party or by
which any of their respective properties may be bound or affected, except in the
case of the foregoing clause (ii) or (iii) for any such Violations which would
not have a Material Adverse Effect on the Parent.
(b) None of the execution and delivery of this Agreement or each of the
Related Agreements to which it is a party by Parent or the Purchaser, the
consummation by Parent or the Purchaser of the transactions contemplated hereby
or compliance by Parent or the Purchaser with any of the provisions hereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing of a
certificate of merger, or, if permitted, a certificate of ownership and merger,
pursuant to the GCL, (iii) applicable state takeover and environmental statutes,
(iv) compliance with the HSR Act and any requirements of any foreign or
supranational Antitrust Laws and (v) Consents the failure of which to obtain or
make would not reasonably be expected to have a Material Adverse Effect on
Parent.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the "Other Filings" will, at the respective times filed with the SEC or
other Governmental Entity and, in addition, in the case of the Proxy Statement,
at the date it or any amendment or supplement is mailed to stockholders, at the
time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.05 Financing. Purchaser has received and obtained firm
commitment letters from nationally recognized, financially capable financial
institutions addressed to Purchaser providing for equity, mezzanine and debt
capital and sufficient funds to consummate the Offer, the Merger and the
transactions contemplated hereby and related fees and expenses (the "Commitment
Letters"). The Purchaser is not aware of any reason, condition or circumstance
that would prevent or interfere with funding under the Commitment Letters as
contemplated by this Agreement. True, complete and correct copies of the
Commitment Letters, together with a summary of Purchaser's expected sources and
uses of cash, have been furnished to the Company. All fees and expenses
required, to be paid under the Commitment Letters have been paid by or on behalf
of Purchaser.
24
25
SECTION 5.06 Ownership of Common Shares. Except for the transactions
contemplated by the Shareholders Agreement, as of the date of this Agreement,
neither Parent, Purchaser nor any of their respective subsidiaries or
stockholders beneficially owns any Common Shares.
SECTION 5.07 Brokers. None of Parent, Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement for or with respect to which the Company is or might be liable.
SECTION 5.08 Line of Business. Section 5.08 of the Purchaser Disclosure
Statement contains a complete and accurate list of (i) all Persons which Parent,
Purchaser and each of its shareholders controls (as such term is defined in the
HSR Act) and whose principal line of business is in the consumer products
industry and (ii) the principal products produced or manufactured by each such
Person.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, or with the prior written consent of Parent, or
as specified in the Company Disclosure Statement, during the period from the
date of this Agreement to the Effective Time, the Company will, and will cause
each of its subsidiaries to, conduct its operations only in and the Company and
its subsidiaries shall not take any action other than in the ordinary course of
business consistent with past practice and in compliance with applicable laws
(including but not limited to Environmental Laws) and will use commercially
reasonable efforts, and will cause each of its subsidiaries to use commercially
reasonable efforts, to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the present relationships of
the Company and its subsidiaries with customers, suppliers and other persons
with which the Company or any of its subsidiaries has significant business
relations. Without limiting the generality of the foregoing and except as
otherwise expressly contemplated by this Agreement or the Company Disclosure
Statement, the Company will not, and will not permit any of its subsidiaries to,
prior to the Effective Time, without the prior written consent of Parent (which
will not be unreasonably withheld or delayed):
(a) adopt any amendment to its charter or by-laws or
comparable organizational documents;
(b) except for issuances of capital stock of the Company's
subsidiaries to the Company or a wholly-owned subsidiary of the Company,
issue, reissue, sell, pledge, dispose of or encumber or authorize the
issuance, reissuance, sale, pledge, disposition or
25
26
encumbrance of (i) additional shares of capital stock of any class, or
securities convertible into capital stock of any class, or any rights,
warrants or options or other rights of any kind to acquire any
convertible securities or capital stock or any other ownership interest
(including but not limited to stock appreciation rights or phantom
stock) of the Company or any of its subsidiaries other than the issuance
of Common Shares, in accordance with the terms of the instruments
governing such issuance on the date hereof or pursuant to the exercise
of Options outstanding on the date hereof or (ii) any other securities
in respect of, in lieu of, or in substitution for, Common Shares
outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock other than between
any of the Company and any of its wholly owned subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other
securities;
(e) except for (i) increases in salary, wages and benefits of
officers or employees of the Company or its subsidiaries in the ordinary
course of business and in accordance with past practice, (ii) increases
in salary, wages and benefits granted to officers and employees of the
Company or its subsidiaries in conjunction with new hires, promotions or
other changes in job status in the ordinary course of business for
officers and employees whose aggregate cash compensation is equal to or
less than $75,000 per annum or (iii) increases in salary, wages and
benefits to employees of the Company pursuant to collective bargaining
agreements entered into in the ordinary course of business consistent
with past practice, increase the compensation or fringe benefits payable
or to become payable to its directors, officers or key employees
(whether from the Company or any of its subsidiaries), or pay any
benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any
severance or termination pay to (except pursuant to existing agreements,
plans or policies), or enter into any employment or severance agreement
with, any director, officer or other key employee of the Company or any
of its subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for
the benefit or welfare of any directors, officers or current or former
employees (any of the foregoing being an "Employee Benefit
Arrangement"), except in each case to the extent as required by
applicable law or regulation, provided, however, that nothing herein
will be deemed to prohibit the payment of benefits as they become
payable;
26
27
(f) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any material assets, (ii) except for
borrowings under existing lines of credit in the ordinary course of
business, incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans, advances or capital contributions to, or investments in,
any other person, except for bonuses, advances, capital contributions or
investments between any wholly owned subsidiary of the Company and the
Company or another wholly owned subsidiary of the Company, (iii) except
in the ordinary course of business consistent with past practice, make
or start any bid or proposal, or enter into, renew or amend any contract
or agreement that could result in a loss or would involve aggregate
consideration in excess of $0.5 million, (iv) authorize any single
capital expenditure which is in excess of $0.5 million or capital
expenditures which are, in the aggregate, in excess of $1.0 million for
the Company and its subsidiaries taken as a whole, (v) enter into any
transaction, contract or commitment with any affiliate of the Company,
except as contemplated by this Agreement, (vi) sell, lease, license to
others or dispose of any assets outside the ordinary course of business
consistent with past practice which individually or in the aggregate are
material to the Company or (vii) enter into or amend any contract,
agreement, commitment or arrangement with respect to any of the matters
set forth in this Section 6.01(f);
(g) except as may be required as a result of a change in law or
in generally accepted accounting principles, change in any material
respect any of the accounting practices or principles used by it;
(h) make or change any Tax election, make or change any method of
accounting with respect to Taxes, file any amended Tax Return or settle
or compromise any material Tax liability;
(i) settle or compromise any pending or threatened suit, action
or claim which is material or which relates to the transactions
contemplated hereby;
(j) make any change in the key management structure of the
Company or any of its subsidiaries, including, without limitation, the
hiring of additional officers or the termination of existing officers;
(k) transfer or grant any rights under, or enter into any
settlement regarding, the breach or infringement of, any Company
Intellectual Property Rights, or modify any existing rights with respect
thereto;
(l) take any action, including but not limited to introducing a
new product, reasonably likely to expose the Company to any claim that
the Company has violated applicable laws, rules or regulations or any
rights of any other person in any material respect;
27
28
(m) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(n) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and
consistent with past practice;
(o) enter into any collective bargaining agreement or any
successor collective bargaining agreement to any collective bargaining
agreement; or
(p) take, or offer or propose to take, or agree to take in
writing or otherwise, any of the actions described in Sections 6.01(a)
through 6.01(o) or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue and incorrect as of the date when made in any material respect if
such action had then been taken, or would result in any of the
conditions set forth in Annex I not being satisfied.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause its subsidiaries, and each of
their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, provide Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives and financing sources (collectively, the "Parent
Representatives") reasonable access (subject, however, to existing
confidentiality and similar non-disclosure obligations and the preservation of
attorney-client and work product privileges), during normal business hours and
upon reasonable notice, to the offices and other facilities and to the books and
records of the Company and its subsidiaries, and will permit Parent and the
Purchaser to make inspections of such as either of them may reasonably require,
and will cause the Company Representatives and the Company's subsidiaries to
furnish Parent, the Purchaser and the Parent Representatives to the extent
available with such other information with respect to the business and
operations of the Company and its subsidiaries as Parent and the Purchaser may
from time to time reasonably request. Unless otherwise required by law, Parent
and the Purchaser will, and will cause the Parent Representatives to, hold any
such information in confidence until such time as such information otherwise
becomes publicly available through no wrongful act of Parent, the Purchaser or
the Parent Representatives. No investigation pursuant to this Section 6.02 shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto. In the event of termination of this
Agreement for any reason, Parent and the Purchaser will, and will cause the
Parent Representatives to, return to the Company or destroy all copies of
written information furnished by the Company or any of the Company
Representatives to Parent or the Purchaser or the Parent Representatives and
destroy all memoranda, notes and other writings prepared by Parent, the
Purchaser or the Parent Representatives based upon or including the information
furnished by the Company or any of the Company Representatives to
28
29
Parent or the Purchaser or the Parent Representatives (and Parent will certify
to the Company that such destruction has occurred). In addition, Parent will
comply with the terms of the Confidentiality Agreement (as hereinafter defined).
SECTION 6.03 Efforts. (a) Subject to the terms and conditions hereof,
each party hereto shall use their reasonable best efforts to ensure that the
conditions set forth in Article VII and Annex I are satisfied and to consummate
and make effective the transactions contemplated by the Offer, the Merger and
this Agreement as promptly as practicable in accordance with this Agreement.
(b) The Company agrees to provide, and will cause its subsidiaries and
its and their respective officers, employees and advisers to provide, all
reasonable cooperation in connection with the arrangement of any financing
contemplated by the Commitment Letters to be consummated contemporaneous with
the Closing in respect of the transactions contemplated by this Agreement,
including without limitation, participation in meetings, due diligence sessions,
road shows, the preparation of offering memoranda, private placement memoranda,
prospectuses and similar documents. The Company will also provide commercially
reasonable assistance to the Purchaser in connection with the execution and
delivery of any underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested certificates
or documents, as may be requested by Parent or Purchaser, except (i) as
specifically provided in Section 6.16 and (ii) the Company will not be
responsible for any indemnities or expense reimbursements in connection
therewith until the Offer closes.
(c) The Company and the Purchaser will as promptly as practicable file
with the Federal Trade Commission and the Department of Justice the notification
and report forms required for the transactions contemplated hereby and any
supplemental information that may be reasonably requested in connection
therewith pursuant to the HSR Act, which notification and report forms and
supplemental information will comply in all material respects with the
requirements of the HSR Act. Purchaser shall pay all filing fees required with
respect to the notification, report and other requirements of the HSR Act.
(d) If at any time prior to the Effective Time any event or circumstance
relating to either the Company or Parent or the Purchaser or any of their
respective subsidiaries, should be discovered by the Company or Parent, as the
case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering parties will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
(e) Each of the parties agrees to cooperate with each other in taking,
or causing to be taken, all actions necessary to delist the Shares from the
NASDAQ National Market; provided, that such delisting shall not be effective
until after the Effective Time. The parties also
29
30
acknowledge that it is Purchaser's intent that the Shares following the Merger
will not be listed on any national securities exchange or quoted on NASDAQ/NMS.
(f) The Purchaser agrees to use reasonable best efforts to promptly
satisfy any conditions in the Commitment Letters, and not to waive or amend, or
provide any waivers, in respect of the Commitment Letters in a manner which
would adversely affect the consummation of the Merger or the Offer in accordance
with this Agreement, including its timing thereof (an "Adverse Manner"). The
Purchaser agrees to fully enforce the Commitment Letters.
(g) Other than pursuant to Section 1.01(a), the Purchaser agrees not to
delay, extend or terminate the Offer or the Merger without the prior written
approval of the Company, unless Purchaser is entitled to terminate this
Agreement pursuant to Section 8.01.
SECTION 6.04 Consents.
(a) Each of the parties will as promptly as practicable (i) make the
required filings with, and take all reasonable steps to obtain the required
authorizations, approvals, consents and other actions of, any Governmental
Entity, (ii) take all reasonable steps (not including the expenditure of money
or the payment or delivery of other consideration) to obtain the required
consents of other persons with respect to the transactions contemplated hereby
and the Shareholders Agreement and (iii) use its reasonable best efforts to
obtain waivers of any Violations that may be caused by, the consummation of the
Offer, the Merger and other transactions contemplated by the Offer and this
Agreement.
(b) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any of the transactions contemplated by this
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government or
authority with respect to the transactions contemplated by this Agreement, then
such party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Parent will advise the
Company promptly in respect of any understandings, undertakings or agreements
(oral or written) which Parent proposes to make or enter into with the Federal
Trade Commission, the Department of Justice or any other domestic or foreign
government or governmental or multinational authority in connection with the
transactions contemplated by this Agreement. The parties will use their
respective commercially reasonable best efforts to satisfy the condition in
Section 7.01(d).
SECTION 6.05 Maintenance of Insurance. Each of the Company and its
subsidiaries will continue to carry its existing insurance through the Effective
Time, and shall not allow any breach, default or cancellation (other than
expiration and replacement of policies in the ordinary cause of business) of
such insurance policies or agreements to occur or exist that would reasonably be
expected to have a Material Adverse Effect on the Company.
30
31
SECTION 6.06 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company agree to consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with any
securities exchange.
SECTION 6.07 Employment Benefit Arrangements.
(a) Parent agrees that the Company will honor and, from and after the
Effective Time, Parent will cause the Surviving Corporation to honor and
continue to maintain in full force and effect, all Employee Benefit Arrangements
to which the Company or any of its subsidiaries is presently a party, including
but not limited to the agreements existing on the date hereof between the
Company and certain executives of the Company (the "Executive Protection
Agreements") listed on the Company Disclosure Statement, provided however that
nothing herein shall restrict or limit the surviving corporation's ability to
amend or terminate any Plan.
(b) Parent will cause the Surviving Corporation to take such actions as
are necessary so that, for a period of at least one year from the Effective
Time, employees of the Company and its subsidiaries (excluding employees covered
by collective bargaining agreements) will be provided cash compensation employee
benefit and incentive compensation and similar plans and programs as will
provide compensation and benefits which in the aggregate are substantially
comparable to those provided to such employees by the Plans listed in Section
4.10 of the Company Disclosure Statement; provided, however, that neither the
Parent nor the Surviving Corporation shall have any obligation to provide
benefits substantially, comparable to any Plan providing equity awards.
(c) In any termination or layoff of (i) any employee as of the Effective
Time as a result of the transactions contemplated by this Agreement or (ii) any
employee of the Surviving Corporation as of the Effective Time (a "Hired
Employee") after the Effective Time, Parent will cause the Surviving Corporation
to comply fully, if applicable, with the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") and all other applicable foreign, Federal
state and local laws, including those prohibiting discrimination and requiring
notice to employees. The Surviving Corporation shall not, and shall cause its
subsidiaries not to, at any time prior to 60 days after the Effective Time,
effectuate a "plant closing" or "mass layoff" as those terms are defined in WARN
affecting in whole or in part any facility, site of employment, operating unit
or employee of the Company or any subsidiary without complying fully with the
requirements of WARN. Parent will bear the cost of compliance with (or failure
to comply with) any such laws.
SECTION 6.08 Indemnification.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in the Certificate of Incorporation and
By-laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
31
32
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers or employees of the Company.
(b) For six years from and after the Effective Time, Parent agrees that
it will or will cause the Surviving Corporation to indemnify and hold harmless
each present and former director, officer and employee of the Company
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (collectively, "Claims"), arising out
of or pertaining to matters existing or occurring at or prior to the Effective
Time, including, in any event, in connection with the Offer, the Merger and this
Agreement, whether asserted or claimed prior to, at or after the Effective Time,
to the fullest extent permitted under applicable law (and Parent shall, or shall
cause the Surviving Corporation to, also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(c) Parent agrees that the Company and, from and after the Effective
Time, the Surviving Corporation shall use its reasonable best efforts to cause
to be maintained in effect for not less than six years from the Effective Time
the current policies of the directors' and officers' liability insurance
maintained by the Company with respect to matters occurring prior to the
Effective Time; provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.08(c)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) Any Indemnified Party wishing to claim indemnification under this
Section 6.08, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Parent thereof, but the failure to so
notify shall not relieve Parent of any liability it may have to such Indemnified
Party if such failure does not materially prejudice the Parent. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Closing Date), (i) Parent or the Surviving Corporation shall
have the right to assume the defense thereof and Parent shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Parent or the Surviving Corporation elects
not to assume such defense or counsel for the indemnified parties advises that
there are issues which raise conflicts of interest between Parent or the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Parent shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are
32
33
received; provided, however, that Parent or the Surviving Corporation shall be
obligated pursuant to this paragraph (d) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of interest,
(ii) the Indemnified Parties will cooperate in the defense of any such matter
and (iii) Purchaser shall not be liable for any settlement effected without its
prior written consent, which will not be unreasonably withheld; and provided,
further, that Purchaser shall not have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(e) If the Parent or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Parent shall assume all of the obligations set forth in this Section 6.08.
(f) The provisions of this Section 6.08 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
SECTION 6.09 No Solicitation. The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its or
its subsidiaries' directors, officers, employees, agents, advisors or
representatives, directly or indirectly, to (a) solicit, initiate or encourage
or knowingly facilitate the submission of any inquiries or the making of any
proposal (a "Takeover Proposal") with respect to any acquisition or purchase of
a substantial amount of the assets of the Company and its subsidiaries, taken as
a whole, or of over 15% of any class of equity securities or convertible
securities of the Company or any of its subsidiaries, or any tender offer
(including a self tender offer) or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of equity
securities or convertible securities of the Company or any of its subsidiaries,
or any merger, consolidation or business combination recapitalization,
reclassification, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries other than the transactions contemplated by
this Agreement and the Shareholders Agreement or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or Merger or which would reasonably be
expected to materially dilute the benefits to Parent and Purchaser of the
transactions contemplated hereby (each, an "Acquisition Transaction"), (b)
negotiate, explore or otherwise participate in discussions with any person
(other than Parent, Purchaser or their respective directors, officers,
employees, agents and representatives), and including any parties with which the
Company has previously engaged in discussions or negotiations with respect to
any Acquisition Transaction, or furnish to any person (other than Parent,
Purchaser or their respective directors, officers, employees, agents and
representatives) any information with respect to its business, properties or
assets or any of the foregoing, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other
33
34
person (other than Parent, Purchaser or their respective directors, officers,
employees, agents and representatives) to do or seek any of the foregoing or (c)
enter into any agreement, arrangement or understanding with respect to, or
endorse, any Takeover Proposal; provided, however, that the foregoing shall not
prohibit the Company from (i) prior to the consummation of the Offer (A)
furnishing information pursuant to a confidentiality letter (provided for
informational purposes to Parent), with terms no less favorable than the
Confidentiality Agreement, concerning the Company and its businesses, properties
or assets to a third party who has made an unsolicited bona fide written
Takeover Proposal, or (B) engaging in discussions or negotiations with such a
third party who has made an unsolicited bona fide written Takeover Proposal or
(ii) following receipt of an unsolicited bona fide written Takeover Proposal but
prior to consummation of the Offer, failing to make or withdrawing or modifying
its recommendation referred to in Section 1.02(a), but in each case referred to
in the foregoing clauses (i) and (ii) only to the extent that the Board of
Directors of the Company shall have concluded in good faith, on the basis of
advice from outside legal counsel and the Company's financial advisors, that (A)
such Takeover Proposal is more favorable to the stockholders of the Company than
the transactions contemplated by this Agreement (taking into account all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal) and (B) such action is necessary in order for the Board of
Directors to comply with its fiduciary duties to the shareholders of the Company
under applicable law; provided, further, that the Board of Directors of the
Company shall not take any of the foregoing actions referred to in clauses (i)
and (ii) until after notice to Parent and Purchaser with respect to such action
and the Board of Directors shall continue to advise Parent and Purchaser after
taking such action. Nothing herein shall prevent the Board from taking, and
disclosing to the Company's stockholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender offer. In
addition, if the Board of Directors of the Company receives an unsolicited
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal, then the Company shall promptly inform Parent and Purchaser
orally and in writing of the terms and conditions of such proposal and the
identity of the person making it.
SECTION 6.10 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any covenant, condition or agreement hereunder not to be complied with
or satisfied in all material respects and (b) any failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder nor shall it limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.11 Special Meeting. The Company shall take no action unless
compelled by legal process to call a special meeting of stockholders of the
Company except in accordance
34
35
with this Agreement unless and until this Agreement has been terminated in
accordance with its terms.
SECTION 6.12 Disposition of Litigation. (a) The Company agrees that it
will not settle any litigation currently pending, or commenced after the date
hereof, against the Company or any of its directors by any stockholder of the
Company relating to the Offer or this Agreement, without the prior written
consent of Parent.
(b) The Company will not voluntarily cooperate with any third party
which has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Purchaser to
resist any such effort to restrain or prohibit or otherwise oppose the Offer or
the Merger.
SECTION 6.13 Restatement of Financial Advisory Agreement. The Company
has amended and restated the Financial Advisory Agreement, dated July 12, 1995,
between the Company and TJC Management Corp. (the "Financial Advisory
Agreement") in consideration of the payment of fees of not more than $2.5
million to TJC Management (the "TJC Amount") in accordance with a payment letter
acceptable to Parent (the "TJC Letter"). The parties acknowledge that the TJC
Amount is paid in consideration of services in connection with this Agreement,
as well as the transactions contemplated hereby, and such amendment and
restatement, which constitute conditions of Purchaser's willingness to enter
into this Agreement.
SECTION 6.14 Release. Except to the extent that the Released Parties are
shown in a final, unappealable determination by courts of competent jurisdiction
to have engaged in criminal, fraudulent or intentionally improper conduct,
Parent hereby irrevocably and unconditionally releases, acquits and forever
discharges on behalf of itself and any person acting by, through, or under or in
concert with Parent (including the Company) and all persons acting by, through,
under or in concert with any of them (collectively the "Releasees"), or any of
them, each of the directors and officers of the Company (collectively, the
"Released Parties") from any and all charges, complaints, claims, suits,
judgments, demands, actions, obligations or liabilities, damages, causes of
action, rights, costs, loans, debts and expenses (including attorneys' fees and
costs actually incurred) of any nature whatsoever known or unknown, emanating
from, arising out of, or in any way whatsoever arising prior to the Effective
Time or resulting from any action which the Company may have taken or failed to
take in connection with this Agreement and the transactions contemplated hereby,
including the Merger and the Offer, and Parent agrees that neither it, nor any
person acting by, through, or under, Parent shall institute or pursue any action
or actions, cause or causes of action (in law or in equity), suits, or claims in
state or federal court against or adverse to the Released Parties arising from
or attributable to the Releasees in connection with the foregoing.
SECTION 6.15 State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Offer and the Merger and the Shareholder's
Agreement, of any state or foreign takeover law.
35
36
SECTION 6.16 The Debt Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01, and subject to Section
6.16(d), the Company shall, as soon as practicable after the date hereof,
commence an offer to purchase all of the Company's outstanding 9-7/8% Series B
Senior Notes due 2005 (the "Senior Notes") on the terms set forth in Section
6.16 of the Company Disclosure Statement and such other customary terms and
conditions as are reasonably acceptable to Parent (the "Debt Offer"); provided,
that closing of the Debt Offer will be subject to closing the Offer or Merger.
The Company shall waive any of the conditions to the Debt Offer and make any
other changes in the terms and conditions of the Debt Offer as may be reasonably
requested by Parent, and the Company shall not, without Parent's prior consent,
waive any condition to the Debt Offer, make any changes to the terms and
conditions of the Debt Offer set forth in Section 6.16 of the Disclosure
Statement or make any other changes to the terms and conditions of the Debt
Offer. Notwithstanding anything in this Agreement, including the immediately
preceding sentence, to the contrary, the Company shall not be required to accept
for payment or pay for any Senior Notes prior to the closing of the Offer.
(b) Promptly following the date of this Agreement, the Company shall
prepare, subject to reasonable advice and comments of Parent, an offer to
purchase the Senior Notes (or portions thereof) and forms of the related letter
of transmittal (the "Letter of Transmittal") (collectively, the "Debt Offer to
Purchase"), as well as all other information and exhibits required in connection
therewith (collectively, the "Debt Offer Documents"). All mailings to the
holders of Senior Notes in connection with the Debt Offer shall be subject to
the prior review, comment and approval (which will not be unreasonably withheld)
of Parent. The Company will use its reasonable best efforts to cause the Debt
Offer Documents to be mailed to the holders of the Senior Notes as promptly as
practicable following commencement of the Debt Offer in accordance with Section
6.16(a).
(c) The Company covenants and agrees that, subject to the terms and
conditions of this Agreement, including but not limited to the conditions to the
Debt Offer, on the closing of the Debt Offer, the Company will accept for
payment the Senior Notes.
(d)(i) Notwithstanding the foregoing, the Company will not be obligated
to take or refrain from taking any action which it reasonably believes is
inconsistent with applicable law or the terms and conditions of the Senior Notes
or which would impede, delay or interfere with the consummation of the Offer or
the Merger in accordance with this Agreement.
(ii) The Purchaser acknowledges that the Company is making the Debt
Offer at the request and as an accommodation to the Purchaser, and that the Debt
Offer, and its terms, conditions, failure or success, or any claims or actions
relating thereto, will not be grounds for failure of a condition, termination or
delay of the Offer or the Merger, including the conditions thereof, nor
otherwise affect them.
(iii) The Purchaser will pay and reimburse the Company upon request for
all fees and expenses relating to the Debt Offer, including but not limited to
legal fees and expenses,
36
37
accounting fees and expenses, and printing, mailing and filing fees and
expenses, and fees and expenses of banks, financial institutions,
representatives and advisors, and will indemnify the Company and its directors
and officers from and against all claims, lawsuits, losses, expenses and
liabilities, including legal fees and expenses incurred by any of them in
connection with the Debt Offer and this Section 6.16.
(iv) The Purchaser agrees to comply with applicable law and the terms
and conditions of the Senior Notes in connection with the Debt Offer and this
Section 6.16.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. If required by the GCL, the
stockholders of the Company shall have duly adopted this Agreement and
approved the transactions contemplated by this Agreement, pursuant to
the requirements of the Company's certificate of incorporation and
applicable law (which the Company has represented shall be solely the
affirmative vote of a majority of the outstanding Shares).
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the
terms hereof; provided, that this condition shall be deemed to have been
satisfied with respect to Parent and the Purchaser if the Purchaser
fails to accept for payment or pay for Shares pursuant to the Offer in
violation of the terms of the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by
any Governmental Entity which prevents the consummation of the Merger;
provided that the party invoking this condition shall have used their
reasonable best efforts to prevent the entry of such order, judgment,
decree, injunction or ruling and to appeal as promptly as practicable
any such order, judgment, decree, injunction or ruling.
(d) Expiration of HSR Waiting Period. Any waiting period
applicable to the Merger under the HSR Act shall have terminated or
expired.
37
38
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Offer
and Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by the mutual written consent of Parent and the Company;
(b) by Parent or the Company if there shall be any statute, law,
rule or regulation that makes consummation of the Offer or the Merger
illegal or prohibited or if any court or other Governmental Entity of
competent jurisdiction or located or having jurisdiction within the
United States or any country or economic region in which either the
Company or the Parent, directly or indirectly, has material assets or
operations shall have issued, enacted, entered, promulgated or enforced
any final order, judgment, decree, injunction, or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, judgment, decree, injunction or ruling
shall have become nonappealable;
(c) by Parent or the Company if (i) the Offer is terminated or
withdrawn pursuant to its terms without any Shares being purchased
thereunder; or (ii) if Purchaser shall have failed to pay for Common
Shares pursuant to the Offer within 55 days following the date hereof;
provided, however, that neither Parent nor the Company, as the case may
be, may terminate the Agreement pursuant to this Section 8.01(c) if
Purchaser's termination or withdrawal of the Offer or failure to pay for
Common Shares pursuant to the Offer has been caused by or results from
the failure of such party seeking to terminate the Agreement to perform
in any material respects any of its covenants or agreements contained in
this Agreement or a material breach of such party's representations and
warranties contained in this Agreement;
(d) by the Company if (i) the Offer shall not be commenced upon
the day specified in Section 1.01, provided, that the failure to so
commence has not been caused by and does not result from the failure of
the Company to perform in any material respect any of its
representations, warranties, covenants or agreements contained in this
Agreement, (ii) there shall have been a breach of any representation,
warranty, covenant or agreement (without regard to any materiality or
Material Adverse Effect qualifier) on the part of Parent or the
Purchaser contained in this Agreement which materially adversely affects
Parent's or Purchaser's ability to consummate (or materially delays
commencement or consummation of) the Offer, and, with respect to any
such breach that is reasonably capable of being cured, which shall not
have been cured prior to the earlier of (A) 10 business days following
notice of such breach and (B) two business days prior to the date on
which the Offer expires, (iii) Purchaser shall have terminated the
Offer, (iv) any of the Commitment Letters shall have been withdrawn,
terminated or modified in an
38
39
Adverse Manner (unless such withdrawn, terminated or modified
Commitment Letters (which shall not include the Commitment Letter of
X.X. Childs Equity Partners II, L.P.) are promptly replaced, with
commitment letters from nationally recognized, capable financial
institutions, having substantially similar commitment, terms and
conditions, including but not limited to the funding and closing
conditions set forth therein, all of which shall be in form and
substance reasonably acceptable to the Company), or (unless with the
Company's prior written approval in accordance with this Agreement) or
(v) prior to the purchase of Shares pursuant to the Offer, any person
shall have made a bona fide Takeover Proposal (A) that the Board of
Directors of the Company determines in its good faith judgment in
consultation with its financial advisor, is more favorable to the
Company's stockholders than the Offer and the Merger (taking into
account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal) and (B) as a result of
which a majority of the Board of Directors concludes in good faith on
the advice of independent outside legal counsel to the Company that
termination of this Agreement is necessary in order for the Board to
comply with its fiduciary obligations under applicable law; provided,
that such termination under this clause (v) shall not be effective
until the Company has made payment of the full fee and expense
reimbursement required by Section 8.03(b) hereof; or
(e) By Parent prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have been a breach of any representation or
warranty on the part of the Company contained in this Agreement (without
regard to any materiality or Material Adverse Effect qualifier) which
would reasonably be expected to have a Material Adverse Effect on the
Company or which would materially adversely affect (or materially delay)
the commencement or consummation of the Offer, (ii) there shall have
been a breach of any covenant or agreement on the part of the Company
contained in this Agreement (without regard to any materiality or
material Adverse Effect qualifier) which would reasonably be expected to
have a Material Adverse Effect on the Company or which would materially
adversely affect (or materially delay) the consummation of the Offer,
which, in the clause (i) or (ii), if such breach is reasonably capable
of being cured, such breach shall not have been cured prior to the
earlier of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, (iii) the
Company shall effect, or enter into any agreement with respect to, an
Acquisition Transaction with any person (other than Parent or Purchaser)
or the Board has resolved to do so, (iv) the Board shall have withdrawn
or modified (including by amendment of the Schedule 14D- 9) in a manner
adverse to Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another offer or
transaction, or shall have resolved to effect any of the foregoing or
(v) the Minimum Condition (as defined in Annex I hereto) shall not have
been satisfied by the expiration date of the Offer and, in addition, on
or prior to such date, either (A) any person (other than Parent or
Purchaser) shall have made a public proposal, filing, announcement or
communication to the Company with respect to a Significant Acquisition
Transaction (as defined in Section 9.15 hereof) or (B) any person
(including the Company or any of its affiliates or
39
40
subsidiaries), other than Parent or any of its affiliates shall have
become the beneficial owners of 25% or more of the Common Shares.
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.02, Section 8.03 and the last two sentences of Section 6.02, which shall
survive any such termination. Nothing contained in this Section 8.02 shall
relieve any party from liability for any breach of this Agreement or the
Confidentiality Agreement.
SECTION 8.03 Fees and Expenses. (a) Subject to Sections 8.03(b) and (c)
below, all Expenses (as hereinafter defined) incurred by the parties hereto
shall be borne solely and entirely by the party which has incurred such
Expenses; provided, that all Expenses related to the printing, filing and
mailing of the Offer Documents, the Debt Offer Documents and all Commission and
other regulatory filing fees incurred in connection with the Offer Documents and
Debt Offer Documents allocable to the Company and to Parent or Purchaser,
including legal fees and expenses, as the case may be, shall be paid by
Purchaser.
(b) (i) If this Agreement is terminated by the Company pursuant to
Section 8.01(d)(v) or by the Purchaser pursuant to Section 8.01(e) (iii) or
(iv); or
(ii) (A) If this Agreement is terminated by Parent pursuant to Section
8.01(e)(i), (ii) or (v), and, in addition, (B) following the date of this
Agreement and at or prior to the time of the event giving rise to such
termination there shall have existed a Significant Takeover Proposal with
respect to the Company and (C) within 12 months thereafter, either (1) the
Company enters into an agreement with respect to any Significant Acquisition
Transaction or (2) any Significant Acquisition Transaction occurs;
the Company shall pay to Parent, within one business day following the execution
and delivery of such agreement or such occurrence, as the case may be, or no
later than concurrently with any termination contemplated by Section
8.01(e)(iii) or (iv) or Section 8.01(d)(v), a fee, in cash and in immediately
available funds, of $5.5 million (the "Fee").
(c) If this Agreement is terminated pursuant to Section 8.01(d)(v) or
Section 8.01(e), then the Company shall pay to Purchaser, within one business
day after its receipt of written statements therefor, an amount equal to the
reasonable and documented Expenses set forth in such statement; provided, that
in no event will the amount of the Expenses reimbursed exceed $1 million (the
"Expenses Cap"); provided, however, that the Expenses Cap shall not apply to the
Collection Expenses. Such Expenses shall be in addition to, and not in
substitution for, the Fee paid by the Company, if any, pursuant to Section
8.03(b).
"Expenses" means all out-of-pocket fees and expenses actually incurred
by Parent or Purchaser or on their behalf, whether before or after the execution
and delivery of this Agreement, in connection with the transactions contemplated
by this Agreement, including the
40
41
Merger and the Shareholders Agreement, including without limitation, fees and
reasonable expenses payable to all banks, investment banking firms and other
financial institutions, and their respective agents and counsel, all fees and
reasonable expenses of counsel, accountants, experts and consultants to Parent
or Purchaser, and, further, including without limitation fees and reasonable
expenses of, or incurred in connection with, any litigation or other proceedings
to collect the Fee or the Expenses (the "Collection Expenses").
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may
be amended by the Company, Parent and the Purchaser at any time before or after
any approval of this Agreement by the stockholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.02, Section 6.07, Section 6.08, Section 6.13, Section 6.14 and 6.16(d)
shall survive the Effective Time indefinitely (except to the extent a shorter
period of time is explicitly specified therein) and those agreements set forth
in the last two sentences of Section 6.02, Section 8.03 and Article IX shall
survive termination of this Agreement.
SECTION 9.02 Limitation on Warranties. The Company makes no
representations or warranties with respect to any projections, forecasts or
forward-looking information provided to Parent or Purchaser. There is no
assurance that any projected or forecasted results will be achieved. EXCEPT AS
TO THOSE MATTERS COVERED BY THE REPRESENTATIONS AND WARRANTIES IN ARTICLE IV,
THE COMPANY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR
IMPLIED, AS TO ANY OTHER INFORMATION OR MATTERS. Each of Parent and Purchaser
acknowledges that neither the Company, any subsidiary nor any other Person has
made any representation or
41
42
warranty, express or implied, as to the accuracy or completeness of any
information which is not included in this Agreement or the Company Disclosure
Statement, and neither the Company, any subsidiary, nor any other Person will
have or be subject to any liability to Parent or Purchaser, any affiliate
thereof or any other Person resulting from the distribution of any such
information to, or use of any such information by, Parent or Purchaser, any
affiliate thereof or any of their agents, consultants, accountants, counsel or
other representatives. Without limitation of the foregoing, to the extent that
any memoranda or summaries prepared by the Company, any subsidiary or by any of
their respective advisors or representatives regarding the Company, the
subsidiaries, or their respective businesses are or have been provided to Parent
or Purchaser, Parent and Purchaser acknowledge and agree that no representation
or warranty is made to Purchaser or any affiliate thereof or any other Person as
to the completeness or accuracy of such memoranda or summaries.
SECTION 9.03 Company Disclosure Statement. Any fact or item in any
portion of the Company Disclosure Statement shall be deemed to be disclosed with
respect to any other relevant portion, whether or not an explicit
cross-reference appears. No representation or warranty hereunder shall be deemed
to be inaccurate if the actual situation is explicitly disclosed in the
specifically referenced section or cross-section of the Company Disclosure
Statement. Neither the specification of any dollar amount in any representation,
warranty or covenant contained in this Agreement nor the inclusion of any
specific item in the Company Disclosure Statement hereto is intended to imply
that such amount, or higher or lower amounts, or the item so included or other
items, are or are not material, and no party shall use the fact of the setting
forth of any such amount or the inclusion of any such item in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in the Company Disclosure Statement is or is not
material for purposes of this Agreement.
SECTION 9.04 Entire Agreement; Assignment.
(a) The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof. This Agreement, the
Related Agreements (including the documents and the instruments referred to
herein and the letter agreements, by and between Purchaser and the Company,
dated December 4, 1997 and January 12, 1999 (collectively, the "Confidentiality
Agreement")), constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement and the Related Agreements nor any of the
rights, interests or obligations hereunder or thereunder will be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party except that Parent and Purchaser may
assign all or any of their rights to affiliates with the permission of the
Company, which will not be unreasonably withheld; provided, that no such
assignment shall relieve the assigning party of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
42
43
SECTION 9.05 Binding Agreement. This Agreement and the Related
Agreements shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided, that, except as provided
in Section 9.04(b), no party may assign its rights and obligations under this
Agreement without the prior written consent of the other parties.
SECTION 9.06 Further Assurances. Upon the reasonable request of Parent,
Purchaser or the Company, each party will on and after the Effective Time
execute and deliver to the other parties such other documents, assignments and
other instruments as may be required to effectuate completely the transfer and
assignment to Purchaser of, and to vest fully in Purchaser title to, the Shares,
and to effect and evidence the provisions of this Agreement and the Related
Agreements and the transactions contemplated hereby.
SECTION 9.07 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity of enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other situation or in any other jurisdiction. If
the final judgement of a court of competent jurisdiction declares that any term
or provision hereof is invalid or unenforceable, the Parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
SECTION 9.08 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
c/o X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
43
44
If to the Company:
American Safety Razor Company
Xxx Xxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
with a copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
with a copy to:
The Jordan Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.09 Governing Law; Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(b) In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
New York or any New York state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in court other than a federal or state sitting in the State
of New York.
(c) In the event of any dispute in respect of this Agreement or the
Related Agreements, then the enforcement costs (including legal fees and
expenses) of the prevailing party will be paid and reimbursed by the losing
party.
44
45
SECTION 9.10 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.12 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state or local law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
SECTION 9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.14 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except with respect
to Sections 1.03(c), 6.08, 6.13 and 6.14, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.15 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of
the power to direct
45
46
or cause the direction of the management and policies of that person,
whether through the ownership of voting securities, by contract or
otherwise;
(b) the term "Knowledge" means the actual knowledge, after
reasonable inquiry, of the executive officers of the Company;
(c) the term "Significant Acquisition Transaction" shall have the
same meaning as "Acquisition Transaction" except that the references to
15% contained therein shall be deemed to be (i) 35% with respect to any
Significant Acquisition Transaction effected through a primary sale of
Common Stock (or a security convertible into Common Stock) by the
Company or a merger involving the Company or a tender or exchange offer
or any other transaction that the Board has recommended acceptance of,
and (ii) 50% with respect to any Significant Acquisition Transaction
effected through a tender or exchange offer that the Board has
recommended rejection of or other market or secondary acquisition of the
Common Stock (or a security convertible into Common Stock);
(d) the term "Significant Takeover Proposal" means a Takeover
Proposal relating to a Significant Acquisition Transaction;
(e) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act); and
(f) the term "subsidiary" or "subsidiaries" means, with respect
to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the
Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 9.16 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 9.17 Parent Guarantee. Parent hereby guarantees the due
performance of any and all obligations and liabilities of the Purchaser under or
arising out of this Agreement and the transactions contemplated hereby.
46
47
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
RSA HOLDINGS CORP. OF DELAWARE
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title:
RSA ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title:
AMERICAN SAFETY RAZOR COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title:
47
48
ANNEX I
Offer Conditions
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-l(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) to the extent permitted by
the Merger Agreement if, (i) at the expiration of the Offer, a number of shares
of Company Common Stock which constitutes more than 50% of the voting power
(determined on a fully-diluted basis), on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer (the "Minimum Condition"), or
(ii) at any time on or after the date of this Agreement and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred:
(a) there shall have been instituted or pending any action or
proceeding brought by any governmental authority before any federal or
state court, or any order or preliminary or permanent injunction entered
and continuing in any action or proceeding before any federal or state
court or governmental, administrative or regulatory authority or agency,
or any statute, rule, regulation, legislation, interpretation, judgment
or order enacted, entered, enforced, promulgated, amended, issued and
continuing and applicable to Parent, Purchaser, the Company or any
subsidiary or affiliate of Purchaser or the Company or the Offer or the
Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency which would reasonably
be expected to have the effect of: (i) making illegal, or otherwise
directly or indirectly restraining or prohibiting or making materially
more expensive the making of the Offer, the acceptance for payment of,
or payment for the Shares by Parent or the Purchaser or the consummation
of any of the transactions contemplated by the Merger Agreement; (ii)
prohibiting or materially limiting the ownership or operation by the
Company or any of its subsidiaries or Parent, Purchaser or any of
Parent's affiliates of all or any material portion of the business or
assets of the Company or any of its subsidiaries, taken as a whole, or
any of its affiliates or compelling Parent, Purchaser or any of Parent's
affiliates to dispose of or hold separate all or any material portion of
the business or assets of the Company or any of its subsidiaries or
Parent, or any of its affiliates, as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iii) imposing or
confirming limitations on the ability of Parent, Purchaser or any of
Parent's affiliates effectively to acquire or hold or to exercise full
rights of ownership of Shares, including without limitation the right to
vote any Shares acquired or owned by Parent or Purchaser or any of its
affiliates on all matters properly presented to the stockholders of the
Company, including without limitation the adoption and approval of the
Agreement and
1
49
the Merger or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company; or (iv)
requiring divestiture by Parent or Purchaser of any Shares;
(b) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) a material adverse change in or material disruption
of conditions in the market for syndicated bank credit facilities or the
financial, banking or capital markets generally, (iii) a commencement
and continuation of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States which would have a Material Adverse Effect on the Company or (iv)
in the case of any of the foregoing existing at the time of commencement
of the Offer, a material acceleration or worsening thereof;
(c) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 25% of the outstanding Shares has been
acquired by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other entity or
group (as defined in Section 13(d)(3) of the Exchange Act), other than
Parent or its affiliates, or the Principal Holders or any of their
respective affiliates (but only with respect to the Common Shares that
they beneficially own on the date hereof), or (ii) (A) the Board of
Directors of the Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Takeover Proposal or any other acquisition
of Shares other than the Offer and the Merger, (B) any such corporation,
partnership, person or other entity or group shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to an Acquisition Transaction, or (C) the Board of Directors of
the Company or any committee thereof shall have resolved to do any of
the foregoing;
(d) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality or
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be
true and correct in any material respect, in each case as if such
representations and warranties were made at the time of such
determination;
(e) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by
it under the Merger Agreement;
(f) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent
of the Company; or
2
50
(g) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated, or any material approval, permit, authorization or consent
of any domestic or foreign governmental, administrative or regulatory
agency (federal, state, local, provincial or otherwise) shall not have
been obtained on terms satisfactory to the Parent in its reasonable
discretion;
and, in addition, which, in the case of (a) through (g), in the reasonable, good
faith judgement of Parent or the Purchaser, and regardless of the circumstances
(including any action or inaction by Parent or Purchaser or any of its
affiliates) giving rise to any such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for Shares
or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
3
