Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 10,
1998, is made by and among Communications Instruments, Inc., a North Carolina
corporation (the "Parent"), RF Acquisition Corp., an Illinois corporation and
a wholly-owned subsidiary of the Parent (the "Merger Sub"), and Corcom, Inc.,
an Illinois corporation (the "Company"). Cross-references to the defined
terms used in this Agreement are set forth in Article VIII below.
WHEREAS, the Merger Sub is a corporation duly organized and validly existing
under the laws of the State of Illinois having authorized capital shares
consisting of 1,000 shares of common stock, $.01 par value per share ("Merger
Sub Shares"), all of which are of one class and all of which are entitled to
vote, and all of which are issued and outstanding and owned by the Parent.
WHEREAS, the Company is a corporation duly organized and validly existing under
the laws of the State of Illinois and having authorized capital shares
consisting of 10,000,000 shares of common stock, no par value per share
("Common Shares"), all of which are of one class and all of which are entitled
to vote, and of which 3,823,243 shares are issued and outstanding.
WHEREAS, the Parent desires to purchase all outstanding Common Shares through
the merger of the Merger Sub with and into the Company (the "Merger"), with
the Company surviving the Merger and the Merger Sub ceasing to exist (the
Company and the Merger Sub being hereinafter sometimes referred to as the
"Constituent Corporations" and the Company, following the effectiveness of the
Merger, being hereinafter sometimes referred to as the "Surviving
Corporation"), all upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Parent, the Merger Sub and the Company agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 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 Business Corporation Act of 1983 of the
State of Illinois (the "Illinois Act"), at the Effective Time (as defined in
Section 1.02) the Merger Sub shall be merged with and into the Company.
Following the Merger, the separate corporate existence of the Merger Sub shall
cease and the Company shall continue as the Surviving Corporation.
SECTION 1.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the Company
and the Merger Sub shall execute in the manner required by the Illinois Act
and deliver to the Secretary of State of the State of Illinois a duly executed
and verified Articles of Merger in accordance with Section 5/11.25 of the
Illinois Act, and the parties shall take such other and further actions as
may be required by law to make the Merger effective. The Merger shall become
effective when a certificate of merger (the "Certificate of Merger") is issued
by the Secretary of State of the State of Illinois. When used in this
Agreement, the term "Effective Time" shall mean the date and time at which
the Certificate of Merger is issued.
SECTION 1.03 Effects of the Merger. The Merger shall have the effects set
forth in Section 5/11.50 of the Illinois Act.
SECTION 1.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Articles of Incorporation of the Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Articles 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 5.06 of this Agreement, the By-
Laws of the Merger Sub in effect at the Effective Time shall be the By-Laws
of the Surviving Corporation until amended in accordance with the provisions
thereof and applicable law.
SECTION 1.05 Directors. Subject to applicable law, the directors of the
Merger Sub 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 1.06 Officers. To the extent permitted under applicable law, 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.
SECTION 1.07 Conversion of Common Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, each
Common Share issued and outstanding immediately prior to the Effective Time
(other than any Common Shares held by the Parent, the Merger Sub, any wholly-
owned subsidiary of the Parent or the Merger Sub, in the treasury of the
Company or by any wholly-owned subsidiary of the Company, which Common 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 2.01)) shall be converted into the right to receive in cash
an amount equal to the Merger Price (as defined below), payable to the holder
thereof, without interest thereon, upon surrender of the certificate formerly
representing such Common Share. The "Merger Price" shall be an amount per
Common Share equal to $13.00. The "Aggregate Common Share Merger Price" shall
be an amount equal to the Merger Price multiplied by the number of Common
Shares outstanding as of the Effective Time. The "Aggregate Merger Price"
shall be an amount equal to the sum of the Aggregate Common Share Merger Price
and the Option Payment (as defined in Section 1.09).
SECTION 1.08 Conversion of the Merger Sub Shares. At the Effective Time,
each Merger Sub Share 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 non-assessable share of common stock, no par value per share,
of the Surviving Corporation.
SECTION 1.09 Company Option Plans. The Company shall cause each
outstanding option to purchase Common Shares (each, an "Option") to be
cancelled, as of the Effective Time, at which time the Company will pay each
holder of an Option (whether or not such Option is then vested or exercisable)
an amount determined by multiplying (i) the excess, if any, of the Merger
Price over the applicable exercise price of such Option by (ii) the number of
Common Shares such holder could have purchased if such holder had exercised
such Option in full immediately prior to such time (without giving effect to
any antidilutive changes in the number of such Common Shares arising from the
Merger and assuming any unvested Options have vested) (the sum of all such
payments, the "Option Payment"). Prior to the Effective Time, the Company
shall obtain all consents necessary to give effect to the transaction
described in the foregoing sentence.
SECTION 1.10 Shareholders' Meeting; Proxy Statement.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through the Board, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of its
shareholders (a "Shareholders' Meeting") as soon as reasonably practicable
following the date hereof for the purpose of considering and taking action
upon this Agreement;
(ii) prepare and file with the Securities and Exchange Commission (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 the 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
shareholders and (y) to obtain the necessary approvals of the Merger and this
Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the Board that
shareholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement.
(b) The Parent agrees that it will vote, or cause to be voted, all of the
Common Shares then owned by it, the Merger Sub or any of its other
subsidiaries in favor of the approval of the Merger and the adoption of this
Agreement.
SECTION 1.11 Closing. The closing of the Merger contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx
in Chicago, Illinois as soon as practicable after the satisfaction or waiver
of all of the conditions to the Merger contained in Article VI or at such
other time and place as the Parent, the Merger Sub and the Company shall
agree.
ARTICLE II
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 2.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Common Shares outstanding immediately prior to the Effective
Time and held by a holder who has demanded and perfected his or her appraisal
rights in accordance with Section 5/11.65 of the Illinois Act and who has not
effectively withdrawn or lost his right to such appraisal, if such Section
5/11.65 provides for dissenters' rights for such Common Shares in the Merger
(a "Dissenting Share"), shall not be converted into the right to receive the
Merger Price as provided in Section 1.07, unless and until such holder fails
to perfect or withdraws or otherwise loses his right to appraisal and payment
under the Illinois Act, but the holder thereof shall only be entitled to such
rights as are granted by the Illinois Act and shall not be entitled to vote
or to exercise any other rights of a shareholder of the Company except as
provided in the Illinois Act. Each holder of Dissenting Shares who becomes
entitled to payment therefor pursuant to the Illinois Act shall receive such
payment from the Surviving Corporation in accordance with the Illinois Act.
If, after the Effective Time, any such holder fails to perfect or withdraws
or loses his right to dissent, 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 the Parent
prompt notice of any demands received by the Company for appraisal of Common
Shares and, prior to the Effective Time, the Parent shall have the right to
participate in 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 the Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 2.02 Payment for Common Shares.
(a) From and after the Effective Time, a bank or trust company as shall
be mutually acceptable to the Parent and the Company shall act as paying
agent (the "Paying Agent") in effecting the payment of the Merger Price in
respect of certificates (the "Certificates") that, prior to the Effective
Time, represented Common Shares entitled to payment of the Merger Price
pursuant to Section 1.07. At the Effective Time, the Parent or the Merger Sub
shall deposit, or cause to be deposited, in trust with the Paying Agent the
Aggregate Common Share Merger Price to which holders of Common Shares shall
be entitled at the Effective Time pursuant to Section 1.07.
(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 Common Shares (other than Certificates representing Dissenting
Shares and Certificates representing Common Shares held by the Parent or the
Merger Sub, any wholly-owned subsidiary of the Parent or the Merger Sub, in
the treasury of the Company or by any wholly-owned subsidiary of the Company)
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 instructions
for use in surrendering such Certificates and receiving the Merger Price in
respect thereof. Upon the surrender of each such Certificate, the Paying Agent
shall pay the holder of such Certificate the Merger Price multiplied by the
number of Common Shares formerly represented by such Certificate, in
consideration therefor, and such Certificate shall forthwith be cancelled.
Until so surrendered, each such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Common Shares
held by the Parent or the Merger Sub, any wholly owned subsidiary of the
Parent or the Merger Sub, in the treasury of the Company or by any
wholly-owned subsidiary of the Company) shall represent solely the right to
receive the Aggregate Common Share 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 Common 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 or otherwise be in proper form for transfer and that the
person surrendering such Common Shares 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 180 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 Common Share
may surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Aggregate Common Share Merger Price relating
thereto, without any interest or dividends thereon.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Common 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 Common Share Merger Price
relating thereto, as provided in this Article II, subject to applicable law
in the case of Dissenting Shares.
(e) 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 required by the Surviving
Corporation, the posting by such person of a bond, in such reasonable amount
as the Surviving Corporation may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Price as provided in Section 1.07.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and the Merger Sub that
except as set forth in the Company Disclosure Statement which it has
delivered to the Parent and the Merger Sub simultaneous with its execution of
this Agreement (the "Company Disclosure Statement"):
SECTION 3.01 Organization and Qualification; Subsidiaries. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Com-
pany 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.
SECTION 3.02 Charter and By-Laws. The Company has heretofore made
available to the Parent and the Merger Sub a complete and correct copy of the
charter and the by-laws or comparable organizational documents, each as
amended to the date hereof, of the Company and each of the Subsidiaries.
SECTION 3.03 Capitalization. The authorized capital stock of the Company
consists of 10,000,000 Common Shares. As of the close of business on March 6,
1998 (the "Reference Date"), the Company had issued and outstanding 3,823,243
Common Shares and 142,000 options to purchase Common Shares. Since the
Reference Date, the Company has not issued any shares of capital stock except
pursuant to the exercise of Options outstanding as of such date. 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. 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 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, and neither the
Company nor any of its Subsidiaries is obligated to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except as contemplated by this Agreement and
except for the Company's obligations in respect of the Options under the
Corcom, Inc. 1985 Key Employees' Incentive Stock Option Plan, the Corcom, Inc.
1988 Key Employees' Incentive Stock Option Plan, the Corcom, Inc. 1991
Directors' Stock Option Plan, and the Corcom, Inc. 1994 Directors' Stock
Option Plan (collectively, the "Option Plans"), 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. Each of the outstanding shares of
capital stock of each of the Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and such shares of the Subsidiaries as are
owned by the Company or any of its Subsidiaries are 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").
SECTION 3.04 Authority Relative to this Agreement. 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 the
affirmative vote of the holders of two-thirds of the Common Shares then
outstanding, to the extent required by applicable law). 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 the
Parent and the Merger Sub, 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.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery 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 Articles of Incorporation or By-Laws of the Company or
comparable organizational documents of any of the Subsidiaries, (ii) conflict
with or violate any statute, ordinance, rule, regulation, order, judgment or
decree applicable to the Company or any of the 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, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in any loss of any material
benefit, or the creation of any Lien on any of the properties or assets of the
Company or any of the Subsidiaries (any of the foregoing referred to in
clause (ii) or this clause (iii) being a "Violation") pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the Subsidiaries
or any of their respective properties may be bound or affected.
(b) None of the execution and delivery 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, domestic, foreign or supranational or any
administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational (a "Governmental Entity"),
except for (i) compliance with any applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) the issuance of
the Certificate of Merger by the Secretary of State of the State of Illinois,
(iii) such filings, authorizations, orders and approvals as may be required by
state takeover laws (the "State Takeover Approvals"), and (iv) compliance with
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and (v) consents the failure of which to obtain or make would not
have a Material Adverse Effect on the Company (as defined in Section 3.10
below), or materially adversely affect the ability of the Company to
consummate the transactions contemplated hereby.
SECTION 3.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed
by the Company with the SEC since January 1, 1995 (the "SEC Reports"). 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 (the "Securities Act") 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 contained any untrue statement of a material fact
or omitted 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 financial statements (including, in each case, any
notes thereto) of the Company included in the SEC Reports complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with United States generally accepted accounting principles
("GAAP") (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to any other adjustments described therein and normal year-end
audit adjustments). The books and records of the Company and its Subsidiaries
have been, and are being, maintained in accordance with GAAP and other
applicable legal and accounting requirements.
SECTION 3.07 Information. None of the information set forth in the Company
Disclosure Statement or supplied by the Company in writing specifically for
inclusion or incorporation by reference in (i) the Proxy Statement 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 (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 shareholders, at the
time of the Shareholders' 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. 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 pursuant to
this Section 3.07 with respect to statements made therein based on information
supplied by the Parent or the Merger Sub in writing specifically for inclusion
in the Proxy Statement.
SECTION 3.08 State Takeover Statutes; Required Vote. The Board has taken
all action so that prior to the execution hereof, the Board has approved the
Merger pursuant to Sections 5/7.85 and 5/11.75 of the Illinois Act. As of the
date hereof, no other state takeover statutes, including without limitation,
any business combination act, are applicable to the Merger, this Agreement and
the transactions contemplated hereby. The affirmative vote of the holders of
not less than two-thirds of the outstanding Common Shares is required to
approve the transactions contemplated by this Agreement. No other vote of the
shareholders of the Company is required by law, the Articles of Incorporation
or By-Laws of the Company or otherwise for the Company to consummate the
Merger and the transactions contemplated hereby.
SECTION 3.09 Brokers. Except for the Company's retention of ABN AMRO
Incorporated, none of the Company, any of the 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.
SECTION 3.10 Material Adverse Effect. There have been no events,
conditions, developments or states of fact which singly or in the aggregate
since December 31, 1996 have had or are reasonably expected to have a Material
Adverse Effect on the Company that were not disclosed in the Company
Disclosure Statement or in any of the reports filed with the SEC as described
in Section 3.06. Since December 31, 1997, the Company has not taken any
action or agreed to take any action that the Company is prohibited from
taking after the date hereof by Section 5.01. The term "Material Adverse
Effect on the Company", as used in this Agreement, means any change in or
effect on the business, assets, operations, financial condition, results of
operations, customer relations, supplier relations, or business prospects of
the Company or any of the Subsidiaries that is, or is reasonably expected to
be, materially adverse to the Company and the Subsidiaries taken as a whole.
SECTION 3.11 Litigation. Except as may be disclosed in the SEC Reports (as
defined in Section 3.06(a) hereof) or the Company Disclosure Statement, there
are no actions, proceedings or investigations pending or, to the best of the
Company's knowledge, threatened against the Company or the Subsidiaries before
any court or governmental or regulatory authority or body. Neither the
Company nor the Subsidiaries nor any of their assets is subject to any order,
judgment, injunction or decree.
SECTION 3.12 Absence of Certain Changes or Events. Since December 31, 1997,
except as set forth in the SEC Reports (as defined in Section 3.06(a) hereof)
or the Company Disclosure Statement, (a) neither the Company nor any
Subsidiary has incurred any indebtedness for money borrowed except in the
ordinary and usual conduct of the Company's business; (b) neither the Company
nor any Subsidiary has assumed, guaranteed, endorsed or otherwise became
responsible for the obligations of any other individual, firm or corporation,
other than any obligation relating to existing co-insurance programs and the
endorsement of checks for collection in the ordinary and usual course of
business; (c) there has been no creation or assumption by the Company or any
Subsidiary of any Lien on any asset; (d) there has been no loan, advance or
capital contribution to or investment in any person by the Company or any
Subsidiary except in the ordinary and usual conduct of the Company's business;
(e) neither the Company nor any Subsidiary has entered into any contract,
lease, commitment or transaction with any officer, director or any affiliate
(as defined in Rule 405 of the SEC promulgated under the Securities Act) of
the Company or any Subsidiary (other than pursuant to consulting or employment
agreements or other employee benefit arrangements); (f) there has been no
transaction or commitment made, or any contract or agreement entered into,
by the Company or any Subsidiary relating to its assets or business (including
the acquisition or disposition of any assets) or any relinquishment by the
Company or any Subsidiary of any contract or other right, which in either case
is material to the Company and the Subsidiaries taken as a whole (other than
transactions, commitments and relinquishments contemplated by this Agreement
and other than sales of inventory in the ordinary and usual course of business
and other than investments of a capital nature in the ordinary and usual
course of business); (g) neither the Company nor any Subsidiary has purchased
or leased any real property; (h) neither the Company nor any Subsidiary has
leased any equipment or property other than in the ordinary and usual course
of business; (i) there has been no change in any method of accounting or
accounting practice by the Company or the Subsidiaries; (j) there has been no
grant (whether or not in writing and whether formal or informal) of any
severance or termination pay to any current or former officer or employee of
the Company or any Subsidiary, any employment, bonus, profit sharing, pension,
retirement, deferred compensation, fringe benefit, or other similar agreement
with or plan or program for (or, except as required by law, any amendment,
formal or informal, to any such existing agreement with or plan or program
for) any current or former officer, director, employee or consultant of the
Company or any Subsidiary, any increase in benefits payable under any existing
severance or termination pay policies, employment agreements, or deferred
compensation or fringe benefit plan or program or any increase in
compensation, bonus or other benefits payable, or to become payable, to
officers, directors, employees or consultants of the Company or any Subsidiary
other than increases in benefits to non-officer employees of the Company
in the ordinary course of business in accordance with past practices;
(k) there has been no repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or other
ownership interest of the Company or any Subsidiary; (l) there has been no
declaration or payment of any dividend on, or other distribution with respect
to, any capital stock of the Company or any Subsidiary; and (m) neither the
Company nor any Subsidiary has entered into any other transaction other than
in the ordinary course of business.
SECTION 3.13 Employee Benefit Plans.
(a) The Company Disclosure Statement sets forth a true and complete list
of all Plans (as defined below) maintained or sponsored by the Company or any
Subsidiary, contributed to by the Company or any Subsidiary, to which the
Company or any Subsidiary is obligated to contribute or with respect to which
the Company or any Subsidiary has any liability or potential liability,
including all Plans contributed to, maintained or sponsored by any member of
the controlled group of companies, within the meaning of Sections 414(b) and
414(c) of the Internal Revenue Code of 1986, as amended (the "Code"), of which
the Company and/or any Subsidiary is or, during the last three years, ever
was a member (the "Company Controlled Group") (to the extent that the Company
or any Subsidiary has any liability or potential liability with respect to
such Plans). For purposes of this Agreement, the term "Plans" shall mean:
(i) employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
funded, (ii) employment agreements, and (iii) personnel policies or fringe
benefit plans, policies, programs and arrangements, whether or not subject to
ERISA, whether or not funded, and whether or not covering employees residing
in the United States, including without limitation, stock bonus, stock option,
stock appreciation right, stock purchase, "phantom stock," deferred
compensation, pension, profit sharing, savings, severance, bonus, vacation,
incentive, travel, and health, disability and welfare plans. Neither the
Company nor any Subsidiary has any commitment, whether formal or informal,
to create any additional employee benefit plans, or to modify any existing
Plan except as may be required to conform to changes in applicable law.
(b) Neither the Company nor any Subsidiary has within the last five years
participated in, contributed to or been obligated to contribute to any
"multiemployer plan", as such term is defined in Section 3(37) of ERISA
("Multiemployer Plan"), nor does the Company or any Subsidiary have any other
liability or potential liability with respect to any Multiemployer Plan or
with respect to any employee benefit plan of the type described in Section
4063 and 4064 of ERISA or in Section 413(c) of the Code (and regulations
promulgated thereunder).
(c) Neither the Company nor any Subsidiary maintains, contributes to,
has any obligation to contribute to or has any other liability or potential
liability with respect to any Plan that is a defined benefit pension plan or
that is subject to the funding requirements of Section 412 of the Code and
Section 302 of ERISA. There has been no complete or partial termination of
any Plan which could result in any material liability to the Company or any
Subsidiary.
(d) Neither the Company nor any Subsidiary maintains or has any
obligation to contribute to (or has any other liability or potential
liability with respect to) any Plan which provides health, life insurance,
accident or other "welfare-type" benefits to current or future retirees,
current or future former employees, current or future former independent
contractors, or the spouses, dependents or beneficiaries thereof, other than
in accordance with Section 4980B of the Code, Sections 601 et seq. of ERISA,
and/or other applicable continuation coverage law.
(e) None of the Plans obligates the Company or the Subsidiaries to pay
separation, severance, termination or similar-type benefits solely as a
result of any transaction contemplated by this Agreement or solely as a result
of a "change in control", as such term is defined in Section 280G of the Code.
(f) With respect to each Plan, all required payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to or
as of the Effective Time shall have been made or properly accrued. No Plan
has any unfunded liabilities.
(g) Each Plan and all related trusts, insurance contracts and funds have
been maintained, funded, and administered in material compliance in all
respects with all applicable laws and regulations, including but not limited
to ERISA and the Code. Neither the Company nor any Subsidiary has incurred,
or expects to incur, any liability to the Internal Revenue Service ("IRS"),
the Department of Labor, any other governmental (whether of the United States
or otherwise) agency, or any person with respect to any Plan currently or
previously maintained by members of the Company Controlled Group that has not
been satisfied in full, and no condition exists that presents a risk to the
Company and/or the Subsidiaries or any other member of the Company Controlled
Group of incurring such a liability (other than liability for routine benefit
claims). None of the Company, any Subsidiary, any trustee or administrator of
any Plan, or other person has engaged in any transaction with respect to the
Plans which could subject the Company, any Subsidiary, or any trustee or
administrator of the Plans, or any party dealing with any Plan, to any tax or
penalty (civil or otherwise) imposed by ERISA, the Code or other applicable
law. No actions, investigations, suits or claims with respect to the Plans
(other than routine claims for benefits) or any fiduciary or other person
dealing with such Plans are pending or threatened and the Company has no
knowledge of any facts which could give rise to or be expected to give rise to
any such actions, investigations, suits or claims.
(h) No prohibited transaction within the meaning of Section 4975 of the
Code or Section 406 of ERISA has occurred with respect to any Plan, other than
a transaction which is exempt under Section 408 of ERISA or for which no
excise tax is assessed under Section 4975 of ERISA.
(i) All Plans which are intended to be qualified under Section 401(a) of
the Code have received a favorable determination letter from the IRS.
(j) No underfunded defined benefit plan has been, during the five years
preceding the Effective Time, transferred out of the Company Controlled Group.
(k) With respect to each Plan, and upon the request of the Parent, the
Company has provided the Parent with true, complete and correct copies, to the
extent applicable, of all documents pursuant to which the Plans are maintained,
funded and administered.
SECTION 3.14 Material Contracts and Other Agreements. The Company
Disclosure Statement sets forth a complete and accurate list of the following
contracts and commitments to which the Company or any Subsidiary is a party or
by which any of their respective properties are bound: (a) collective
bargaining agreements and contracts with any labor union; (b) employment or
consulting agreements or any agreements providing for severance, termination
or similar payments; (c) leases, whether as lessor or lessee, involving
personal property with annual rental payments in excess of $50,000; (d) loan
agreements, mortgages, indentures, instruments or other evidence of
indebtedness or commitments (other than letters of credit issued in the
ordinary course of business pursuant to existing credit agreements in respect
of inventory purchases) in each case involving indebtedness (or available
credit) for borrowed money or money lent to others; (e) guaranty or suretyship,
performance bond, indemnification or contribution agreements; (f) written
contracts with customers or suppliers that require aggregate payments to or
from the Company or its Subsidiaries of more than $50,000 in any one-year
period, other than contracts issued in the ordinary and usual course of
business or terminable with 30 days or less notice without premium or penalty;
(g) joint venture, partnership, or other agreements evidencing an ownership
interest or a participation in or sharing of profits; (h) agreements, contracts
or commitments limiting the freedom of the Company or any of the Subsidiaries
to engage in any line of business or compete with any other corporation,
partnership, joint venture, company or individual, (i) contracts that are
terminable, or under which payments by the Company or any Subsidiary may be
accelerated, upon a change in control of the Company, (j) written contracts
with distributors of the Company's or any of the Subsidiaries' products, and
(k) any other agreements material to the Company and its Subsidiaries taken as
a whole. The Company has furnished or made available accurate and complete
copies of the foregoing contracts and agreements to the Parent. The
termination of any oral agreement or understanding to which the Company or a
Subsidiary is a party of the type described in Sections 3.14(f) and 3.14(j)
above would not, to the Company's knowledge, have a Material Adverse Effect on
the Company. Each such oral agreement or understanding is terminable by the
Company or a Subsidiary, as the case may be, without premium or penalty. As
to each contract and commitment referred to above (i) there exists no breach
or default, and no event has occurred which with notice or passage of time
would constitute such a breach or default or permit termination, notification
or acceleration, on the part of the Company or any Subsidiary or, to the best
knowledge of the Company, on the part of any third party and (ii) as of the
Effective Time, no third party consent, approval or authorization shall be
required for the consummation of the Transactions. This Section 3.14 does
not relate to real property, such items being the subject of Section 3.15.
SECTION 3.15 Real Estate Leases. The Company Disclosure Statement sets
forth a list of (a) all leases and subleases under which the Company or the
Subsidiaries is lessor or lessee of any real property together with all
amendments, supplements, nondisturbance agreements and other agreements
pertaining thereto; (b) all options held by the Company or the Subsidiaries or
contractual obligations on the part of the Company or the Subsidiaries to
purchase or acquire any interest in real property; and (c) all options granted
by the Company or the Subsidiaries or contractual obligations on the part of
the Company or the Subsidiaries to sell or dispose of any interest in real
property. Except as set forth in the Company Disclosure Statement, as to such
leases, subleases and other agreements referred to above, (i) there exists no
breach or default, and no event has occurred which with notice or passage of
time would constitute such a breach or default or permit termination,
notification or acceleration, on the part of the Company or any Subsidiary, or
on the part of any other party thereto, and (ii) as of the Effective Time, no
material third party consent, approval or authorization shall be required for
the consummation of the Merger. To the Company's knowledge, there are no
Liens on any of the leasehold interests set forth on the Company Disclosure
Statement hereof except for (i) Liens reflected in the balance sheet included
in the Company's Form 10-K for the period ended December 31, 1996, (ii) Liens
of record consisting of zoning or planning restrictions, easements, permits
and other restrictions or limitations on the use of real property which do not
materially detract from the value of, or materially impair the use of, such
property by the Company or the Subsidiaries in the operation of their
respective businesses, (iii) Liens for current Taxes (as defined in Section
3.22(a)), assessments or governmental charges or levies on property not yet
delinquent or being contested in good faith and for which appropriate reserves
have been established in accordance with GAAP (which contested levies are
described on the Company Disclosure Statement), and (iv) Liens imposed by law,
such as materialman's, mechanic's, carrier's, workers' and repairmen's Liens
securing obligations not yet delinquent or being contested in good faith and
for which appropriate reserves have been established in accordance with GAAP
or securing obligations not being paid in the ordinary course of business in
accordance with customary and commercially reasonable practice. (collectively,
"Permitted Liens").
SECTION 3.16 Real Property. The Company Disclosure Statement lists all real
property owned by the Company and the Subsidiaries. Each of the Company and
the Subsidiaries has good and marketable title in fee simple to its respective
real properties set forth on the Company Disclosure Statement, in each case,
to the Company's knowledge, free and clear of all Liens, except for Permitted
Liens.
SECTION 3.17 Compliance with Laws. The Company and the Subsidiaries have
substantially complied and, to the Company's knowledge, are in substantial
compliance with applicable federal, state or local statutes, laws and
regulations including, without limitation, any applicable building, zoning,
health, sanitation, safety, labor relations or other law, ordinance or
regulation. Neither the Company nor any Subsidiary has (a) failed to obtain
any license, permit, franchise or other governmental authorization which is
necessary to the operations of the business of the Company and the
Subsidiaries, taken as a whole, or (b) received any notice of any alleged
violation or breach of any law or regulation or of any license, permit,
franchise or authorization.
SECTION 3.18 Proprietary Rights. The Company Disclosure Statement contains
a complete and accurate list of all patents and patent applications; all
trademarks, service marks, trade dress, trade names, internet domain names
and corporate names; all registered copyrights and all material unregistered
copyrights; all registrations, applications and renewals for any of the
foregoing; owned by the Company or the Subsidiaries or in which any of them
has any rights and all contracts, agreements and licenses relating to any of
the foregoing. All right, title and interest in and to each of the foregoing
is owned by the party identified on the Company Disclosure Statement, free
and clear of any Liens or royalty obligations except as set forth on the
Company Disclosure Statement. The Company and each Subsidiary owns all right,
title and interest in and to, or has a valid and enforceable license to use,
free and clear of all Liens, all patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not
reduced to practice), trademarks, trade names, service marks, internet domain
names, copyrights, mask works, and registrations, applications and renewals
for any of the foregoing, trade secrets and confidential information
(including, but not limited to know-how and formulas), computer software and
other material intellectual property rights necessary for the conduct of their
respective businesses as now being conducted (collectively, the "Proprietary
Rights"). To the Company's knowledge, neither the Company nor any Subsidiary
has infringed or is infringing on any Proprietary Rights belonging to any
other person, firm or corporation. Neither the Company nor any of the
Subsidiaries has granted any licenses with respect to any of their respective
Proprietary Rights. Neither the Company nor any of the Subsidiaries has
received any notice, nor does the Company or any of the Subsidiaries have any
knowledge of any infringement or misappropriation by or misuse or conflict
with respect to the use of its corporate name or any of its Proprietary Rights
or of any facts which indicate a likelihood of any of the foregoing. The
validity of the Proprietary Rights and the Company's or any Subsidiary's title
thereto is not being questioned in any suit, action, investigation, legal,
administrative or other proceeding to which the Company or any Subsidiary has
been notified that it is a party or, to the Company's knowledge, to which any
other person is a party nor, to the Company's knowledge, is any such suit,
action, investigation, legal, administrative or other proceeding threatened.
None of the computer software, computer firmware, computer hardware (whether
general or special purpose) or other similar or related items of automated,
computerized or software systems that are used or relied on by Company or by
any of its Subsidiaries in the conduct of their respective businesses will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing or receiving
(i) date-related data from, into and between the twentieth and twenty-first
centuries or (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries, except where such malfunctions would
not have a Material Adverse Effect on the Company. The consummation of the
Merger will not adversely affect the Company's or any Subsidiary's title and
interest in and to the Proprietary Rights.
SECTION 3.19 No Undisclosed Liabilities. There is no liability or
obligation of the Company or any Subsidiary of any nature, whether absolute,
accrued, contingent or otherwise other than: (a) the liabilities and
obligations reflected on the September 30, 1997 consolidated balance
sheet contained in the SEC Reports (the "September Balance Sheet"); (b) all
liabilities and obligations of the Company and the Subsidiaries incurred since
September 30, 1997 in the ordinary and usual course of business; and (c) any
liabilities and obligations relating to contracts not yet required to be
performed.
SECTION 3.20 Title to Personal Property. Each of the Company and the
Subsidiaries has good title to or a valid and enforceable leasehold interest
in, or a contractual or common law right to use, all personal property material
to the operation of its business, free and clear of all Liens other than
Permitted Liens.
SECTION 3.21 Labor Relations. There is (a) no unfair labor practice
complaint, grievance or arbitration pending or, to the best knowledge of the
Company, threatened against the Company or any Subsidiary, (b) no strike,
labor dispute, slowdown or stoppage pending or, to the best knowledge of the
Company, threatened against the Company or any Subsidiary and (c) to the best
knowledge of the Company, no labor union organizing campaign in progress with
respect to any employees of the Company or the Subsidiaries.
SECTION 3.22 Taxes and Tax Returns. Except as set forth in the Company
Disclosure Statement:
(a) all United States federal and state income and other Tax returns
and reports required to be filed by the Company and the Subsidiaries on or
before the Effective Time (including extensions to the due date for such
returns) with respect to the business or assets of the Company and the
Subsidiaries have been or will be duly filed and all federal, state, local
and foreign taxes of any kind ("Taxes") have been paid or will be paid when
due, except such Taxes as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established;
(b) neither the Company nor the Subsidiaries has been notified in writing
by any taxing authority, or otherwise has any knowledge, of any pending
actions, suits, claims or assessments for any Tax deficiency;
(c) all U.S. federal and state income tax returns referred to in Section
3.22(a) above filed through the year ended December 31, 1994 have been
examined and closed, or the periods during which any tax due with respect to
such returns may be assessed have expired without extension or waiver;
(d) no consent has been or will be filed with respect to the Company or
the Subsidiaries relating to Section 341(f) of the Internal Revenue Code;
(e) neither the Company nor the Subsidiaries is a party to any Tax
indemnity or Tax sharing agreement;
(f) there are no liens for Taxes (other than for Taxes not yet due) on any
assets of the Company or the Subsidiaries;
(g) neither the Company nor any of the Subsidiaries will be required (i)
as a result of a change in method of accounting or a taxable period ending on
or prior to the Effective Time, to include any adjustment under Section 481(c)
of the Code (or any similar or corresponding provision of federal, state,
local or foreign income Tax law) in taxable income for any taxable period
ending after the Effective Time or (ii) as a result of any "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law), to include any item of
income in or exclude any item of deduction from any taxable period ending
after the Effective Time;
(h) neither the Company nor any of the Subsidiaries has been a member of
an affiliated group (as defined in Section 1504 of the Code) other than one of
which the Company was the common the Parent, or filed or been included in a
combined, consolidated or unitary income Tax Return, other than one filed by
the Company; and
(i) neither the Company nor any of the Subsidiaries has made any payments,
or is or will become obligated (under any contract entered into on or before
the Effective Time) to make any payments, that will be non-deductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign income Tax law).
SECTION 3.23 Environmental Matters.
(a) Compliance Generally. The Company and the Subsidiaries have complied
in all material respects with and are in material compliance with all
Environmental and Safety Requirements (as defined in Section 3.23(j)).
(b) Permits. The Company and the Subsidiaries have obtained and complied
in all material respects with, and are in material compliance with, all
permits,licenses and other authorizations that are required pursuant to
Environmental and Safety Requirements for the occupation of its facilities and
the operation of their business, and such permits, licenses and other
authorizations may be relied upon for continued lawful conduct of the business
and operations of the Company and its Subsidiaries immediately after the
Effective Time without transfer, reissuance, or other approval or action by
any governmental entity or other person.
(c) Claims. Except as set forth in the Company Disclosure Statement, the
Company and the Subsidiaries have not received any claim, complaint, citation,
report or other notice regarding any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, arising under Environ-
mental and Safety Requirements.
(d) Storage Tanks, Asbestos, PCBs. Except as set forth in the Company
Disclosure Statement, no above-ground or underground storage tank, asbestos in
any form or condition, or polychlorinated biphenyls (PCBs) exists at any
property owned, used, leased or occupied or formerly owned, used, leased or
occupied in connection with the business or operation of the Company and its
Subsidiaries.
(e) Certain Environmental Liabilities. Except as set forth in the Company
Disclosure Statement, the Company and the Subsidiaries have not stored,
disposed of, arranged for or permitted the disposal of, transported, handled
or released any substance, including without limitation any hazardous
substance, pollutant, contaminant or waste, or owned or operated any facility
or property, so as to give rise to liabilities of the Company and its
Subsidiaries pursuant to the Environmental and Safety Requirements, including
without limitation any liability for response costs, corrective action,
natural resources damages, personal injury, property damage or attorneys
fees.
(f) Operations. Except as set forth in the Company Disclosure Statement,
no facts, events or conditions relating to the past or present facilities,
properties or operations of the Company and the Subsidiaries will prevent,
hinder or limit continued compliance with Environmental and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements, or give rise
to any other liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) pursuant to Environmental and Safety Requirements, including any
Environmental and Safety Requirement relating to onsite or offsite releases
or threatened releases of hazardous or otherwise regulated materials,
substances or wastes, personal injury, property damage or natural resources
damage.
(g) Transaction-Triggered Requirements. Except as set forth in the
Company Disclosure Statement, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein imposes
any obligations for site investigation or cleanup, or notification to or
consent of governmental entity or any other person, pursuant to any
"transaction-triggered" Environmental and Safety Requirement.
(h) Liability for Others. Except as set forth in the Company Disclosure
Statement, the Company and the Subsidiaries have not, either expressly or by
operation of law, assumed or undertaken any liability or corrective or
remedial obligation of any other person relating to Environmental and Safety
Requirements.
(i) Environmental Liens. Except as set forth in the Company Disclosure
Statement, no Environmental Lien (as defined below) has attached to any property
owned, leased or operated by the Company and the Subsidiaries arising out of
any action or omission of the Company and the Subsidiaries or, to the
Company's knowledge, any other person.
(j) "Environmental and Safety Requirements" means all legal requirements,
and all obligations under any contract, concerning public health and safety,
worker health and safety, or pollution or protection of the environment,
including all those relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous or otherwise regulated materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
(k) "Environmental Lien" means any Lien, either recorded or unrecorded,
in favor of any governmental entity and relating to any liability arising
under Environmental and Safety Requirements.
SECTION 3.24 Accounts Receivable. All of the notes and accounts receivable
of the Company and the Subsidiaries reflected on the face of the September
Balance Sheet were, and all notes and accounts receivable of the Company and
the Subsidiaries as of the Effective Time will be, good and valid receivables
and, to the best knowledge of the Company, collectible after the Effective
Time at the aggregate amount recorded therefor on the books and records of
the Company as of the Effective Time, net of a reasonable allowance for
doubtful accounts.
SECTION 3.25 Inventory. All inventory of the Company and the Subsidiaries
reflected on the face of the September Balance Sheet was, and all inventory of
the Company and the Subsidiaries as of the Effective Time will be, in accordance
with the Company's past custom and practice, merchantable and fit for the
purpose for which it was procured or manufactured and is and as of the
Effective Time will be, to the best knowledge of the Company, useable for the
purpose for which such inventory was acquired or produced by the Company.
SECTION 3.26 Product and Service Warranty. Each product sold or delivered
and each service rendered by the Company and the Subsidiaries with respect to
any such product has been in conformity with all material applicable
contractual commitments and all material express and implied warranties of the
Company and the Subsidiaries. No product sold or delivered or service
rendered by the Company or the Subsidiaries with respect to any such product
is subject to any guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions with respect thereto. Prior to the date hereof,
the Company and the Subsidiaries have delivered to the Parent copies of the
standard terms and conditions of sale for products delivered and services
rendered by the Company and the Subsidiaries with respect thereto (containing
all applicable guaranty, warranty and indemnity provisions).
SECTION 3.27 Opinion of Financial Advisor. The Company has received the
opinion of ABN AMRO Incorporated, dated the date hereof, to the effect that,
as of such date, the Merger Consideration to be received in the Merger by the
Company's shareholders is fair to the Company's shareholders from a financial
point of view, a copy of which opinion has been delivered to the Parent and
the Merger Sub.
SECTION 3.28 Effective Time. The representations and warranties of the
Company and the Subsidiaries contained in this Article 3 and elsewhere in this
Agreement and all information contained in any exhibit, schedule, or
attachment hereto or in any certificate or other writing delivered by, or on
behalf of the Company to the Parent shall be true and correct on the date of
the Closing as though then made, except as affected by the transactions
expressly disclosed in writing to the Parent by the Company prior to the
Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE MERGER SUB
The Parent and the Merger Sub represent and warrant to the Company as follows:
SECTION 4.01 Organization and Qualification. The Parent is a corporation
duly organized, validly existing and in good standing under the laws of North
Carolina and each material subsidiary of the Parent is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. The Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Illinois. The Parent and each of its subsidiaries (including the Merger
Sub) 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. The term "Material Adverse Effect on the Parent", as used in this
Agreement, means any change in or effect on the business, assets, operations,
financial condition, results of operations, customer relations, supplier
relations, or business prospects of the Parent or any of its subsidiaries that
is, or is reasonably expected to be, materially adverse to the Parent and its
subsidiaries taken as a whole.
SECTION 4.02 Authority Relative to this Agreement. Each of the Parent and
the Merger Sub 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 Parent and the Merger Sub
and the consummation by the Parent and the Merger Sub of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Boards of Directors of the Parent and the Merger Sub and by the Parent as
shareholder of the Merger Sub and no other corporate proceedings on the part
of the Parent or the Merger Sub are necessary to authorize or approve this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Parent and the
Merger Sub and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
the Parent and the Merger Sub 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 creditor's rights generally and (ii) is subject to
general principles of equity.
SECTION 4.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by the Parent or
the Merger Sub, the consummation by the Parent or the Merger Sub of the
transactions contemplated hereby or compliance by the Parent or the Merger Sub
with any of the provisions hereof will (i) conflict with or violate the
organizational documents of the Parent or the Merger Sub, (ii) conflict with
or violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Parent or the Merger Sub, 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 Merger Sub, or
any of their subsidiaries, is a party or by which any of their respective
properties or assets may be bound or affected.
(b) None of the execution and delivery of this Agreement by the Parent and
the Merger Sub, the consummation by the Parent and the Merger Sub of the
transactions contemplated hereby or compliance by the Parent and the Merger
Sub 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 issuance of the Certificate of
Merger by the Secretary of State of the State of Illinois, (iii) such filings,
authorizations, orders and approvals as may be required to obtain the State
Takeover Approvals, (iv) compliance with the HSR Act, and (v) Consents the
failure of which to obtain or make would not have a Material Adverse Effect
on the Parent or materially adversely affect the ability of the Parent or the
Merger Sub to consummate the transactions contemplated hereby.
SECTION 4.04 Information. None of the information supplied or to be
supplied by the Parent and the Merger Sub in writing specifically for
inclusion in (i) the Proxy Statement or (ii) the Other Filings will, at the
respective times filed with the SEC or such 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 shareholders, at the time of the Shareholders'
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 4.05 Ownership of Securities. Neither the Parent or any of its
affiliates was at the time the Board approved the Merger, an "Interested
Shareholder" as defined in Section 5/7.85 of the Illinois Act.
SECTION 4.06 Financing. In connection with the transactions contemplated
in this Agreement, Bank of America has issued a commitment letter to the Parent
to provide funds sufficient to pay the Merger Price, a true and correct copy
of which has been delivered to the Company two business days prior to the
execution of this Agreement.
SECTION 4.07 Equity Investment. At the Closing, the Parent will have
received at least a $30.0 million equity investment from CII Technologies,
Inc., its sole stockholder ("CIIT"), including, for purposes of this
calculation, all amounts previously received from CIIT.
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written consent of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company
will, and will cause each of the Subsidiaries to, conduct its operations only
in the ordinary and usual course of business consistent with past practice
and will use its reasonable efforts, and will cause each of the Subsidiaries
to use its reasonable efforts, to preserve intact the business organization of
the Company and each of the Subsidiaries, to keep available the services of
its and their present officers and key employees, and to preserve the good
will of those having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise contemplated by this
Agreement, the Company will not, and will not permit any of the Subsidiaries
to, prior to the Effective Time, without the prior written consent of the
Parent:
(a) adopt any amendment to its charter or By-Laws or comparable
organizational documents;
(b) except for issuances of capital stock of the Subsidiaries to the
Company or a wholly-owned Subsidiary, issue, reissue, pledge or sell, or
authorize the issuance, reissuance, pledge or sale 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 to acquire any convertible
securities or capital stock, other than the issuance of Common Shares, in
accordance with the terms of the instruments governing such issuance on the
date hereof, 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 increases in salary and wages granted to officers and
hourly employees of the Company or the Subsidiaries in conjunction with
promotions or other changes in job status or normal compensation reviews 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 employees (whether from the Company or any of the Subsidiaries),
or pay or award 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 pursuant
to the Option Plans or otherwise) or grant any additional severance or
termination pay to (other than as required by existing agreements or policies
described in the Company Disclosure Statement), or enter into any employment
or severance agreement with, any director, officer or other employee of the
Company or any of the Subsidiaries or establish, adopt, enter into, amend or
waive any performance or vesting criteria under 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 required by applicable law or
regulation; provided, however, that nothing herein will be deemed to prohibit
the payment of benefits as they become payable; provided, further, however,
that the Company may enter into severance agreements, in the form heretofore
agreed upon with Parent, with each of Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxx,
Xxxxxx Xxxxxxx, Xxxx Baltimore, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx.
(f) except as set forth in the Company Disclosure Schedule, acquire, sell,
lease or dispose of any assets or securities which are material to the Company
and the Subsidiaries, or enter into any commitment to do any of the foregoing
or enter into any material commitment or transaction outside the ordinary
course of business consistent with past practice other than transactions
between a wholly owned Subsidiary and the Company or another wholly owned
Subsidiary;
(g) except as set forth in the Company Disclosure Schedule (i) incur,
assume or pre-pay any long-term debt or incur or assume any short-term debt,
except that the Company and the Subsidiaries may incur or pre-pay debt in the
ordinary course of business in amounts and for purposes consistent with past
practice under existing lines of credit, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary
course of business consistent with past practice, or (iii) make any loans,
advances or capital contributions to, or investments in, any other person
except in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments between any
wholly owned subsidiary of the Company and the Company or another wholly
owned Subsidiary; or
(h) settle or compromise any suit or claim or threatened suit or claim
material to the transactions contemplated hereby or material to the Company
and its Subsidiaries, taken as a whole;
(i) other than in the ordinary course of business consistent with past
practice, (i) modify, amend or terminate any material contract, (ii) waive,
release, relinquish or assign any contract (or any of the Company's rights
thereunder), right or claim, or (iii) cancel or forgive any indebtedness
owed to the Company or any of the Subsidiaries; provided, however, that the
Company may not under any circumstance waive or release any of its rights
under any confidentiality agreement to which it is a party;
(j) make any Tax election not required by law or settle or compromise any
Tax liability, in either case that is material to the Company and the
Subsidiaries; or
(k) agree in writing or otherwise to take any of the foregoing actions
prohibited under Section 5.01 or any action which would cause any
representation or warranty in this Agreement to be or become untrue or
incorrect in any material respect as of the date when made or deemed made.
SECTION 5.02 Access to Information. From the date of this Agreement until
the Effective Time, the Company will, and will cause the Subsidiaries, and each
of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give the
Parent and the Merger Sub and their respective officers, employees, counsel,
advisors and representatives (collectively, the "Parent Representatives") full
access, during normal business hours, to the offices and other facilities and
to the books and records of the Company and the Subsidiaries and will cause
the Company Representatives and the Subsidiaries to furnish the Parent, the
Merger Sub and the Parent Representatives to the extent available with such
financial and operating data and such other information with respect to the
business and operations of the Company and the Subsidiaries as the Parent and
the Merger Sub may from time to time request. In addition, the Parent will
comply with the terms of the Confidentiality Agreement (as hereinafter
defined).
SECTION 5.03 Reasonable Best Efforts. Subject to the terms and conditions
herein provided and to applicable legal requirements, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, and to assist and cooperate with the
other parties hereto in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable laws and regulations to ensure
that the conditions set forth in Article VI are satisfied and to consummate
and make effective the transactions contemplated by this Agreement.
SECTION 5.04 Consents.
(a) Each of the parties will use its reasonable best efforts to obtain as
promptly as practicable all Consents of any Governmental Entity or any other
person required in connection with, and waivers of any Violations that may be
caused by, the consummation of the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, each of the
parties shall use its reasonable best efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations of any domestic or foreign government or governmental authority
("Antitrust Laws").
(c) 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. The Parent will
advise the Company promptly in respect of any understandings, undertakings or
agreements (oral or written) which the 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.
SECTION 5.05 Public Announcements. So long as this Agreement is in effect,
but only until the Effective Time, the Parent, the Merger Sub and the Company
agree to use best efforts 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.
SECTION 5.06 Indemnification.
(a) The Parent agrees that all rights to indemnification now existing in
favor of any director or officer of the Company and the Subsidiaries (the
"Indemnified Parties"), as provided in their respective charters or bylaws
or, to the extent set forth in the Company Disclosure Statement, as provided
in an agreement between an Indemnified Party and the Company or one of its
Subsidiaries, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time;
provided that in the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification in respect of any such
claim or claims shall continue until final disposition of any and all such
claims. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior
to, and including, the Effective Time, the Parent will pay as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The Parent
shall pay all expenses, including attorney's fees, that may be incurred by
any Indemnified Party in enforcing the indemnity and other obligations
provided for in this Section 5.06 subject to the limitations of the Illinois
Act.
(b) The Parent agrees that the Company, and from and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
director's and officer's liability insurance maintained by the Company and
during such six-year period shall notify the directors in writing covered
thereby of payment by the Surviving Corporation of the premiums associated
with such liability insurance ten business days prior to the date such
premium payments are due; provided that the Surviving Corporation may
substitute therefor other policies not materially less advantageous to the
beneficiaries of the current policies 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.
SECTION 5.07 Notification of Certain Matters. The 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 material covenant, condition or agreement
under this Agreement not to be complied with or satisfied in all material
respects and (b) any failure of the Company or the 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. Prior
to the Effective Time, the Parent shall promptly notify the Company of (i) any
material developments which are likely to result in the Parent not having
sufficient funds to pay the Merger Price and (ii) any material changes agreed
to by the Parent to the commitment letter described in Section 4.06.
SECTION 5.08 State Takeover Laws. The Company shall, upon the request of
the Parent, take all reasonable steps to assist in any challenge by the Parent
to the validity or applicability to the transactions contemplated by this
Agreement, including the Merger, of any state takeover law.
SECTION 5.09 No Solicitation. (a) The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of the
Subsidiaries or any of its or the Subsidiaries' directors, officers,
employees, agents or representatives, directly or indirectly, to solicit,
initiate, facilitate or encourage any inquiries or the making of any proposal
with respect to any merger, consolidation or other business combination
involving the Company or the Subsidiaries or acquisition of any capital stock
or any material portion of the assets (except for acquisitions of assets in
the ordinary course of business consistent with past practice) of the Company
or any of the Subsidiaries (an "Acquisition Transaction") or negotiate or
otherwise engage in substantive discussions with any person (other than the
Merger Sub, the Parent or their respective directors, officers, employees,
agents and representatives) with respect to any Acquisition Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that the Company may, in response to
a Favorable Third Party Proposal (as defined below) furnish information to,
and negotiate or otherwise engage in substantive discussions with, the party
making such Favorable Third Party Proposal if the Board or Directors of the
Company determines in good faith by a majority vote, that failing to take
such action would constitute a breach of the fiduciary duties of the Board.
For purposes of this Agreement a "Favorable Third Party Proposal" shall mean
a written proposal from a credible third party regarding the acquisition of
substantially all the capital stock of the Company, a merger, consolidation
or other business combination with the Company or a sale of substantially all
the assets of the Company, which proposal (i) is not subject to any financing
or regulatory uncertainty greater than the financing and regulatory
uncertainties to which the transaction contemplated by this Agreement is
subject, (ii) is, in the written opinion of a nationally recognized investment
bank, more favorable to the Company's shareholders from a financial point of
view than the transactions contemplated hereby, and (iii) was not solicited by
or on behalf of the Company in violation of this Section 5.09.
(b) Upon executing this Agreement, the Company shall immediately advise the
Parent in writing regarding the identity of any other persons or entities with
whom the Company has had direct or indirect contact since September 30, 1997
regarding a possible Acquisition Transaction. The Company shall immediately
advise the Parent in writing of the receipt, directly or indirectly, of any
inquiries or proposals relating to an Acquisition Transaction and any actions
taken pursuant to Section 5.09(a) and furnish to the Parent either a copy of
any such proposal or a written summary of any such proposal.
SECTION 5.10 Break-Up Fee; Expense Reimbursement.
(a) If (i) on or before June 30, 1998 (the "Termination Date"), a third
party or group of related third parties become the beneficial owners of 50%
or more of the outstanding voting securities of the Company (by a tender
offer, exchange offer, stock issuance or otherwise), including any such
transaction in which any of Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxx or Xxxxxxx
X. Xxxxx (each, a "Controlling Shareholder") or their affiliates participate,
or (ii) the Merger is not consummated for any of the following reasons:
(A) the Company's Board of Directors authorizes or recommends, or the Company
enters into an agreement or agreement in principle or closes, an Acquisition
Transaction (other than the Merger) or the Company's Board of Directors fails
to recommend, or adversely modifies or withdraws its recommendation, to the
Company's shareholders that they vote to approve the Merger as a result of
Section 7.01(d), or takes any action to abandon or terminate this Agreement
in accordance with Section 7.01(d), (B) a Controlling Shareholder or the
Company fails to call a Shareholders' Meeting, or (C) the shareholders of the
Company approve an Acquisition Transaction (other than the Merger), then the
Company will promptly, but in no event later than three business days after
the first of such events to occur, pay $2,000,000 to the Parent, plus an
amount not to exceed $500,000 for the transaction expenses incurred by the
Merger Sub and the Parent.
(b) The parties agree that the payment of the fees and expenses required
pursuant to and in the manner set forth in this Section 5.10 is a material
inducement to the Parent and the Merger Sub to enter into this Agreement and
is intended to compensate the Parent and the Merger Sub for the opportunity
costs and risks of entering into this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01 Conditions to Parties' Obligations. The respective obligations
of each party to effect the Transactions shall be subject to the fulfillment at
or prior to the Effective Time of the following conditions:
(a) This Agreement and the Merger shall have been approved and adopted by
the requisite vote of the holders of the outstanding Common Shares of the
Company entitled to vote thereon.
(b) Any waiting period applicable to the Merger under the HSR Act shall
have expired or been terminated.
(c) No (i) order issued by any United States federal or state or foreign
governmental or regulatory authority or body and no statute, rule, regulation
or executive order promulgated or enacted by any United States federal or state
or foreign government or governmental authority shall be in effect which, or
(ii) action, suit, or proceeding shall be pending before any court or quasi
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree, stipulation,
injunction, or charge which, would (A) prevent consummation of any of the
Transactions or (B) cause any of the Transactions to be rescinded following
consummation (and no such judgment, order, decree, stipulation, injunction,
or charge shall be in effect).
SECTION 6.02 Conditions to the Parent's and the Merger Sub's Obligation to
Effect the Merger. The obligations of the Parent and the Merger Sub to effect
the Merger shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as if made on and
as of the Effective Time.
(b) The Company shall have performed in all material respects each covenant
and complied with each agreement to be performed and complied with by them
hereunder.
(c) At the time of Closing, holders of no more than 5% of the outstanding
Common Shares shall have dissented and preserved their rights to seek appraisal.
(d) The Company shall have furnished to the Parent a certificate dated as of
the Effective Time in which the Company shall certify that an appropriate
inquiry has been made of the principal executive officers of the Company
having principal responsibilities for the matters as to which representations
and warranties have been made by the Company in this Agreement and for the
performance of the covenants of the Company set forth in this Agreement, and
after completion of such inquiry, the Company has no reason to believe that
the conditions set forth in Section 6.02(a) and Section 6.02(b) have not been
fulfilled. The parties hereto acknowledge and agree that, absent fraud, the
officer(s) of the Company executing the certificate described above on behalf
of the Company shall have no personal liability in respect of such
certificate.
(e) Xx. Xxxxxx X. Xxxxxx and the Company shall have entered into a
Consulting and Noncompetition Agreement effective January 1, 1999 in the form
heretofore agreed among Xx. Xxxxxx, the Company and the Parent, and such
agreement shall be in full force and effect.
(f) The Parent shall have obtained the debt financing in the amount
identified in the commitment letter referenced in Section 4.06 above on terms
and conditions which are substantially similar to the Parent and its
affiliates than the terms and conditions set forth on such commitment letter.
(g) The Parent shall have received from the Company's counsel, X'Xxxxxx &
Xxxxxx, an opinion, addressed to the Parent and its senior lenders, dated as of
the Effective Time, subject to customary qualifications and exceptions, to the
effect that (i) this Agreement and all other agreements entered into by the
Company or Controlling Shareholders in connection with the Transactions have
been duly authorized by the Board of Directors of the Company (in case of the
Company) and are valid, binding and enforceable in accordance with their
respective terms and (ii) the Articles of Merger have been filed in accordance
with applicable law and upon filing of the Articles of Merger in Illinois,
the Merger has been duly consummated and is effective under Illinois law.
(h) The fees and expenses of legal counsel, investment bankers and
accountants (including any representatives of legal counsel, investment bankers
or accountants) incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby and paid or payable by
the Company (whether before or after the Closing) shall not have exceeded
$1,250,000 in the aggregate.
SECTION 6.03 Conditions to the Company's Obligation to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) All representations and warranties of the Parent and the Merger Sub
in this Agreement shall be true and correct in all material respects as if made
on and as of the Effective Time.
(b) Each of the Parent and the Merger Sub shall have performed in all
material respects each covenant and complied with each agreement to be
performed and complied with by it hereunder (including, without limitation,
deposit of the Aggregate Common Share Merger Price with the Paying Agent).
(c) The Company will have received from the Parent's counsel, Xxxxxxxx &
Xxxxx, an opinion, addressed to the Company, dated as of the Effective Time,
subject to customary qualifications and exceptions, to the effect that (i)
this Agreement and all other agreements entered into by the Parent or the
Merger Sub in connection with the Transactions have been duly authorized by
the Board of Directors of the Parent or the Merger Sub, as the case may be,
and are valid, binding and enforceable in accordance with their respective
terms.
(d) Each of the Parent and the Merger Sub shall have furnished to the
Company a certificate dated as of the Effective Time in which the Parent or the
Merger Sub, as the case may be, shall certify that an appropriate inquiry has
been made of its executive officers having principal responsibilities for the
matters as to which representations and warranties have been made by the
Parent or the Merger Sub, as the case may be, in this Agreement and for the
performance of the covenants of the Parent or the Merger Sub, as the case may
be, set forth in this Agreement, and after completion of such inquiry, the
Parent or the Merger Sub, as the case may be, has no reason to believe that
the conditions set forth in Section 6.03(a) and Section 6.03(b) have not been
fulfilled. The parties hereto acknowledge and agree that, absent fraud, the
officer(s) of the Parent or the Merger Sub, as the case may be, executing the
certificate described above on behalf of the Parent or the Merger Sub, as the
case may be, shall have no personal liability in respect of such certificate.
SECTION 6.04 Satisfaction or Waiver of Conditions. The conditions set
forth in this Article VI shall be deemed to have been satisfied for purposes
of this Agreement if, as and when (a) the conditions in Section 6.01 have been
satisfied or waived by the Parent, the Merger Sub and the Company in writing;
(b) the conditions in Section 6.02 shall have been satisfied or waived by the
Parent and the Merger Sub in writing; and (c) the conditions in Section 6.03
shall have been satisfied or waived by the Company in writing.
ARTICLE VII
TERMINATION; AMENDMENTS; WAIVER
SECTION 7.01 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of the Company (with any
termination by the Parent also being an effective termination by the Merger
Sub):
(a) by the mutual written consent of the Boards of Directors (or duly
authorized committees thereof) of the Parent, the Merger Sub and the Company;
(b) by any party if (i) the Company's shareholders fail to approve this
Agreement at the Shareholders' Meeting or (ii) the Merger shall not have been
consummated on or before the Termination Date; provided that if any condition
to this Agreement shall fail to be satisfied by reason of the existence of an
injunction or order of any court or governmental or regulatory body, then at
the request of any party the deadline date referred to above shall be extended
for a reasonable period of time, not in excess of 30 days, to permit the
parties to have such injunction vacated or order reversed;
(c) by the Company, in the event of a material breach by the Parent or
the Merger Sub of any representation, warranty or agreement of the Parent or
the Merger Sub contained in this Agreement, in each case which has not been
cured or is not curable by the earlier of (i) the Termination Date or (ii)
the 30th day after notice of such breach was given to the Parent or the Merger
Sub (as the case may be);
(d) by the Company, if the Company receives a firm proposal with respect
to an Acquisition Transaction which its Board of Directors determines, in the
exercise of its fiduciary duties as advised by counsel, contains terms that
are more favorable to the Company and its constituents, taken as a whole,
than the Merger;
(e) by the Parent, in the event of a material breach by the Company of
any representation, warranty or agreement of the Company contained in this
Agreement which has not been cured or is not curable by the earlier of (i) the
Termination Date or (ii) the 30th day after notice of such breach was given
to the Company;
(f) by the Parent upon the occurrence of any event described in
5.10(a)(i) or 5.10(a)(ii); or
(g) by either party if the conditions to be satisfied by the other party
pursuant to Article VI hereof shall not have been satisfied (or waived) prior
to the Termination Date.
SECTION 7.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or
its directors, officers or shareholders, other than the provisions of Section
5.10 with respect to the payment of the breakup fee and expense reimbursement
as described therein, the last sentence of Section 5.02, which in each case
shall survive any such termination. Nothing contained in this Section 7.02
shall relieve any party from liability for any breach of the Confidentiality
Agreement.
SECTION 7.03 Expense Reimbursement for Company. In the event this
Agreement is terminated by the Company pursuant to Section 7.01(c) hereof,
Parent shall promptly pay to the Company an amount equal to the actual out-of-
pocket fees and expenses reasonably incurred by the Company in connection
with the Merger and the transactions contemplated by this Agreement.
SECTION 7.04 Amendment. This Agreement may be amended by the Company,
the Parent and the Merger Sub at any time before or after any approval of
this Agreement by the shareholders 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 shareholders hereunder without the
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 7.05 Extension; Waiver. 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 VIII
DEFINITIONS
"Acquisition Transaction" has the meaning set forth in Section 5.09.
"affiliate" has the meaning set forth in Section 9.09(a).
"Agreement" has the meaning set forth in the preamble.
"Antitrust Laws" has the meaning set forth in Section 5.04(b).
"Certificates" has the meaning set forth in Section 2.02(a).
"Closing Invoice Amount" has the meaning set forth in Section 1.07.
"Code" has the meaning set forth in Section 3.13(a).
"Common Shares" has the meaning set forth in the preamble.
"Company" has the meaning set forth in the preamble.
"Company Controlled Group" has the meaning set forth in Section 3.13(a).
"Company Disclosure Statement" has the meaning set forth in Article III.
"Company Representatives" has the meaning set forth in Section 5.02.
"Confidentiality Agreement" has the meaning set forth in Section 9.02(a).
"Consent" has the meaning set forth in Section 3.05(b).
"Constituent Corporations" has the meaning set forth in the preamble.
"control" has the meaning set forth in Section 9.09(a).
"Controlling Shareholder" has the meaning set forth in Section 5.10(a).
"Dissenting Shares" has the meaning set forth in Section 2.01.
"Effective Time" has the meaning set forth in Section 1.02.
"Employee Benefit Arrangement" has the meaning set forth in Section 5.01(e).
"Environment and Safety Requirements" has the meaning set forth in Section
3.23(j).
"Environmental Lien" has the meaning set forth in Section 3.23(k).
"ERISA" has the meaning set forth in Section 3.13(a).
"Exchange Act" has the meaning set forth in Section 3.05(b).
"Favorable Third Party Proposal" has the meaning set forth in Section 5.09(a).
"GAAP" has the meaning set forth in Section 3.06(b).
"Governmental Entity" has the meaning set forth in Section 3.05(b).
"HSR" has the meaning set forth in Section 3.05(b).
"Illinois Act" has the meaning set forth in Section 1.01.
"Indemnified Parties" has the meaning set forth in Section 5.06(a).
"IRS" has the meaning set forth in Section 3.13(g).
"Lien" has the meaning set forth in Section 3.03.
"Material Adverse Effect on the Company" has the meaning set forth in
Section 3.10.
"Material Adverse Effect on the Parent" has the meaning set forth in
Section 4.01.
"Merger" has the meaning set forth in the preamble.
"Merger Price" has the meaning set forth in Section 1.07.
"Merger Sub" has the meaning set forth in the preamble.
"Merger Sub Shares" has the meaning set forth in the preamble.
"Multiemployer Plan" has the meaning set forth in Section 3.13(b).
"Option" has the meaning set forth in Section 1.09.
"Option Plans" has the meaning set forth in Section 3.03.
"Other Filings" has the meaning set forth in Section 3.07.
"Parent" has the meaning set forth in the preamble.
"Parent Representatives" has the meaning set forth in Section 5.02.
"Paying Agent" has the meaning set forth in Section 2.02(a).
"Permitted Liens" has the meaning set forth in Section 3.15.
"Person" has the meaning set forth in Section 9.09(b).
"Plans" has the meaning set forth in Section 3.13(a).
"Proprietary Rights" has the meaning set forth in Section 3.18.
"Proxy Statement" has the meaning set forth in Section 1.10(a)(ii).
"SEC" has the meaning set forth in Section 1.10(a)(ii).
"SEC Reports" has the meaning set forth in Section 3.06(a).
"Securities Act" has the meaning set forth in Section 3.06(a).
"September Balance Sheet" has the meaning set forth in Section 3.19.
"Shareholders' Meeting" has the meaning set forth in Section 1.10(a)(i).
"Subsidiaries" has the meaning set forth in Section 3.01.
"Surviving Corporation" has the meaning set forth in the preamble.
"Taxes" has the meaning set forth in Section 3.22(a).
"Termination Date" has the meaning set forth in Section 5.10(a).
"Violation" has the meaning set forth in Section 3.05(a).
"Voting Debt" has the meaning set forth in Section 3.03.
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 2.02, the last sentence of Section 5.03, Section 5.06 and the
last sentence Section 5.02 shall survive the Effective Time indefinitely
(except to the extent a shorter period of time is explicitly specified
therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred
to herein) and the letter agreement dated January 6, 1998 (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 nor any of the rights, interests or obligations
hereunder 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 the Parent may assign its rights and the Merger Sub may assign
its rights, interest and obligations to any affiliate or direct or indirect
subsidiary of the Parent without the consent of the Company). Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.04 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 the Parent or the Merger Sub:
c/o CII Technologies, Inc.
0000 Xxxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attention: President
with a copy to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Perl
If to the Company:
Corcom, Inc.
000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
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 9.05 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
construed in accordance with the domestic laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Illinois.
SECTION 9.06 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 9.07 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 9.08 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 1.09, 5.06 and 5.07, 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 9.09 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 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 "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
(c) the term "Subsidiary" or "subsidiaries" means, with respect to the
Parent, the Company or any other person, any corporation, partnership, joint
venture or other legal entity of which the 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.
IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan
of Merger to be executed on its behalf by its respective officer thereunto
duly authorized, all as of the day and year first above written.
COMMUNICATIONS INSTRUMENTS, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President
RF ACQUISITION CORP
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President
CORCOM, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, President
