AGREEMENT AND PLAN OF MERGER
By and Among
▇▇▇▇▇▇ INDUSTRIES, INC.,
BLUE ACQUISITION INC.
and
▇▇▇▇▇▇ CORPORATION
September 17, 1996
ARTICLE I
THE MERGER............................... 1
SECTION 1.1. The Merger................................................... 1
SECTION 1.2. Effective Time............................................... 2
SECTION 1.3. Effects of the Merger........................................ 2
SECTION 1.4. Certificate of Incorporation and By-laws..................... 2
SECTION 1.5. Directors.................................................... 3
SECTION 1.6. Officers..................................................... 3
SECTION 1.7. Vacancies.................................................... 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES........... 3
SECTION 2.1. Effect on Capital Stock...................................... 3
(a) Capital Stock of Sub........................................... 3
(b) Cancellation of Company and Parent Owned Stock................. 3
(c) Conversion of Shares........................................... 3
(d) No Fractional Shares........................................... 3
SECTION 2.2. Exchange of Certificates..................................... 4
(a) Exchange Agent................................................. 4
(b) Payment of Merger Consideration................................ 4
(c) Exchange Procedure............................................. 4
(d) Distributions with Respect to Unexchanged Shares............... 5
(e) No Further Ownership Rights in Shares.......................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES..................... 6
SECTION 3.1. Representations and Warranties of the Company................ 6
(a) Organization, Standing and Power............................... 6
(b) Subsidiaries................................................... 6
(c) Capital Structure.............................................. 6
(d) Authority; Non-contravention................................... 7
(e) SEC Documents.................................................. 8
(f) Information Supplied........................................... 9
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(g) Absence of Certain Changes or Events........................... 9
(h) State Takeover Statutes; Absence of Supermajority Provision.... 10
(i) Brokers........................................................ 10
(j) Litigation..................................................... 10
(k) Accounting Matters............................................. 10
(l) Employee Benefit Matters....................................... 11
(m) Taxes.......................................................... 13
(n) No Excess Parachute Payments................................... 13
(o) Environmental Matters.......................................... 13
(p) Compliance with Laws........................................... 14
(q) Material Contracts and Agreements.............................. 14
(r) Title to Properties............................................ 14
(s) Intellectual Property.......................................... 15
(t) Labor Matters.................................................. 15
(u) Undisclosed Liabilities........................................ 15
(v) Opinion of Financial Advisor................................... 16
(w) Board Recommendation........................................... 16
SECTION 3.2. Representations and Warranties of Parent and Sub............. 16
(a) Organization; Standing and Power............................... 16
(b) Subsidiaries................................................... 16
(c) Capital Structure.............................................. 17
(d) Authority; Non-contravention................................... 17
(e) SEC Documents.................................................. 18
(f) Information Supplied........................................... 19
(g) Absence of Certain Changes or Events........................... 19
(h) State Takeover Statutes; Absence of Supermajority Provision.... 19
(i) Brokers........................................................ 20
(j) Litigation..................................................... 20
(k) Accounting Matters............................................. 20
(l) Employee Benefit Matters....................................... 20
(m) Taxes.......................................................... 22
(n) No Excess Parachute Payments................................... 22
(o) Environmental Matters.......................................... 23
(p) Compliance with Laws........................................... 23
(q) Material Contracts and Agreements.............................. 23
(r) Title to Properties............................................ 23
(s) Intellectual Property.......................................... 24
(t) Labor Matters.................................................. 24
(u) Undisclosed Liabilities........................................ 25
(v) Opinion of Financial Advisor................................... 25
(w) Board Recommendation........................................... 25
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS............... 25
SECTION 4.1. Conduct of Business.......................................... 25
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(a) Ordinary Course................................................ 25
(b) Changes in Employment Arrangements............................. 27
(c) Severance...................................................... 27
(d) Other Actions.................................................. 28
SECTION 4.2. Conduct of Business of Parent and Sub........................ 28
(a) Ordinary Course................................................ 28
(b) Other Actions.................................................. 29
ARTICLE V
ADDITIONAL AGREEMENTS......................... 29
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement;
Preparation of Registration Statement........................ 29
SECTION 5.2. Letter of the Company's Accountants.......................... 30
SECTION 5.3. Letter of Parent's Accountants............................... 30
SECTION 5.4. Access to Information........................................ 30
SECTION 5.5. Reasonable Efforts; Notification............................. 35
SECTION 5.6. Employee Benefit Matters..................................... 37
SECTION 5.7. Indemnification.............................................. 39
SECTION 5.8. Fees and Expenses............................................ 39
SECTION 5.9. Public Announcements......................................... 39
SECTION 5.10. Stockholder Litigation...................................... 40
SECTION 5.11. Accounting Matters.......................................... 40
SECTION 5.12. Parent's Board of Directors................................. 40
SECTION 5.13. Appointment of Directors to Committees...................... 40
SECTION 5.14. Appointment of W. ▇▇▇▇ ▇▇▇▇▇▇▇ as Executive Vice President.. 40
SECTION 5.15. Affirmation of this Agreement............................... 40
ARTICLE VI
CONDITIONS PRECEDENT.......................... 41
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SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger... 41
(a) Stockholder Approval........................................... 41
(b) NYSE Listing................................................... 41
(c) HSR Act........................................................ 41
(d) No Injunctions or Restraints................................... 41
(e) Registration Statement Effectiveness........................... 41
(f) Blue Sky Filings............................................... 41
SECTION 6.2. Conditions of Parent and Sub................................. 42
(a) Compliance..................................................... 42
(b) Certifications and Opinion..................................... 42
(c) Representations and Warranties True............................ 43
(d) Affiliate Letters.............................................. 43
(e) Tax Opinion.................................................... 43
(f) Pooling Accounting............................................. 43
(g) Consents, etc.................................................. 44
(h) No Litigation.................................................. 44
(i) Fairness Opinion............................................... 44
(j) No Material Adverse Change..................................... 44
SECTION 6.3. Conditions of the Company.................................... 44
(a) Compliance..................................................... 44
(b) Certifications and Opinion..................................... 45
(c) Representations and Warranties True............................ 45
(d) Tax Opinion.................................................... 46
(e) Fairness Opinion............................................... 46
(f) No Material Adverse Change..................................... 46
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER................... 46
SECTION 7.1. Termination.................................................. 46
SECTION 7.2. Effect of Termination........................................ 47
SECTION 7.3. Amendment.................................................... 47
SECTION 7.4. Extension; Waiver............................................ 48
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver.... 48
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS................ 48
SECTION 8.1. Takeover Defenses of the Company............................. 48
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SECTION 8.2. No Solicitation.............................................. 48
SECTION 8.3. Fee and Expense Reimbursements............................... 50
ARTICLE IX
GENERAL PROVISIONS........................... 51
SECTION 9.1. Nonsurvival of Representations and Warranties................ 51
SECTION 9.2. Notices...................................................... 52
SECTION 9.3. Definitions.................................................. 53
SECTION 9.4. Interpretation............................................... 54
SECTION 9.5. Counterparts................................................. 54
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries............... 54
SECTION 9.7. Governing Law................................................ 54
SECTION 9.8. Assignment................................................... 54
SECTION 9.9. Enforcement of the Agreement................................. 54
SECTION 9.10. Severability................................................ 55
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AGREEMENT AND PLAN OF MERGER dated as of September 17, 1996, by
and among ▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation ("Parent"),
BLUE ACQUISITION INC., a Delaware corporation ("Sub") and a
wholly-owned subsidiary of Parent, and ▇▇▇▇▇▇ CORPORATION, a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions of this Agreement and Plan of Merger (the
"Agreement");
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions of this Agreement,
whereby each issued and outstanding share of the Company's Common Stock, $.01
par value, including the related right to purchase one one-thousandth of a share
of Series A Junior Participating Preferred Stock, $.01 par value, of the Company
(collectively, a "Share") not owned by the Company, Parent, Sub or any
wholly-owned subsidiary of the Company, Parent or Sub will be converted into
fifty-eight one-hundredths (.58) of a share of Common Stock, $1.25 par value,
including the related right to purchase one one-hundredth interest in a share of
Series A Junior Participating Preferred Stock, $1.00 par value, of Parent
(collectively, a "Parent Share");
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions
hereof and in accordance with the Delaware General Corporation Law (the "DGCL"),
Sub shall be merged with and into the Company at the Effective Time of the
Merger (as hereinafter defined). At the election of Parent, any direct
wholly-owned subsidiary (as defined in Section 9.3) of Parent may be substituted
for Sub as a constituent corporation in the Merger. In such event, the parties
agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing. Following the
Merger, the separate corporate existence of Sub shall cease and theCompany shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL.
SECTION 1.2. Effective Time. As soon as practicable following the
satisfaction or, to the extent permitted hereunder, waiver of the conditions set
forth in Article VI, the Surviving Corporation shall file the officer's
certificate required by the DGCL with respect to the Merger and other
appropriate documents (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Delaware Secretary of
State, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time of the Merger"). The closing of the Merger (the
"Closing") shall take place at the offices of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., in
Houston, Texas, on the date of the meetings of the Company's stockholders (the
"Company Stockholders Meeting") and of Parent's stockholders (the "Parent
Stockholders Meeting"), in each case, to approve the Merger, or, if any of the
conditions set forth in Article VI have not been satisfied, then as soon as
practicable thereafter, or at such other time and place or such other date as
Parent and the Company shall agree (the "Closing Date"). If such meetings are
not held or concluded on the same date, then the Closing Date shall be on the
date of the latter of such meetings.
SECTION 1.3. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL. If at any time after the Effective Time of
the Merger, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or otherwise are necessary or desirable
to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, all rights, title and interests in all real estate and other
property and all privileges, powers and franchises of the Company and Sub, the
Surviving Corporation and its proper officers and directors, in the name and on
behalf of the Company and Sub, shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of the Company or otherwise to take any and all such action.
SECTION 1.4. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time of the Merger shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the Effective
Time of the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
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SECTION 1.5. Directors. The directors of Sub immediately prior to the
Effective Time of the Merger shall be the directors of the Surviving Corporation
and shall hold office in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation from the Effective Time of the Merger until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.6. Officers. The officers of the Company immediately prior
to the Effective Time of the Merger shall be the officers of the Surviving
Corporation and shall hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation from the Effective Time
of the Merger until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.7. Vacancies. If at the Effective Time of the Merger a
vacancy shall exist in the Board of Directors or in any of the offices of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by the DGCL and the Certificate of Incorporation and By-laws of the
Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any Shares:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
(b) Cancellation of Company and Parent Owned Stock. All Shares that
are owned by any wholly-owned subsidiary of the Company and any Shares owned by
Parent, Sub or any other wholly-owned subsidiary of Parent or Sub shall be
canceled and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 2.1(d) and (e), each
issued and outstanding Share shall be converted into the right to receive, upon
the surrender of the certificate formerly representing such Shares pursuant to
Section 2.2, .58 of a Parent Share (the "Merger Consideration").
(d) No Fractional Shares. No fractional Parent Shares shall be issued
in the Merger. All fractional Parent Shares that a holder of Shares would
otherwise be entitled to receive as a result of the Merger shall be aggregated
and if a fractional Parent Share results from such aggregation, such holder
shall be entitled to receive, in lieu thereof, an amount in cash determined by
multiplying the average of the daily
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closing sale price per Parent Share on the New York Stock Exchange ("NYSE") for
the ten trading days next preceding the Effective Time of the Merger by the
fraction of a Parent Share to which such holder would otherwise have been
entitled. Alternatively, Parent and Sub shall have the option of instructing the
Exchange Agent (as defined in Section 2.2(a)) to aggregate all fractional Parent
Shares, sell such Parent Shares in the public market and distribute to holders
of fractional Parent Shares a pro rata portion of the proceeds of such sale. No
such cash in lieu of fractional Parent Shares shall be paid to any holder of
fractional Parent Shares until Certificates (as defined in Section 2.2(c))
representing such Parent Shares are surrendered and exchanged in accordance with
Section 2.2(c).
SECTION 2.2. Exchange of Certificates. (a) Exchange Agent. Prior to
the Effective Time of the Merger, Parent shall engage Wachovia Bank of North
Carolina, N.A., or such other bank or trust company reasonably acceptable to the
Company, to act as exchange agent (the "Exchange Agent") for the issue of the
Merger Consideration upon surrender of certificates representing Shares.
(b) Payment of Merger Consideration. Parent shall take all steps
necessary to enable and cause there to be provided to the Exchange Agent on a
timely basis, as and when needed after the Effective Time of the Merger,
certificates for the Parent Shares to be issued upon the conversion of the
Shares pursuant to Section 2.1. Parent or the Surviving Corporation shall timely
make available to the Exchange Agent any cash necessary to make payments in lieu
of fractional shares.
(c) Exchange Procedure. As soon as practicable after the Effective
Time of the Merger, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time of the
Merger represented outstanding Shares (the "Certificates"), other than the
Company, Parent, Sub and any wholly-owned subsidiary of the Company, Parent or
Sub, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in a form and
have such other provisions as Parent and Sub may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the certificates representing the Parent Shares and any cash in lieu of a
fractional share. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate or certificates representing the number of whole Parent Shares
into which the Shares theretofore represented by such Certificate shall have
been converted pursuant to Section 2.1 and any cash payable in lieu of a
fractional Share, and the Certificate so surrendered shall forthwith be
canceled. If the Parent Shares are to be issued to a person other than the
person in whose name the Certificate so surrendered is registered, it shall be a
condition of exchange that such Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
exchange to a person other than the registered holder of such Certificate or
establish to the
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reasonable satisfaction of the Surviving Corporation that such tax has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such surrender the number of
Parent Shares and cash, if any, in lieu of fractional Parent Shares into which
the Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 2.1. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the Parent Shares held by it
from time to time hereunder, except that it shall receive and hold all dividends
or other distributions paid or distributed with respect thereto for the account
of persons entitled thereto.
(d) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time of the Merger with
respect to the Parent Shares with a record date after the Effective Time of the
Merger shall be paid to the holder of any unsurrendered Certificate with respect
to the Parent Shares represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.1(d)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the Certificates
representing the Parent Shares issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of any cash payable in lieu of a
fractional Parent Share to which such holder is entitled pursuant to Section
2.1(d) and the amount of dividends or other distributions with a record date
after the Effective Time of the Merger theretofore paid with respect to such
whole Parent Shares, as the case may be, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time of the Merger but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole Parent Shares.
(e) No Further Ownership Rights in Shares. All Parent Shares issued
upon the surrender of Certificates in accordance with the terms of this Article
II, together with any dividends payable thereon to the extent contemplated by
this Section 2.2, shall be deemed to have been exchanged and paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The
Company agrees that it will, on or before October 1, 1996, affirm in writing
(the "Company Affirmation and Disclosure Document") that, as of the date of this
Agreement, it represents and warrants to, and agrees with, Parent and Sub as
follows, subject to any exceptions specified in the Company Affirmation and
Disclosure Document:
(a) Organization, Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the law of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. The Company is
duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so qualified to do business or in good standing (individually or
in the aggregate) would not have a material adverse effect (as defined in
Section 9.3) on the Company and its subsidiaries, taken as a whole.
(b) Subsidiaries. The Company's subsidiaries that are corporations are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation and have the requisite
corporate power and authority to carry on their respective businesses as they
are now being conducted and to own, operate and lease the assets they now own,
operate or hold under lease. The Company's subsidiaries are duly qualified to do
business and are in good standing in each jurisdiction in which the nature of
their respective businesses or the ownership or leasing of their respective
properties makes such qualification necessary, other than in such jurisdictions
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
All the outstanding shares of capital stock of the Company's subsidiaries that
are corporations have been duly authorized and validly issued and are fully paid
and non-assessable and were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any person. Except as
disclosed in the SEC Documents (as defined in Section 3.1(e)), all such stock
and ownership interests are owned of record and beneficially by the Company or
by a wholly-owned subsidiary of the Company, free and clear of all liens,
pledges, security interests, charges, claims and other encumbrances of any kind
or nature ("Liens"). Except for the capital stock of, or ownership interests in,
its subsidiaries, the Company does not own, directly or indirectly, any capital
stock, equity interest or other ownership interest in any corporation,
partnership, association, joint venture, limited liability company or other
entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 30,000,000 shares of common stock, $.01 par value ("Company Common
Stock"), and 1,000,000 shares of preferred stock, $.01 par value ("Preferred
Stock"), of which 250,000 shares have been designated Series A Junior
Participating Preferred
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Stock and reserved for issuance pursuant to the Rights Agreement dated October
31, 1995 between the Company and American Stock Transfer & Trust Company, as
rights agent (the "Company Rights Agreement"). At the close of business on
August 31, 1996: 8,483,435 Shares were issued and outstanding; 45,000 and
736,000 shares of Company Common Stock were reserved for issuance pursuant to
outstanding options granted under the Company's 1994 Nonemployee Directors'
Stock Option Plan and 1994 Stock Incentive Plan, respectively; and 30,000 and
10,800 shares of Company Common Stock were reserved for issuance pursuant to
awards not yet granted under the Company's 1994 Nonemployee Directors' Stock
Option Plan and 1994 Stock Incentive Plan, respectively. Except as set forth
above, no shares of capital stock or other equity or voting securities of the
Company are reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all such shares issuable upon the exercise
of stock options will be, validly issued, fully paid and nonassessable and not
subject to preemptive rights. No capital stock has been issued by the Company
since August 31, 1996, other than shares of Common Stock issued pursuant to
options outstanding on or prior to such date in accordance with their terms at
such date. Except for options outstanding under the Company's 1994 Nonemployee
Directors' Stock Option Plan and 1994 Stock Incentive Plan as set forth above,
as of August 31, 1996, there were no outstanding or authorized securities,
options, warrants, calls, rights, commitments, preemptive rights, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party, or by which any of them is bound, obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock or other equity or voting
securities of, or other ownership interests in, the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
(d) Authority; Non-contravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
Company Stockholder Approval (as defined in Section 3.1(h)), to consummate the
transactions contemplated hereby and to take such actions, if any, as shall have
been taken with respect to the matters referred to in Section 3.1(h). The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company, subject to Company
Stockholder Approval. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial decisions now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement by the Company do
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of or "put" right
with respect to any obligation or to loss of
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a material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under, any provision of (i) the Certificate
of Incorporation or By-laws of the Company or any provision of the comparable
organizational documents of its subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject to
governmental filing and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, defaults, rights or liens, security interests,
charges or encumbrances that individually or in the aggregate would not have a
material adverse effect on the Company and would not materially impair the
ability of the Company to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or agency, domestic or foreign, including local authorities (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (i) the filing of a premerger notification and
report form by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a joint proxy statement relating to the
Company Stockholder Approval and Parent Stockholder Approval (as defined in
Section 3.2(d) (such proxy statement as amended or supplemented from time to
time, the "Proxy Statement") and (B) the Registration Statement (as defined in
Section 5.1(b)); and (C) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated hereby, and
(iii) the filing of the Certificate of Merger with the Delaware Secretary of
State with respect to the Merger as provided in the DGCL and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business and such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not have a material adverse effect on the Company.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since March 7,
1994, including any and all such reports, schedules, forms, statements and other
documents filed with the SEC in connection with the distribution of shares of
Company Common Stock to shareholders of Galveston-Houston Company (such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein, collectively referred to herein as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any
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untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the SEC Documents
comply in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of 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 in
the notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments and other adjustments described therein).
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
Registration Statement (as defined in Section 5.1(b)) will, at the time the
Registration Statement is filed with the SEC, and at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Proxy Statement will, at the date the Proxy
Statement is first mailed to the Company's stockholders and at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement, as it relates to the Company
Stockholders Meeting, will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents, since December 31, 1995, the Company has conducted its business
only in the ordinary course consistent with past practice, and there has not
been (i) any material adverse change with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) (A) any
granting by the Company or any of its subsidiaries to any executive officer of
the Company or any of its subsidiaries of any increase in compensation, except
in the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of December 31, 1995, (B) any
granting by the Company or any of its subsidiaries to any such executive officer
of any increase in severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of December 31,
1995, or (C) any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such executive officer,
(iv) any damage, destruction or loss, whether or not covered by insurance, that
has or reasonably could be expected to have a material adverse effect on the
Company, (v) any
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change in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles, or (vi) any
event which, if it had taken place following the execution of this Agreement,
would not have been permitted by Section 4.1.
(h) State Takeover Statutes; Absence of Supermajority Provision. The
Company has taken all action to assure that no state takeover statute or similar
statute or regulation, including, without limitation ss.203 of the DGCL, shall
apply to the Merger or any of the other transactions contemplated hereby. Except
for the approval of the Merger by the holders of a majority of the outstanding
Shares ("Company Stockholder Approval"), no other stockholder action on the part
of the Company is required for approval of the Merger and the transactions
contemplated hereby. No provision of the Company's Certificate of Incorporation
or By-laws or other governing instruments of its subsidiaries or the terms of
any rights plan or other takeover defense mechanism of the Company would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights of a stockholder with respect to, securities of
the Company and its subsidiaries that may be acquired or controlled by Parent or
permit any stockholder to acquire securities of the Company on a basis not
available to Parent in the event that Parent were to acquire securities of the
Company.
(i) Brokers. Except for ▇▇▇▇▇▇▇▇▇ & Company, Inc. ("Jefferies"), which
will be rendering the opinion referred to in Section 6.3(e) and whose fees are
to be paid by the Company, no broker, investment banker or other person is
entitled to receive from the Company or any of its subsidiaries any investment
banking, brokerage or finder's fees in connection with this Agreement or the
transactions contemplated hereby, including any fee for any opinion rendered by
any investment banker. The engagement letter between the Company and Jefferies
provided to Parent on or prior to the date of this Agreement constitutes the
entire understanding of the Company and Jefferies with respect to the matters
referred to therein, and has not been amended or modified, nor will it be
amended or modified prior to the Effective Time of the Merger.
(j) Litigation. Except as disclosed in the SEC Documents, there is no
suit, action, proceeding or investigation pending or, to the best of the
Company's knowledge, threatened against or affecting the Company or any of its
subsidiaries that could reasonably be expected to have a material adverse effect
on the Company or prevent, hinder or materially delay the ability of the Company
to consummate the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future could have, any such
effect.
(k) Accounting Matters. Neither the Company nor, to the best of its
knowledge, any of its affiliates, has through the date of this Agreement taken
or agreed to take any action that (without giving effect to any action taken or
agreed to be taken by Parent or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests.
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(l) Employee Benefit Matters. As used in this Section 3.1(l), the term
"Employer" shall mean the Company as defined in the preamble of this Agreement
and any member of a controlled group or affiliated service group, as defined in
Sections 414(b), (c), (m) and (o) of the Internal Revenue Code of 1986, as
amended ("Code") of which the Company is a member.
(i) With respect to each employee welfare benefit plan, employee
pension benefit plan and employee benefit plan as defined in Sections 3(1),
3(2), and 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which have been or are sponsored by, participated in or
contributed to by or required to be contributed to by the Employer, and
except for any matter that would not individually or in the aggregate have
a material adverse effect on the Company: (A) the plan is in substantial
compliance with the Code and ERISA, including all reporting and disclosure
requirements of Part 1 of Subtitle B of Title I of ERISA; (B) the
appropriate Form 5500 has been timely filed for each year of its existence;
(C) there has been no transaction described in Sections 406 or 407 of ERISA
or Section 4975 of the Code unless exempt under Section 408 of ERISA or
Section 4975 of the Code, as applicable; (D) the bonding requirements of
Section 412 of ERISA have been satisfied; (E) there is no issue pending nor
any issue resolved adversely to the Employer which may subject the Company
to the payment of a penalty, interest, tax or other amount, (F) the plan
can be unilaterally terminated or amended on no more than 90 days notice
other than collectively bargained union plans; (G) all contributions or
other amounts payable by the Employer as of the Effective Time of the
Merger with respect to the plan have either been paid or accrued in the
Employer's most recent financial statements included in the SEC Documents
and (H) no notice has been received by the Employer of an increase or
proposed increase in the cost of any such plan or any other employee
benefit agreement or arrangement, including deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock
purchase plans, golden parachute agreements, severance pay plans or
agreements, dependent care plans, cafeteria plans, employee assistance
programs, scholarship programs, employment contracts and other similar
plans, agreements and arrangements that are currently in effect or were
maintained within three years of the date hereof, or have been approved
before this date but are not yet effective, for the benefit of directors,
officers or employees, or former directors, officers or employees (or their
beneficiaries) of the Employer (each, a "Company Benefit Plan"). There are
no pending or, to the Company's knowledge, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any
Company Benefit Plan or their related trusts.
(ii) Neither the Company nor any entity (whether or not incorporated)
that was at any time during the six years before the date of this Agreement
treated as a single employer together with the Company under Section 414 of
the Code has ever maintained, had any obligation to contribute to or
incurred any liability with respect to a pension plan that is or was
subject to the provisions of Title IV of ERISA or Section 412 of the Code.
Neither the Company nor any entity (whether or not incorporated) that was
at any time during the six years
-11-
before the date of this Agreement treated as a single employer together
with the Company under Section 414 of the Code has ever maintained, had an
obligation to contribute to, or incurred any liability with respect to a
multiemployer pension plan as defined in Section 3(37) of ERISA. During the
last six years, the Company has not maintained, had an obligation to
contribute to or incurred any liability with respect to a voluntary
employees beneficiary association that is or was intended to satisfy the
requirements of Section 501(c)(9) of the Code. No plan, arrangement or
agreement with any one or more employees will cause the Employer to have
liability for severance pay as a result of the Merger, except as otherwise
set forth in the severance agreements between the Company and each of W.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Severance
Agreements"). The Employer does not provide employee benefits, including
without limitation, death, post-retirement medical or health coverage
(whether or not insured) or contribute to or maintain any employee benefit
plan which provides for benefit coverage following termination of
employment except (A) as is required by Section 4980B(f) of the Code or
other applicable statute, (B) death benefits or retirement benefits under
any employee pension benefit plan as defined in Section 3(2) of ERISA, (C)
benefits the full cost of which is borne by the current or former employee
(or his beneficiary) nor has it made any representations, agreements,
covenants or commitments to provide that coverage or (D) deferred
compensation benefits which have been accrued as liabilities on the books
of the Employer and disclosed on its financial statements included in the
SEC Documents. All group health plans maintained by the Employer have been
operated in material compliance with Section 4980B(f) of the Code.
(iii) All Company Benefit Plans as defined in Section 3(2) of ERISA
which are intended to qualify under Section 401(a) of the Code have been
submitted to and approved as qualifying under Section 401(a) of the Code by
the Internal Revenue Service or the applicable remedial amendment period
will not have ended prior to the Effective Time of the Merger. No facts
have occurred which if known by the IRS could cause disqualification of
those plans.
(iv) Except as expressly provided in this Agreement or the Severance
Agreements and except for options granted under the Company's 1994
Nonemployee Directors' Stock Option Plan, the transactions contemplated by
this Agreement will not accelerate the time of payment or vesting, or
increase the amount, of compensation due any director, officer or employee
or former director, officer or employee (including any beneficiary) from
the Company.
(v) With respect to any entity (whether or not incorporated) that is
both treated as a single employer together with the Company under Section
414 of the Code and located outside of the United States, any benefit plans
maintained by it for the benefit of its directors, officers, employees or
former employees (or any of their beneficiaries) are in compliance with
applicable laws pertaining to such plans in the jurisdiction of such
entity, except where such failure to be in compliance would not, either
individually or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
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(m) Taxes. Each of the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
purposes of which the Company or any of its subsidiaries is or has been a
member, has timely filed all Tax Returns (as defined below) required to be filed
by it on or before the Effective Time of the Merger and has timely paid or
deposited (or the Company has paid or deposited on its behalf) all Taxes which
are required to be paid or deposited on or before the Effective Time of the
Merger. Each of the Tax Returns filed by the Company or any of its subsidiaries
is accurate and complete in all material respects. The most recent consolidated
financial statements of the Company contained in the filed SEC Documents reflect
an adequate reserve for all Taxes payable by the Company and its subsidiaries
for all taxable periods and portions thereof through the date of such financial
statements whether or not shown as being due on any Tax Returns. No material
deficiencies for any Taxes have been proposed, asserted or assessed against the
Company or any of its subsidiaries, no requests for waivers of the time to
assess any such Taxes have been granted or are pending, and there are no tax
liens upon any assets of the Company or any of its subsidiaries. The Federal
income Tax Returns of the Company and its subsidiaries consolidated in such Tax
Returns have never been examined by the IRS. There are no current examinations
of any Tax Return of the Company or any of its subsidiaries being conducted and
there are no settlements or any prior examinations which could reasonably be
expected to adversely affect any taxable period for which the statute of
limitations has not run. As used herein, "Tax" or "Taxes" shall mean all taxes
of any kind, including, without limitation, those on or measured by or referred
to as income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, estimated, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any Governmental Entity, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report, statement or information required to be
filed with any governmental authority with respect to Taxes.
(n) No Excess Parachute Payments. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Company Benefit Plan currently in effect would not
be characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(o) Environmental Matters. Except as would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, (i) the business
operations of the Company and its subsidiaries are being conducted in compliance
with all limitations, restrictions, standards and requirements established under
environmental laws, (ii) no facts or circumstances exist that impose on the
Company or any of its subsidiaries an obligation under environmental laws to
conduct any removal, remediation, or similar response action, (iii) there is no
obligation, undertaking or liability arising out of or relating to environmental
laws that the
-13-
Company or any of its subsidiaries has agreed to, assumed or retained, by
contract or otherwise, or that has been imposed on the Company or any of its
subsidiaries by any writ, injunction, decree, order or judgment, and (iv) there
are no lawsuits, claims or proceedings pending against the Company or any of its
subsidiaries that arise out of or relate to environmental laws.
(p) Compliance with Laws. The Company and its subsidiaries hold all
required, necessary or applicable permits, licenses, variances, exemptions,
orders, franchises and approvals of all Governmental Entities, except where the
failure to so hold would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole (the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits except
where the failure to so comply would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole. Neither the Company nor any of
its subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, permit or order of any Federal, state or local
government, domestic or foreign, or any Governmental Entity, any arbitration
award or any judgment, decree or order of any court or other Governmental
Entity, applicable to the Company or any of its subsidiaries or their respective
business, assets or operations, except for violations and failures to comply
that could not, individually or in the aggregate, reasonably be expected to have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(q) Material Contracts and Agreements. All material contracts of the
Company or its subsidiaries have been included in the SEC Documents, except for
those contracts not required to be filed pursuant to the rules and regulations
of the SEC.
(r) Title to Properties.
(i) Each of the Company and each of its subsidiaries has good and
defensible title to, or valid leasehold interests in, all its properties
and assets purported to be owned by it in the SEC Documents, except for
such as are no longer used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of business and except for
minor defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted or as reasonably expected to be conducted. All such assets and
properties, other than assets and properties in which the Company or any of
the subsidiaries has leasehold interests, are free and clear of all Liens,
other than those set forth in the SEC Documents and except for minor Liens,
that, in the aggregate, do not and will not materially interfere with the
ability of the Company or any of its subsidiaries to conduct business as
currently conducted or as reasonably expected to be conducted.
(ii) Except as would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, each of the Company and each of its
subsidiaries has complied in all material respects with the terms of all
leases to which it is a party and under which it is in occupancy, and all
such leases are in
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full force and effect. Each of the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such leases.
(s) Intellectual Property. The Company and its subsidiaries own, or
are licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs which are
material to the condition (financial or otherwise) or conduct of the business
and operations of the Company and its subsidiaries taken as a whole. To the
Company's knowledge, (i) the use of such patents, patent rights, trademarks,
trademark rights, service marks, service ▇▇▇▇ rights, trade names, copyrights,
technology, know-how, processes and other proprietary intellectual property
rights and computer programs by the Company and its subsidiaries does not
infringe on the rights of any person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liability on the part of the
Company and its subsidiaries which could have a material adverse effect with
respect to the Company and its subsidiaries, taken as a whole, and (ii) no
person is infringing on any right of the Company or any of its subsidiaries with
respect to any such patents, patent rights, trademarks, trademark rights,
service marks, service ▇▇▇▇ rights, trade names, copyrights, technology,
know-how, processes and other proprietary intellectual property rights and
computer programs. No claims are pending or, to the Company's knowledge,
threatened that the Company or any of its subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
patent, license, trademark, trade name, service ▇▇▇▇, copyright or other
intellectual property right. To the Company's knowledge, no person is infringing
the rights of the Company or any of its subsidiaries with respect to any patent,
license, trademark, trade name, service ▇▇▇▇, copyright or other intellectual
property right.
(t) Labor Matters. There are no collective bargaining agreements or
other labor union agreements or understandings to which the Company or any of
its U.S. subsidiaries is a party or by which any of them is bound, nor is it or
any of its subsidiaries the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions. To the Company's
knowledge, since December 31, 1993, neither the Company nor any of its
significant subsidiaries has encountered any labor union organizing activity, or
had any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts. As used in this Agreement, "significant subsidiary" shall have the
meaning given it in the regulations promulgated under the Exchange Act.
(u) Undisclosed Liabilities. Except as set forth in the SEC Documents,
at the date of the most recent audited financial statements of the Company
included in the SEC Documents, neither the Company nor any of its subsidiaries
had, and since such date neither the Company nor any of such subsidiaries has
incurred (except in the ordinary course of business), any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
required by generally accepted accounting principles to be set forth on a
financial statement or in the notes thereto or which,
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individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(v) Opinion of Financial Advisor. The Company has been advised by
▇▇▇▇▇▇▇▇▇ & Company, Inc. that the Merger Consideration is fair to the holders
of the Shares from a financial point of view, a signed copy of which opinion
will be delivered to Parent for inclusion in the Registration Statement (as
defined in Section 5.1(b)).
(w) Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has by vote of those directors present (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger and the transactions contemplated thereby, are fair to and
in the best interests of the stockholders of the Company, and (ii) resolved to
recommend that the holders of the Shares approve the Merger and the transactions
contemplated thereby.
SECTION 3.2. Representations and Warranties of Parent and Sub. Parent
and Sub agree that they will, on or before October 1, 1996, affirm in writing
(the "Parent Affirmation and Disclosure Document") that, as of the date of this
Agreement, they represent and warrant to, and agree with, the Company as
follows, subject to any exceptions specified in the Parent Affirmation and
Disclosure Document:
(a) Organization; Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. Parent is duly qualified to do business and in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure to be so qualified to do business
(individually or in the aggregate) would not have a material adverse effect on
Parent and its subsidiaries, taken as a whole.
(b) Subsidiaries. Parent's subsidiaries that are corporations are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation and have the requisite
corporate power and authority to carry on their respective businesses as they
are now being conducted and to own, operate and lease the assets they now own,
operate or hold under lease. Parent's subsidiaries are duly qualified to do
business and are in good standing in each jurisdiction in which the nature of
their respective businesses or the ownership or leasing of their respective
properties makes such qualification necessary, other than in jurisdictions where
the failure to be so qualified or in good standing would not have a material
adverse effect on Parent and its subsidiaries, taken as a whole. All the
outstanding shares of capital stock of Parent's subsidiaries that are
corporations have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any person. Except as
disclosed in the Parent SEC Documents (as defined in Section 3.2(e)), all such
stock and ownership interests are owned of record and beneficially by Parent or
by a wholly-owned subsidiary of Parent, free and clear of all Liens. Except for
the capital stock of, or ownership interests in, its subsidiaries, Parent does
not own, directly or indirectly, any capital stock, equity
-16-
interest or other ownership interest in any corporation, partnership,
association, joint venture, limited liability company or other entity.
(c) Capital Structure. The authorized capital stock of Parent consists
of 20,000,000 shares of common stock, $1.25 par value, and 1,000,000 shares of
preferred stock, $1.00 par value, of which 150,000 shares have been designated
Series A Junior Participating Preferred Stock and reserved for issuance pursuant
to the Rights Agreement dated May 31, 1990, between Parent and Wachovia Bank and
Trust Company, N.A., as rights agent. At the close of business on August 31,
1996, 12,136,813 Parent Shares were issued and outstanding, (ii) 35,000 and
295,876 shares of Parent common stock were reserved for issuance pursuant to
options not yet granted under Parent's 1995 Non-Employee Directors' Stock Option
Plan and 1977 Stock Option Plan, respectively, (iii) 79,979 shares of Parent
common stock were reserved for issuance under Parent's Stock Award Plan, (iv)
135,000 and 785,579 shares of Parent common stock were reserved for issuance
pursuant to outstanding options granted under Parent's 1995 Non-Employee
Director Stock Option Plan and 1977 Stock Option Plan and (v) 60,000 shares of
Parent common stock were reserved for issuance pursuant to stock options granted
in certain continuation of service agreements. Except as set forth above, no
shares of capital stock or other equity or voting securities of Parent are
reserved for issuance or outstanding. All outstanding shares of capital stock of
Parent are, and all such shares issuable upon the exercise of options will be,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. No capital stock has been issued by Parent since August 31, 1996, other
than Parent Shares issued pursuant to options outstanding on or prior to such
date in accordance with their terms at such date. Except for the stock options
described above, as of August 31, 1996, there were no outstanding or authorized
securities, options, warrants, calls, rights, commitments, preemptive rights,
agreements, arrangements or undertakings of any kind to which Parent or any of
its subsidiaries is a party, or by which any of them is bound, obligating Parent
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or other equity or voting
securities of, or other ownership interests in, Parent or of any of its
subsidiaries or obligating Parent or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Prior to the Effective Time
of the Merger, Parent shall have taken all necessary action to permit it to
issue the number of Parent Shares required to be issued pursuant to terms of
this Agreement. The Parent Shares issued pursuant to the terms of this Agreement
will, when issued, be validly issued, fully paid and nonassessable and not
subject to preemptive rights. Such Parent Shares will, when issued, be
registered under the Securities Act and the Exchange Act and will, when issued,
be listed on the NYSE, subject to notice of official issuance.
(d) Authority; Non-contravention. Parent and Sub have the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of the Merger and this Agreement by the holders of a majority of the
Parent Shares present in person or represented by proxy at the Parent
Stockholder Meeting ("Parent Stockholder Approval"), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by
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all necessary corporate action on the part of Parent and Sub. This Agreement has
been duly executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub, enforceable against Parent and Sub in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. The execution and delivery of this
Agreement by Parent and Sub do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or Sub or any of their subsidiaries under, any provision of (i) the Certificate
of Incorporation or By-laws of Sub or of Parent or any comparable organizational
documents of their subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or Sub or any of their subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation or arbitration
account applicable to Parent or Sub or any of their subsidiaries or their
respective properties or assets, other than, in the case of clause (ii), any
such conflicts, violations or defaults that individually or in the aggregate
would not materially impair the ability of Parent and Sub to perform their
respective obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub or any of their subsidiaries in
connection with the execution and delivery of this Agreement by Parent and Sub
or the consummation by Parent and Sub of the transactions contemplated hereby,
except for (i) the filing by Parent of a premerger notification and report form
under the HSR Act, (ii) the filing with the SEC of (A) the Proxy Statement with
respect to Parent Stockholder Approval and (B) such reports under Section 13(a)
of the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iii) the filing and effectiveness of the
Registration Statement under the Securities Act, and (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the "takeover" or "blue sky" laws of various states and
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not
have a material adverse effect on Parent.
(e) SEC Documents. Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC since October 1, 1994 (such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein, collectively referred to herein as the
"Parent SEC Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as
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the case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent included in the
Parent SEC Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of 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 in the notes thereto) and fairly present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and other adjustments described therein).
(f) Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement is filed
with the SEC, and at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to the Parent's
stockholders and at the time of the Parent Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement, as it relates to the Parent Stockholder Meeting, will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Parent SEC Documents, since December 31, 1995, Parent has conducted its business
only in the ordinary course consistent with past practice, and there has not
been (i) any material adverse change with respect to Parent, (ii) any
declaration, setting aside or payment of any dividend (whether in cash, stock or
property) with respect to any of Parent's capital stock, (iii) any damage,
destruction or loss, whether or not covered by insurance, that has or reasonably
could be expected to have a material adverse effect on Parent or (iv) any change
in accounting methods, principles or practices by Parent materially affecting
its assets, liabilities or business, except insofar as may have been required by
a change in generally accepted accounting principles.
(h) State Takeover Statutes; Absence of Supermajority Provision.
Parent has taken all action to assure that no state takeover statute or similar
statute or regulation, including, without limitation ss.203 of the DGCL, shall
apply to the
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Merger or any of the other transactions contemplated hereby. Except for the
Parent Stockholder Approval, no other stockholder action on the part of Parent
is required for approval of the Merger and the transactions contemplated hereby.
(i) Brokers. Except for ▇▇▇▇▇▇▇ & Company International, whose fees
are to be paid by Parent, no broker, investment banker or other person, is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub, including any fee for any
opinion rendered by any investment banker.
(j) Litigation. Except as disclosed in the Parent SEC Documents, there
is no suit, action, proceeding or investigation pending or, to the knowledge of
Parent, threatened against or affecting Parent or any of its subsidiaries that
could reasonably be expected to have a material adverse effect on Parent or
prevent, hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Parent or any of its subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future could have, any such effect.
(k) Accounting Matters. Neither Parent nor, to the best of its
knowledge, any of its affiliates, has through the date of this Agreement taken
or agreed to take any action that (without giving effect to any action taken or
agreed to be taken by Parent or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests.
(l) Employee Benefit Matters. As used in this Section 3.2(l), the term
"Parent Employer" shall mean Parent as defined in the preamble of this Agreement
and any member of a controlled group or affiliated service group, as defined in
Sections 414(b), (c), (m) and (o) of the Code of which Parent is a member.
(i) With respect to each employee welfare benefit plan, employee
pension benefit plan and employee benefit plan as defined in Sections 3(1),
3(2), and 3(3) of ERISA, which have been or are sponsored by, participated
in or contributed to by or required to be contributed to by Parent
Employer, and except for any matter that would not individually or in the
aggregate have a material adverse effect on Parent: (A) the plan is in
substantial compliance with the Code and ERISA, including all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA; (B)
the appropriate Form 5500 has been timely filed for each year of its
existence; (C) there has been no transaction described in Sections 406 or
407 of ERISA or Section 4975 of the Code unless exempt under Section 408 of
ERISA or Section 4975 of the Code, as applicable; (D) the bonding
requirements of Section 412 of ERISA have been satisfied; (E) there is no
issue pending nor any issue resolved adversely to Parent Employer which may
subject Parent to the payment of a penalty, interest, tax or other amount;
(F) the plan can be unilaterally terminated or amended on no more than 90
days notice other than collectively bargained union plans; (G) all
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contributions or other amounts payable by Parent Employer as of the
Effective Time of the Merger with respect to the plan have either been paid
or accrued in Parent Employer's most recent financial statements included
in the Parent SEC Documents; and (H) no notice has been received by Parent
Employer of an increase or proposed increase in the cost of any such plan
or any other employee benefit agreement or arrangement, including deferred
compensation plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, golden parachute agreements, severance
pay plans or agreements, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employment contracts and other
similar plans, agreements and arrangements that are currently in effect or
were maintained within three years of the date hereof, or have been
approved before this date but are) not yet effective, for the benefit of
directors, officers or employees, or former directors, officers or
employees (or their beneficiaries) of the Parent Employer (each, a "Parent
Benefit Plan"). There are no pending or, to Parent's knowledge, threatened
or anticipated claims (other than routine claims for benefits) by, or on
behalf of or against any Parent Benefit Plan or their related trusts.
(ii) Neither Parent nor any entity (whether or not incorporated) that
was at any time during the six years before the date of this Agreement
treated as a single employer together with Parent under Section 414 of the
Code has ever maintained, had any obligation to contribute to or incurred
any liability with respect to a pension plan that is or was subject to the
provisions of Title IV of ERISA or Section 412 of the Code. Neither Parent
nor any entity (whether or not incorporated) that was at any time during
the six years before the date of this Agreement treated as a single
employer together with Parent under Section 414 of the Code has ever
maintained, had an obligation to contribute to, or incurred any liability
with respect to a multiemployer pension plan as defined in Section 3(37) of
ERISA. During the last six years, Parent has not maintained, had an
obligation to contribute to or incurred any liability with respect to a
voluntary employees beneficiary association that is or was intended to
satisfy the requirements of Section 501(c)(9) of the Code. Parent Employer
does not provide employee benefits, including without limitation, death,
post-retirement medical or health coverage (whether or not insured) or
contribute to or maintain any employee benefit plan which provides for
benefit coverage following termination of employment except (A) as is
required by Section 4980B(f) of the Code or other applicable statute, (B)
death benefits or retirement benefits under any employee pension benefit
plan as defined in Section 3(2) of ERISA, (C) benefits the full cost of
which is borne by the current or former employee (or his beneficiary) nor
has it made any representations, agreements, covenants or commitments to
provide that coverage or (D) deferred compensation benefits which have been
accrued as liabilities on the books of Parent Employer and disclosed on its
financial statements included in the Parent SEC Documents. All group health
plans maintained by Parent Employer have been operated in material
compliance with Section 4980B(f) of the Code.
(iii) All Parent Benefit Plans as defined in Section 3(2) of ERISA
which are intended to qualify under Section 401(a) of the Code have been
submitted to
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and approved as qualifying under Section 401(a) of the Code by the IRS or
the applicable remedial amendment period will not have ended prior to the
Effective Time of the Merger. No facts have occurred which if known by the
IRS could cause disqualification of those plans.
(iv) The transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, or increase the amount, of
compensation due any director, officer or employee or former director,
officer or employee (including any beneficiary) from Parent.
(v) With respect to any entity (whether or not incorporated) that is
both treated as a single employer together with Parent under Section 414 of
the Code and located outside of the United States, any benefit plans
maintained by it for the benefit of its directors, officers, employees or
former employees (or any of their beneficiaries) are in compliance with
applicable laws pertaining to such plans in the jurisdiction of such
entity, except where such failure to be in compliance would not, either
individually or in the aggregate, have a material adverse effect on Parent
and its subsidiaries, taken as a whole.
(m) Taxes. Each of Parent and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
Parent or any of its subsidiaries is or has been a member, has timely filed all
Tax Returns required to be filed by it on or before the Effective Time of the
Merger and has timely paid or deposited (or Parent has paid of deposited on its
behalf) all Taxes which are required to be paid or deposited on or before the
Effective Time of the Merger. Each of the Tax Returns filed by Parent or any of
its subsidiaries is accurate and complete in all material respects. The most
recent consolidated financial statements of Parent contained in the filed Parent
SEC Documents reflect an adequate reserve for all Taxes payable by Parent and
its subsidiaries for all taxable periods and portions thereof through the date
of such financial statements whether or not shown as being due on any Tax
Returns. No material deficiencies for any Taxes have been proposed, asserted or
assessed against Parent or any of its subsidiaries, no requests for waivers of
the time to assess any such Taxes have been granted or are pending, and there
are no tax liens upon any assets of Parent or any of its subsidiaries. The
Federal income Tax Returns of Parent and its subsidiaries consolidated in such
Tax Returns have been examined by the IRS through the year ended September 30,
1990. There are no current examinations of any Tax Return of Parent or any of
its subsidiaries being conducted and there are no settlements or any prior
examinations which could reasonably be expected to adversely affect any taxable
period for which the statute of limitations has not run.
(n) No Excess Parachute Payments. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of Parent or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or Parent Benefit Plan
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currently in effect would not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code).
(o) Environmental Matters. Except as would not have a material adverse
effect on Parent and its subsidiaries, taken as a whole, (i) the business
operations of Parent and its subsidiaries are being conducted in compliance with
all limitations, restrictions, standards and requirements established under
environmental laws, (ii) no facts or circumstances exist that impose on Parent
or any of its subsidiaries an obligation under environmental laws to conduct any
removal, remediation, or similar response action, (iii) there is no obligation,
undertaking or liability arising out of or relating to environmental laws that
Parent or any of its subsidiaries has agreed to, assumed or retained, by
contract or otherwise, or that has been imposed on Parent or any of its
subsidiaries by any writ, injunction, decree, order or judgment, and (iv) there
are no lawsuits, claims or proceedings pending against Parent or any of its
subsidiaries that arise out of or relate to environmental laws.
(p) Compliance with Laws. Parent and its subsidiaries hold all
required, necessary or applicable permits, licenses, variances, exemptions,
orders, franchises and approvals of all Governmental Entities, except where the
failure to so hold would not have a material adverse effect on Parent and its
subsidiaries taken as a whole (the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of Parent Permits except where the
failure to so comply would not have a material adverse effect on Parent and its
subsidiaries, taken a whole. Neither Parent nor any of its subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation, rule,
permit or order of any Federal, state or local government, domestic or foreign,
or any Governmental Entity, any arbitration award or any judgment, decree or
order of any court or other Governmental Entity, applicable to Parent or any of
its subsidiaries or their respective business, assets or operations, except for
violations and failures to comply that could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on Parent
and its subsidiaries, taken as a whole.
(q) Material Contracts and Agreements. All material contracts of
Parent or its subsidiaries have been included in the SEC Documents, except for
those contracts not required to be filed pursuant to the rules and regulations
of the SEC.
(r) Title to Properties.
(i) Each of Parent and each of its subsidiaries has good and
defensible title to, or valid leasehold interests in, all its properties
and assets purported to be owned by it in the Parent SEC Documents, except
for such as are no longer used or useful in the conduct of its businesses
or as have been disposed of in the ordinary course of business and except
for minor defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted or as reasonably expected to be conducted. All such assets and
properties, other than assets and properties in which Parent or any of the
subsidiaries has leasehold interests, are free and clear of all Liens,
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other than those set forth in the Parent SEC Documents and except for minor
Liens, that, in the aggregate, do not and will not materially interfere
with the ability of Parent or any of its subsidiaries to conduct business
as currently conducted or as reasonably expected to be conducted.
(ii) Except as would not have a material adverse effect on Parent and
its subsidiaries, taken as a whole, each of Parent and each of its
subsidiaries has complied in all material respects with the terms of all
leases to which it is a party and under which it is in occupancy, and all
such leases are in full force and effect. Each of Parent and each of its
subsidiaries enjoys peaceful and undisturbed possession under all such
leases.
(s) Intellectual Property. Parent and its subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs which are
material to the condition (financial or otherwise) or conduct of the business
and operations of Parent and its subsidiaries, taken as a whole. To Parent's
knowledge, (i) the use of such patents, patent rights, trademarks, trademark
rights, service marks, service ▇▇▇▇ rights, trade names, copyrights, technology,
know-how, processes and other proprietary intellectual property rights and
computer programs by Parent and its subsidiaries does not infringe on the rights
of any person, subject to such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of Parent and its subsidiaries
which could have a material adverse effect with respect to Parent and its
subsidiaries, taken as a whole, and (ii) no person is infringing on any right of
Parent or any of its subsidiaries with respect to any such patents, patent
rights, trademarks, trademark rights, service marks, service ▇▇▇▇ rights, trade
names, copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs. No claims are pending or, to
Parent's knowledge, threatened that Parent or any of its subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any patent, license, trademark, trade name, service ▇▇▇▇, copyright or other
intellectual property right. To Parent's knowledge, no person is infringing the
rights of Parent or any of its subsidiaries with respect to any patent, license,
trademark, trade name, service ▇▇▇▇, copyright or other intellectual property
right.
(t) Labor Matters. There are no collective bargaining agreements or
other labor union agreements or understandings to which Parent or any of its
U.S. subsidiaries is a party or by which any of them is bound, nor is it or any
of its subsidiaries the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions. To Parent's
knowledge, since December 31, 1993, neither Parent nor any of its significant
subsidiaries has encountered any labor union organizing activity, or had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts.
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(u) Undisclosed Liabilities. Except as set forth in the Parent SEC
Documents, at the date of the most recent audited financial statements of Parent
included in the Parent SEC Documents, neither Parent nor any of its subsidiaries
had, and since such date neither Parent nor any of such subsidiaries has
incurred (except in the ordinary course of business), any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
required by generally accepted accounting principles to be set forth on a
financial statement or in the notes thereto or which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Parent and its subsidiaries, taken as a whole.
(v) Opinion of Financial Advisor. Parent has been advised by ▇▇▇▇▇▇▇ &
Company International that the Merger Consideration is fair to the holders of
the Parent Shares from a financial point of view, a signed copy of which opinion
will be delivered to the Company for inclusion in the Registration Statement.
(w) Board Recommendation. The Board of Directors of Parent, at a
meeting duly called and held, has by vote of those directors present (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger and the transactions contemplated thereby, are fair to and
in the best interests of the stockholders of Parent, and (ii) resolved to
recommend that the holders of the Parent Shares approve the Merger and the
transactions contemplated thereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business of the Company.
(a) Ordinary Course. During the period from the date of this Agreement
to the Effective Time of the Merger (except as otherwise specifically
contemplated by the terms of this Agreement), the Company shall and shall cause
its significant subsidiaries to carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them, in each case consistent with past
practice, to the end that their goodwill and ongoing businesses shall be
unimpaired to the fullest extent possible at the Effective Time of the Merger.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement, the Company shall not, and shall not
permit any of its subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly-owned subsidiary of the
Company to the Company or a wholly-owned subsidiary of the Company, (B)
split, combine
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or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than, in the
case of the Company, the issuance of shares of Company Common Stock upon
the exercise of Stock Options outstanding on the date of this Agreement in
accordance with their current terms);
(iii) amend its Certificate of Incorporation, By-laws or other
comparable charter or organizational document;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the stock or assets of, or by any
other manner, any business or any corporation, partnership, association,
joint venture, limited liability company or other entity or division
thereof or (B) any assets that would be material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole, except
purchases of supplies and inventory in the ordinary course of business
consistent with past practice;
(v) sell, lease, mortgage, pledge, ▇▇▇▇▇ ▇ ▇▇▇▇ on or otherwise
encumber or dispose of any of its properties or assets, except (A) sales of
inventory in the ordinary course of business consistent with past practice,
(B) the sale of buildings in ▇▇▇▇▇▇▇, Ohio and Glenrothes, Scotland, and
(C) other immaterial transactions not in excess of $250,000 in the
aggregate;
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for working capital
borrowings under currently existing revolving credit facilities incurred in
the ordinary course of business, or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than to the
Company or any direct or indirect wholly-owned subsidiary of the Company;
(vii) make or incur any new capital expenditure, which, singly or in
the aggregate with all other expenditures, would exceed $500,000;
(viii) make any material election relating to Taxes or settle or
compromise any material Tax liability;
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(ix) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the SEC Documents or incurred in the ordinary course of
business consistent with past practice;
(x) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(xi) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(xii) except as expressly permitted by this Agreement, enter into any
new collective bargaining agreement;
(xiii) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC;
(xiv) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises:
(A) of litigation where the amount paid in settlement or compromise does
not exceed $100,000, or (B) in consultation and cooperation with Parent,
and, with respect to any such settlement, with the prior written consent of
Parent; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Changes in Employment Arrangements. Neither the Company nor any of
its subsidiaries shall (except as may be required in order to give effect to the
requirements of Section 5.6) adopt or amend (except as may be required by law)
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement (including any Company Benefit Plan) for the
benefit or welfare of any employee, director or former director or employee,
increase the compensation or fringe benefits of any officer of the Company or
any of its subsidiaries, or, except as provided in an existing Company Benefit
Plan or in the ordinary course of business consistent with past practice,
increase the compensation or fringe benefits of any employee or former employee
or pay any benefit not required by any existing plan, arrangement or agreement.
(c) Severance. Neither the Company nor any of its subsidiaries shall
grant any new or modified severance or termination arrangement or increase or
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accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
(d) Other Actions. The Company shall not, and shall not permit any of
its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of the Company
set forth in this Agreement becoming untrue.
SECTION 4.2. Conduct of Business of Parent and Sub.
(a) Ordinary Course. During the period from the date of this Agreement
to the Effective Time of the Merger (except as otherwise specifically
contemplated by the terms of this Agreement), Parent shall and shall cause each
of its significant subsidiaries to carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement, Parent shall not,
and shall not permit any of its significant subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than (I)
dividends and distributions by any direct or indirect wholly-owned
subsidiary of Parent to Parent or a wholly-owned subsidiary of Parent or
(II) regular quarterly cash dividends declared or paid by Parent consistent
with past practice, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or (C)
purchase, redeem or otherwise acquire any shares of capital stock of Parent
or any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities other than, in the case
of Parent, (A) the issuance of Parent Shares upon the exercise of Stock
Options outstanding on the date of this Agreement in accordance with their
current terms, or (B) the issuance of a number of Parent Shares, not to
exceed 5% of the Parent Shares currently outstanding, in connection with
the acquisition of assets or equity securities of other entities or
businesses;
(iii) amend its Certificate of Incorporation, By-laws, or other
comparable charter or organizational document;
(iv) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
-28-
(v) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC; or
(vi) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Parent shall not, and shall not permit any of its
subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of Parent or
Sub set forth in this Agreement becoming untrue.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement;
Preparation of Registration Statement. (a) Each of the Company and Parent shall,
as soon as practicable following the execution and delivery of this Agreement on
dates to be agreed upon between Parent and the Company, which dates shall be set
taking into account the status of pending regulatory matters pertaining to the
transactions contemplated hereby, duly call, give notice of, convene and hold
the Company Stockholders Meeting and the Parent Stockholders Meeting,
respectively, for the purpose of approving the Merger, this Agreement and the
transactions contemplated hereby. Subject to the provisions of Sections 8.2(b)
and 8.3(b), each of the Company and Parent will, through its Board of Directors,
recommend to its stockholders the approval and adoption of the Merger.
(b) Promptly following the date of this Agreement, the Company and
Parent shall prepare and file with the SEC the Proxy Statement, and Parent shall
prepare and file with the SEC a registration statement on Form S-4 (the
"Registration Statement"), in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its reasonable efforts as
promptly as practicable, subject to the setting of the date for the Company
Stockholders Meeting and Parent Stockholder Meeting as provided in Section
5.1(a), to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing. Each of the Company
and Parent will use its reasonable efforts to cause the Proxy Statement to be
mailed to the Company's stockholders and Parent's stockholders, respectively, as
promptly as practicable after the Registration Statement is declared effective
under the Securities Act. Parent shall also take such reasonable actions (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified) as may be required to be taken under any applicable state securities
laws in connection with the issuance of Parent Shares in the Merger, and the
Company shall furnish all information concerning the Company and the holders of
the Shares and rights to acquire Shares pursuant to the Stock Plans as may be
reasonably requested in connection with any such action. The Company and Parent
will notify each other promptly of the receipt of any written or oral comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy
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Statement or for additional information and will supply each other with copies
of all correspondence between the Company or Parent, respectively, or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger.
(c) Parent agrees to use its best efforts to effect the listing on the
NYSE prior to the Effective Time of the Merger, upon official notice of
issuance, Parent Shares to be issued pursuant to the Merger.
(d) Parent agrees to cause all Shares, if any, owned by it or by Sub
or any other subsidiary of Parent to be voted in favor of the approval and
adoption of this Agreement. The Company agrees to cause all Parent Shares, if
any, owned by it or any of its subsidiaries to be voted in favor of the approval
and adoption of this Agreement.
(e) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement.
SECTION 5.2. Letter of the Company's Accountants. The Company shall
use its best efforts to cause to be delivered to Parent a letter of Coopers &
▇▇▇▇▇▇▇ L.L.P., the Company's independent public accountants, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Parent and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement. In
connection with the Company's efforts to obtain such letter, if requested by
Coopers & ▇▇▇▇▇▇▇ L.L.P., Parent shall provide a representation letter to
Coopers & ▇▇▇▇▇▇▇ L.L.P. complying with SAS 72, if then required.
SECTION 5.3. Letter of Parent's Accountants. Parent shall use its best
efforts to cause to be delivered to the Company a letter of Price Waterhouse
LLP, Parent's independent public accountants, dated a date within two business
days before the date on which the Registration Statement shall become effective
and addressed to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement. In connection with Parent's
efforts to obtain such letter, if requested by Price Waterhouse LLP, the Company
shall provide a representation letter to Price Waterhouse LLP complying with SAS
72, if then required.
SECTION 5.4. Access to Information.
(a) During the period from the date hereof to the Effective Time of
the Merger, except to the extent otherwise required by United States regulatory
considerations,
(i) the Company shall, and shall cause each of its subsidiaries,
officers, employees, counsel, financial advisors and other representatives
to, afford to Parent, and to Parent's accountants, counsel, financial
advisors and other
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representatives, reasonable access to the Company's and its subsidiaries'
respective properties, books, contracts, commitments and records and,
during such period, the Company shall, and shall cause each of its
subsidiaries, officers, employees, counsel, financial advisors and other
representatives to, furnish promptly to Parent:
(A) a copy of each report, schedule, registration statement and
other document filed by the Company during such period pursuant to the
requirements of Federal or state securities laws and
(B) all other information concerning its business, properties,
financial condition, operations and personnel as Parent may from time
to time reasonably request so as to afford Parent a reasonable
opportunity to make at its sole cost and expense such review,
examination and investigation of the Company and its subsidiaries as
Parent may reasonably desire to make. The Company agrees to advise
Parent of all material developments with respect to the Company, its
subsidiaries and their respective assets and liabilities. Without
limiting the information required to be provided pursuant to this
Section 5.4(a)(i), the Company will, on or before October 1, 1996,
provide to Parent the following information, in each case, as of the
date hereof, each of which upon delivery shall be deemed to have been
represented and warranted as true and correct as if so done on the
date hereof and shall thereafter be deemed incorporated herein as if
made as a representation or warranty in Article III hereof:
(1) a schedule showing the subsidiaries of the Company, the
states of incorporation or organization of each thereof and the
authorized and outstanding capital stock or ownership interests
of each thereof, as well as such shares or ownership interests
owned by either the Company or another identified subsidiary of
the Company;
(2) a schedule listing all loan or credit agreements, notes,
bonds, security agreements, mortgages, indentures, material
leases, tax sharing or allocation agreements, permits,
concessions, franchises or licenses to which any of the Company
or its subsidiaries is a party, by which any of their respective
property is subject or under which it enjoys any benefit;
(3) a schedule listing all other agreements or instruments
to which any of the Company or its subsidiaries is a party or by
which any of their respective property is subject, which involved
any obligation on the part of the Company or any subsidiary to
pay more than $500,000;
(4) a schedule listing all suits, proceedings,
investigations, or governmental audits, inspections or
assessments pending or, to
-31-
the Company's best knowledge, threatened against or affecting the
Company or any of its subsidiaries or to which the Company or any
of its subsidiaries is a party or, in the case of threatened
matters, a possible party;
(5) a schedule listing all Company Benefit Plans;
(6) a schedule listing all reports, proxy statements,
registration statements and any other filings made by the Company
with the SEC since March 7, 1994;
(7) a schedule listing all intellectual property owned by
the Company or any of its subsidiaries or as to which the Company
or any such subsidiary is a beneficiary as to which any formal
action has been taken to protect the same; and
(8) complete and accurate copies of (I) any document, plan,
arrangement, instrument, agreement or report listed in any of the
foregoing schedules upon request by Parent, (II) the Company's
Certificate of Incorporation and By-laws and the articles or
certificates of incorporation, by-laws or other similar
organizational and governing documents of its subsidiaries, and
(III) with respect to each Company Benefit Plan, as applicable,
(t) the trust, group annuity contract or other document which
provides the funding for the plan, agreement or arrangement, (u)
the three most recent annual Form 5500, 990 and 1041 reports, (v)
the most recent actuarial report or valuation statement, (x) the
most current summary plan description, booklet, or other
descriptive written materials, and each summary of material
modifications prepared after the last summary plan description,
(y) the most recent IRS determination letter and all requests for
rulings or determinations from the IRS subsequent to the date of
that determination letter and (z) all other material
correspondence from the IRS or the Department of Labor received
which relates to one or more of the plans, agreements or
arrangements.
(ii) Parent shall, and shall cause each of its subsidiaries, officers,
employees, counsel, financial advisors and other representatives to, afford
to the Company, and to the Company's accountants, counsel, financial
advisors and other representatives, reasonable access to Parent's and its
subsidiaries' respective properties, books, contracts, commitments and
records and, during such period, Parent shall, and shall cause each of its
subsidiaries, officers, employees, counsel, financial advisors and other
representatives to, furnish promptly to the Company:
(A) a copy of each report, schedule, registration statement and
other document filed by Parent during such period pursuant to the
requirements of Federal or state securities laws and
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(B) all other information concerning its business, properties,
financial condition, operations and personnel as the Company may from
time to time reasonably request so as to afford the Company a
reasonable opportunity to make at its sole cost and expense such
review, examination and investigation of Parent and its subsidiaries
as the Company may reasonably desire to make. Parent agrees to advise
the Company of all material developments with respect to Parent, its
subsidiaries and their respective assets and liabilities. Without
limiting the information required to be provided pursuant to this
Section 5.4(a)(ii), Parent will, on or before October 1, 1996, provide
to the Company the following information, in each case, as of the date
hereof, each of which upon delivery shall be deemed to have been
represented and warranted as true and correct as if so done on the
date hereof and shall thereafter be deemed incorporated herein as if
made as a representation or warranty in Article III hereof:
(1) a schedule showing the subsidiaries of Parent, the
states of incorporation or organization of each thereof and the
authorized and outstanding capital stock or ownership interests
of each thereof, as well s such shares or ownership interests
owned by either Parent or another identified subsidiary of
Parent;
(2) a schedule listing all loan or credit agreements, notes,
bonds, security agreements, mortgages, indentures, material
leases, tax sharing or allocation agreements, permits,
concessions, franchises or licenses to which any of Parent or its
subsidiaries is a party, by which any of their respective
property is subject or under which it enjoys any benefit;
(3) a schedule listing all other agreements or instruments
to which any of Parent or its subsidiaries is a party or by which
any of their respective property is subject, which involved any
obligation on the part of Parent or any subsidiary to pay more
than $500,000;
(4) a schedule listing all suits, proceedings,
investigations, or governmental audits, inspections or
assessments pending or, to Parent's best knowledge, threatened
against or affecting Parent or any of its subsidiaries or to
which Parent or any of its subsidiaries is a party or, in the
case of threatened matters, a possible party;
(5) a schedule listing all Parent Benefit Plans;
(6) a schedule listing all reports, proxy statements,
registration statements and any other filings made by Parent with
the SEC since March 7, 1994;
(7) a schedule listing all intellectual property owned by
Parent or any of its subsidiaries or as to which Parent or any
such
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subsidiary is a beneficiary as to which any formal action has
been taken to protect the same; and
(8) complete and accurate copies of (I) any document, plan,
arrangement, instrument, agreement or report listed in any of the
foregoing schedules upon request by the Company, (II) Parent's
Certificate of Incorporation and By-laws and the articles or
certificates of incorporation, by-laws or other similar
organizational and governing documents of its subsidiaries, and
(III) with respect to each Company Benefit Plan, as applicable,
(t) the trust, group annuity contract or other document which
provides the funding for the plan, agreement or arrangement, (u)
the three most recent annual Form 5500, 990 and 1041 reports, (v)
the most recent actuarial report or valuation statement, (x) the
most current summary plan description, booklet, or other
descriptive written materials, and each summary of material
modifications prepared after the last summary plan description,
(y) the most recent IRS determination letter and all requests for
rulings or determinations from the IRS subsequent to the date of
that determination letter and (z) all other material
correspondence from the IRS or the Department of Labor received
which relates to one or more of the plans, agreements or
arrangements.
(iii) (A) The Company agrees to permit Parent and its
representatives to have full access to all the books and records of
the Company and its subsidiaries and to request Coopers & ▇▇▇▇▇▇▇
L.L.P. to permit Price Waterhouse LLP, to review and examine the work
papers of Coopers & ▇▇▇▇▇▇▇ L.L.P. with respect to the Company and its
subsidiaries, and the officers of the Company will furnish to Parent
such financial and operating data and other information with respect
to the business and properties of the Company and its subsidiaries as
Parent shall from time to time reasonably request, and
(B) Parent agrees to permit the Company and its representatives
to have full access to all the books and records of Parent and its
subsidiaries and to request Price Waterhouse LLP to permit Coopers &
▇▇▇▇▇▇▇ L.L.P., to review and examine the work papers of Price
Waterhouse LLP with respect to Parent and its subsidiaries, and the
officers of Parent will furnish to the Company such financial and
operating data and other information with respect to the business and
properties of Parent and its subsidiaries as the Company shall from
time to time reasonably request.
(iv) The Company shall promptly notify Parent of any notices from or
investigations by Governmental Entities that could materially affect the
Company's business or assets. Parent will promptly notify the Company of
any notices from or investigations by Governmental Entities that could
materially affect the consummation of the Merger.
-34-
(b) Except as required by law, each of the Company and Parent shall,
and shall cause its respective directors, officers, employees, accountants,
counsel, financial advisors and representatives and affiliates to, (i) hold in
confidence, unless compelled to disclose by judicial or administrative process,
or, in the opinion of its counsel, by other requirements of law, all nonpublic
information concerning the other party furnished in connection with the
transactions contemplated by this Agreement until such time as such information
becomes publicly available (otherwise than through the wrongful act of such
person), (ii) not release or disclose such information to any other person,
except in connection with this Agreement to its auditors, attorneys, financial
advisors, other consultants and advisors, and (iii) not use such information for
any competitive or other purpose other than with respect to its consideration
and evaluation of the transactions contemplated by this Agreement. Any
investigation by any party of the assets and business of the other party and its
subsidiaries shall not affect any representations and warranties hereunder or
either party's right to terminate this Agreement as provided in Article VII.
(c) In the event of the termination of this Agreement, each party
promptly will deliver to the other party (and destroy all electronic data
reflecting the same) all documents, work papers and other material (and any
reproductions or extracts thereof and any notes or summaries thereto) obtained
by such party or on its behalf from such other party or its subsidiaries as a
result of this Agreement or in connection therewith so obtained before or after
the execution hereof.
SECTION 5.5. Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, except to the extent
otherwise required by United States regulatory considerations and otherwise
provided in this Section 5.5, each of the parties agrees to use reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger, and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and (iv)
the execution and delivery of any additional instruments (including any required
supplemental indentures) necessary to consummate the transactions contemplated
by this Agreement. In connection with and without limiting the foregoing, each
of the Company and Parent and its respective Board of Directors shall (i) take
all action necessary to ensure that no state takeover statute or similar statute
or regulation is or becomes applicable to the Merger, (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Merger, take
all action necessary to ensure that the Merger may be consummated as promptly as
practicable
-35-
on the terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and (iii) cooperate with each other
in the arrangements for refinancing any indebtedness of, or obtaining any
necessary new financing for, the Company and the Surviving Corporation.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate in any
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations or warranties or covenants or agreements of the
parties or the conditions to the obligations of the parties hereunder.
(c)(i) Each of the parties hereto shall file a premerger notification
and report form under the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement.
Each of the parties agrees to use reasonable efforts to promptly respond to
any request for additional information pursuant to Section (e)(1) of the
HSR Act.
(ii) The Company will furnish to Parent and Sub copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof (collectively, "Company HSR Documents")) between the
Company, or any of its respective representatives, on the one hand, and any
Governmental Entity, or members of the staff of such agency or authority,
on the other hand, with respect to this Agreement or the Merger; provided,
however, that (x) with respect to documents and other materials filed by or
on behalf of the Company with the Antitrust Division of the Department of
Justice, the Federal Trade Commission, or any state attorneys general that
are available for review by Parent and Sub, copies will not be required to
be provided to Parent and Sub and (y) with respect to any Company HSR
Documents (1) that contain any information which, in the reasonable
judgment of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., should not be furnished to Parent or
Sub because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of the Company to furnish any such Company HSR Documents to
Parent and Sub shall be satisfied by the delivery of such Company HSR
Documents on a confidential basis to Fulbright & ▇▇▇▇▇▇▇▇ L.L.P. pursuant
to a confidentiality agreement in form and substance reasonably
satisfactory to Parent. Except as otherwise required by United States
regulatory considerations, Parent and Sub will furnish to the Company
copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof (collectively, "Parent HSR Documents"))
between Parent, Sub or any of their respective representatives, on the one
hand, and any Governmental Entity, or member of the staff of such agency or
authority, on the other hand, with respect to this Agreement or the Merger;
provided, however, that (x) with respect to documents and other materials
filed by or on behalf of Parent or Sub with the Antitrust Division of the
Department of Justice, the Federal Trade Commission, or any state attorneys
general that are available for review by the Company,
-36-
copies will not be required to be provided to the Company, and (y) with
respect to any Parent HSR Documents (1) that contain information which, in
the reasonable judgment of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., should not be
furnished to the Company because of antitrust considerations or (2)
relating to a request for additional information pursuant to Section (e)(1)
of the HSR Act, the obligation of Parent and Sub to furnish any such Parent
HSR Documents to the Company shall be satisfied by the delivery of such
Parent HSR Documents on a confidential basis to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
pursuant to a confidentiality agreement in form and substance reasonably
satisfactory to the Company.
(iii) At the election of Parent, the Company and Parent shall use
reasonable efforts to defend all litigation under the Federal or state
antitrust laws of the United States which if adversely determined would, in
the reasonable opinion of Parent (based on the advice of outside counsel),
be likely to result in the failure of the condition set forth in Section
6.2(h) not being satisfied, and to appeal any order, judgment or decree,
which if not reversed, would result in the failure of such condition.
Notwithstanding the foregoing, nothing contained in this Agreement shall be
construed so as to require Parent, Sub or the Company, or any of their
respective subsidiaries or affiliates, to sell, license, dispose of, or
hold separate, or to operate in any specified manner, any assets or
businesses of Parent, Sub, the Company or the Surviving Corporation (or to
require Parent, Sub, the Company or any of their respective subsidiaries or
affiliates to agree to any of the foregoing). The obligations of each party
under Section 5.5(a) to use reasonable efforts with respect to antitrust
matters shall be limited to compliance with the reporting provisions of the
HSR Act and with its obligations under this Section 5.5(c).
SECTION 5.6. Employee Benefit Matters.
(a) At or before the Effective Time of the Merger, the Company shall
take such actions as may be necessary to cause each individual employed by the
Company and its subsidiaries immediately prior to the Effective Time of the
Merger (a "Company Employee") to have a fully vested and nonforfeitable interest
in such employee's accrued benefits under each Company Benefit Plan that is
intended to qualify under Section 401(a) of the Code.
(b) Parent may cause any Company Benefit Plan to be terminated or
discontinued at or after the Effective Time of the Merger, provided that, to the
extent Parent or its affiliates maintain a Parent Benefit Plan of the same type
for employees of Parent or any of its affiliates, Parent shall take all actions
necessary or appropriate to permit the Company Employees participating in such
Company Benefit Plan to immediately thereafter participate in such Parent
Benefit Plan of the same type maintained by Parent or any of its affiliates for
their employees generally (a "Replacement Plan"); provided, however, that if the
Company Benefit Plan that is so terminated or discontinued is a group health
plan, then Parent shall permit each Company Employee participating in such group
health plan and his or her eligible dependents to be covered under a Replacement
Plan under the terms and conditions of the Replacement Plan as modified to the
extent necessary to (i) provide medical and
-37-
dental benefits to each such Company Employee and such eligible dependents
effective immediately upon the cessation of coverage of such individuals under
such group health plan, (ii) credit to such Company Employee, for the year
during which such coverage under such Replacement Plan begins, with any
deductibles and copayments already incurred during such year under such group
health plan, and (iii) waive any preexisting condition restrictions to the
extent that the preexisting condition restrictions were satisfied under such
group health plan. Parent, the Surviving Corporation, their affiliates, and the
Parent Benefit Plans (including, without limitation, the Replacement Plans)
shall recognize each Company Employee's years of service and level of seniority
with the Company and its subsidiaries for purposes of terms of employment and
eligibility, vesting and benefit determination under the Parent Benefit Plans
(other than benefit accruals under any defined benefit pension plan). Nothing in
this Agreement shall be construed to require Parent to provide any particular
type or amount of benefits for any person under any Parent Benefit Plan.
(c) Parent agrees to assume, effective as of the Effective Time of the
Merger, each option to purchase shares of Company Common Stock granted under the
Company's 1994 Stock Incentive Plan (an "Employee Option") (whether or not
vested) and, to the extent permitted, under the 1994 Nonemployee Directors'
Stock Option Plan ("Director Option") that is currently outstanding and which
remains as of such time unexercised in whole or in part and to substitute Parent
Shares as purchasable under such assumed option ("Assumed Option"), with such
assumption and substitution to be effected as follows:
(i) the Assumed Option shall not give the optionee additional benefits
which he did not have under the Employee Option or Director Option before
such assumption;
(ii) the number of Parent Shares purchasable under any Assumed Option
shall be equal to the number of whole Parent Shares that the holder of the
Employee Option or Director Option being assumed would have received upon
consummation of the Merger had such Employee Option been exercised in full
prior to the Merger;
(iii) the per share option price of the Assumed Option shall be equal
to the per share option price of the Employee Option or Director Option
divided by .58; and
(iv) except for adjustment in the number and price of option shares as
set forth above, the Assumed Option or Director Option shall contain
substantially the same terms as the Employee Option before such assumption.
As soon as practicable after the Effective Time of the Merger, Parent shall
deliver to such holders of Employee Options or Director Options appropriate
agreements evidencing its assumption of such options. Promptly after the
Merger, Parent shall file a registration statement on Form S-8 with the SEC
with respect to the Parent Shares issuable in respect of the Assumed
Options and Parent shall use its best efforts to maintain the effectiveness
of such registration
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statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Assumed Options remain
outstanding.
SECTION 5.7. Indemnification. (a) Parent and Sub agree that all rights
to indemnification for acts or omissions occurring prior to the Effective Time
of the Merger now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws and Indemnity Agreements shall survive
the Merger, and Parent shall cause the Surviving Corporation to continue such
indemnification rights in full force and effect in accordance with their terms
as an obligation of the Surviving Corporation for a period of not less than five
years from the Effective Time of the Merger. Parent shall cause to be maintained
for a period of five years from the Effective Time of the Merger (or such
shorter period of time as shall be agreed to hereafter by the Indemnification
Representatives (or, upon the death of either, the sole surviving
Indemnification Representative) (as hereinafter defined)) the Company's current
directors' and officers' insurance and indemnification policy to the extent that
it provides coverage for events occurring at or prior to the Effective Time of
the Merger (the "D&O Insurance") for all persons who are directors and officers
of the Company on the date hereof or will cause to be provided a comparable
arrangement (which may include self-insurance by Parent). Parent hereby
guarantees the payment by the Surviving Corporation of the full annual premium
for such D&O Insurance or comparable arrangement regardless of increases in the
amount of such annual premium. The Company represents that the current annual
premium for the existing D&O Insurance, which is in full force and effect and
provides aggregate coverage of $10,000,000 million, is $99,000 for the policy
year ending May 20, 1997. The Company has furnished Parent with a copy of the
current D&O Insurance Policy and with copies of all material correspondence and
other written materials with respect thereto. "Indemnification Representatives"
shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation, which shall be financially
responsible persons or entities, assume the obligations set forth in this
Section 5.7.
(c) The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each indemnified
party, his heirs and representatives.
SECTION 5.8. Fees and Expenses. Except as provided in Article VIII,
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated.
SECTION 5.9. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing
any
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press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except
that each party may respond to questions from stockholders and Parent may
respond to inquiries from financial analysts and media representatives in a
manner consistent with its past practice and each party may make such disclosure
as may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange without prior consultation to
the extent such consultation is not reasonably practicable. The parties agree
that the initial press release or releases to be issued in connection with the
execution of this Agreement shall be mutually agreed upon prior to the issuance
thereof.
SECTION 5.10. Stockholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement until the Effective Time of the Merger, and
thereafter, shall give Parent the opportunity to direct the defense of such
litigation and, if Parent so chooses to direct such litigation, Parent shall
give the Company and its directors an opportunity to participate in such
litigation; provided, however, that no settlement of litigation shall be agreed
to without the consent of Parent, the Company and its directors, which consent
shall not be unreasonably withheld.
SECTION 5.11. Accounting Matters. Neither the Company nor Parent shall
take or agree to take, nor shall they permit any of their respective affiliates
to take or agree to take, any action that would prevent Parent from accounting
for the business combination to be effected by the Merger as a pooling of
interests.
SECTION 5.12. Parent's Board of Directors. At the Effective Time of
the Merger, the directors of Parent shall elect two persons mutually agreed to
by the Chairman of the Board of Parent and the Chairman of the Board of the
Company to replace two of the existing directors of Parent, for a total of nine
directors.
SECTION 5.13. Appointment of Directors to Committees. Parent's Board
of Directors shall take the requisite action to appoint at the Effective Time of
the Merger the two Directors designated by the Chairman of the Board of Parent
and the Chairman of the Board of the Company to committees of the Board of
Directors of Parent, one being appointed to the Executive Committee and the
other being appointed to the Compensation Committee.
SECTION 5.14. Appointment of W. ▇▇▇▇ ▇▇▇▇▇▇▇ as Executive Vice
President. Parent's Board of Directors shall take the requisite action to elect
W. ▇▇▇▇ ▇▇▇▇▇▇▇ as an Executive Vice President of Parent at the Effective Time
of the Merger, understanding that ▇▇. ▇▇▇▇▇▇▇ will become an employee-at-will of
Parent but will be entitled to all rights under his existing employment contract
with the Company.
SECTION 5.15. Affirmation of this Agreement. If this Agreement has not
been terminated pursuant to Sections 7.1(f) or (g) on or before October 14,
1996, the parties hereto agree that, on such date, they will execute and deliver
to each other a
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document whereby they reaffirm each and every agreement (other than the first
sentence in each of Sections 3.1 and 3.2), representation and warranty contained
or deemed to be contained herein, including those contained in the Company
Affirmation and Disclosure Document and the Parent Affirmation and Disclosure
Document, and, upon such reaffirmation, each such agreement, representation and
warranty shall, for all purposes, be deemed agreements, representations and
warranties contained in this Agreement and made on and as of the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company Stockholder Approval and Parent
Stockholder Approval shall have been obtained.
(b) NYSE Listing. Parent Shares issuable to the Company's stockholders
pursuant to the Merger shall have been approved for listing on the NYSE, subject
to official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties hereto shall, subject to Section 5.5, use reasonable efforts to have any
such injunction, order, restraint or prohibition vacated.
(e) Registration Statement Effectiveness. The Registration Statement
shall be effective under the Securities Act on the Closing Date, and all
post-effective amendments filed shall have been declared effective or shall have
been withdrawn; and no stop-order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the parties, threatened by the SEC.
(f) Blue Sky Filings. There shall have been obtained any and all
material permits, approvals and consents of securities or "blue sky" authorities
of any jurisdiction that are necessary so that the consummation of the Merger
and the transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a material adverse effect on
Parent.
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SECTION 6.2. Conditions of Parent and Sub. The obligation of Parent
and Sub to consummate the Merger are further subject to the satisfaction at the
Effective Time of the Merger, of the following conditions:
(a) Compliance. The agreements and covenants of the Company to be
complied with or performed on or before the Closing Date pursuant to the terms
hereof shall have been duly complied with or performed in all material respects
and Parent shall have received a certificate dated the Closing Date and executed
on behalf of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
(b) Certifications and Opinion. The Company shall have furnished
Parent with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors of the Company approving this Agreement and
consummation of the Merger and the transactions contemplated hereby and
directing the submission of the Merger to a vote of the stockholders of the
Company;
(ii) a certified copy of a resolution or resolutions duly adopted by
the holders of a majority of the outstanding Shares approving the Merger
and the transactions contemplated hereby;
(iii) a favorable opinion dated the Closing Date, in customary form
and substance, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Company, dated
the Closing Date to the effect that:
(A) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
and has corporate power to own its properties and assets and to carry
on its business as presently conducted and as described in the
Registration Statement;
(B) The Company has the requisite corporate power to effect the
Merger as contemplated by this Agreement; the execution and delivery
of this Agreement did not, and the consummation of the Merger will
not, violate any provision of the Company's Certificate of
Incorporation or By-Laws; and upon the filing by the Surviving
Corporation of the Certificate of Merger, the Merger shall become
effective;
(C) Each of the U.S. subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has corporate power to own its
properties and assets and to carry on its business as presently
conducted; and
(D) The Board of Directors of the Company has taken all action
required by the DGCL and its Certificate of Incorporation or its
By-Laws
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to approve the Merger and to authorize the execution and delivery of
this Agreement and the transactions contemplated hereby; the Board of
Directors and the stockholders of the Company have taken all action
required by the DGCL and its Certificate of Incorporation and By-Laws
to authorize the Merger in accordance with the terms of this
Agreement; and this Agreement is a valid and binding Agreement of the
Company enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial decisions
now or hereafter in effect relating to creditor's rights generally or
governing the availability of equitable relief.
(c) Representations and Warranties True. The representations and
warranties of the Company contained in this Agreement (other than any
representations and warranties made as of a specific date) shall be true in all
material respects (except to the extent the representation or warranty is
already qualified by materiality, in which case it shall be true in all
respects) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except as
contemplated or permitted by this Agreement, and Parent shall have received a
certificate to that effect dated the Closing Date and executed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company.
(d) Affiliate Letters. Parent shall have received from the Company a
list of such persons, if any, as counsel for the Company state may be
"affiliates" of the Company, within the meaning of Rules 144 and 145(c) of the
Commission pursuant to the Securities Act, and shall have received from such
persons undertakings in writing to the effect that no disposition will be made
by such persons of any Parent Shares received or to be received pursuant to the
Merger except in compliance with the applicable provisions of the Securities Act
and the rules and regulations thereunder. Parent shall not be required to
maintain the effectiveness of the Registration Statement for the purpose of
resale by stockholders of the Company who may be "affiliates" pursuant to Rule
145 under the Securities Act.
(e) Tax Opinion. Parent shall have received an opinion of Fulbright &
▇▇▇▇▇▇▇▇ L.L.P., in form and substance satisfactory to Parent, to the effect
that for federal income tax purposes and conditioned upon certain
representations of managements of the Company and Parent as to certain customary
facts and circumstances regarding the Merger: (i) the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and (ii) no
gain or loss will be recognized by the Company, Sub or Parent as a result of the
Merger.
(f) Pooling Accounting. Parent and Company shall have received a
letter from Price Waterhouse LLP, in form and substance satisfactory to Parent
and Company, to the effect that the Merger should be accounted for as a pooling
of interests under generally accepted accounting principles and applicable
regulations of the SEC.
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(g) Consents, etc. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as are necessary in connection with the transactions
contemplated hereby have been obtained, except such licenses, permits, consents,
approvals, authorizations, qualifications and orders which are not, individually
or in the aggregate, material to Parent or the Company or the failure of which
to have received would not (as compared to the situation in which such license,
permit, consent, approval, authorization, qualification or order had been
obtained) materially detract from the aggregate benefits to Parent of the
transactions reasonably contemplated hereby.
(h) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (or by any other person any
suit, action or proceeding which has a reasonable likelihood of success), (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement or seeking to
obtain from Parent or any of its subsidiaries any damages that are material in
relation to Parent and its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
their respective subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, to dispose of or
hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, as a result of the Merger or any
of the other transactions contemplated by this Agreement, (iii) seeking to
impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership as to any shares of Common Stock of the
Surviving Corporation, including, without limitation, the right to vote the
Common Stock of the Surviving Corporation on all matters properly presented to
the stockholders of the Surviving Corporation or (iv) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material respect
the business or operations of the Company or its subsidiaries.
(i) Fairness Opinion. Parent shall have received an opinion from
▇▇▇▇▇▇▇ & Company International to the effect that the terms of the Merger are
fair to the holders of Parent Shares from a financial point of view.
(j) No Material Adverse Change. There shall not have occurred any
material adverse change with respect to the Company since the date hereof.
SECTION 6.3. Conditions of the Company. The obligations of the Company
to consummate the Merger are further subject to the satisfaction at the
Effective Time of the Merger of the following conditions:
(a) Compliance. The agreements and covenants of Parent to be complied
with or performed on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with or performed in all material respects and the
Company shall have received a certificate dated the Closing Date on behalf of
Parent by the chief executive officer and the chief financial officer of Parent
to such effect.
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(b) Certifications and Opinion. Parent shall have furnished the
Company with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors or a duly authorized committee thereof of Parent
approving this Agreement and consummation of the Merger and the
transactions contemplated hereby, including the issuance, listing and
delivery of the Parent Shares pursuant hereto;
(ii) a certified copy of a resolution or resolutions duly adopted by
the holders of a majority of the Parent Shares present or represented by
proxy and entitled to vote at the Parent Stockholder Meeting, approving the
Merger and the transactions contemplated hereby;
(iii) a favorable opinion, dated the Closing Date, in customary form
and substance, of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., counsel for Parent to the
effect that:
(A) Parent and the Sub are corporations duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and have corporate power to own their properties and assets
and to carry on their business as presently conducted and as described
in the Proxy Statement. Sub has the requisite corporate power to merge
with the Company as contemplated by this Agreement and Parent has the
requisite corporate power to carry out its obligations under this
Agreement. The execution and delivery of this Agreement did not, and
the consummation of the Merger will not, violate any provision of
Parent's or Sub's Certificate of Incorporation or By-Laws;
(B) Parent and Sub have taken all action required under the DGCL,
their Certificates of Incorporation or their By-Laws to authorize such
execution and delivery and the transactions contemplated by this
Agreement, including the Merger, in accordance with the terms of this
Agreement; and this Agreement is a valid and binding agreement of
Parent and Sub enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial decisions
now or hereafter in effect relating to creditor's rights generally or
governing the availability of equitable relief; and
(C) The Parent Shares to be issued pursuant to the Merger have
been duly authorized and, when issued and delivered as contemplated
hereby, will have been legally and validly issued and will be fully
paid and non-assessable and no stockholder of Parent will have any
preemptive right of subscription or purchase in respect thereof under
Delaware law or Parent's Certificate of Incorporation or By-laws.
(c) Representations and Warranties True. The representations and
warranties of Parent contained in this Agreement (other than any representations
and
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warranties made as of a specific date) shall be true in all material respects
(except to the extent the representation or warranty is already qualified by
materiality, in which case it shall be true in all respects) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, except as contemplated or permitted by
this Agreement, and the Company shall have received a certificate to that effect
dated the Closing Date and executed on behalf of Parent by the chief executive
officer and the chief financial officer of Parent.
(d) Tax Opinion. The Company shall have received an opinion of ▇▇▇▇▇▇
& ▇▇▇▇▇▇ L.L.P., in form and substance satisfactory to the Company, to the
effect that for federal income tax purposes and conditioned upon certain
representations of managements of the Company and Parent as to certain customary
facts and circumstances regarding the Merger: (i) the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code; (ii) each of
the Company, Parent and Sub are parties to the reorganization within the meaning
of Section 368(b) of the Code; and (iii) no gain or loss will be recognized by
the stockholders of the Company upon the receipt by them of Parent Shares in
exchange for their Shares pursuant to the Merger.
(e) Fairness Opinion. As of the date of the Company Stockholders
Meeting, Jefferies shall not have revoked, modified or materially changed its
opinion referred to in Section 3.1(v) in any manner adverse to the holders of
the Shares.
(f) No Material Adverse Change. There shall not have occurred any
material adverse change with respect to Parent since the date hereof.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the stockholders of the Company fail to give any required
approval of the Merger and the transactions contemplated hereby upon a vote
at a duly held meeting of stockholders of the Company or at any adjournment
thereof;
(ii) if the stockholders of Parent fail to give any required approval
of the Merger and the transactions contemplated hereby upon a vote at a
duly held meeting of stockholders of Parent or at any adjournment thereof;
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(iii) if any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; or
(iv) if the Merger shall not have been consummated on or before
January 31, 1997, unless the failure to consummate the Merger is the result
of a material breach of this Agreement by the party seeking to terminate
this Agreement.
(c) by Parent or the Company to the extent permitted under Section 8.2
or 8.3;
(d) by Parent, if the Company breaches any of its representations or
warranties herein or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement;
(e) by the Company, if Parent or Sub breaches any of its
representations or warranties herein or fails to perform in any material respect
any of its covenants, agreements or obligations under this Agreement;
(f) by Parent within four weeks of date hereof, if the results of
Parent's due diligence review of the Company and its subsidiaries referred to in
Section 5.4(a)(i) hereof or any matter referred to in the Company Affirmation
and Disclosure Document shall not be satisfactory to Parent;
(g) by the Company within four weeks of the date hereof, if the
results of the Company's due diligence review of Parent and its subsidiaries
referred to in Section 5.4(a)(ii) hereof or any matter referred to in the Parent
Affirmation and Disclosure Document shall not be satisfactory to the Company.
SECTION 7.2. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
confidentiality provisions of Sections 5.4(b) and (c) and the provisions of
Sections 5.8, 8.2, 8.3 and Article IX.
SECTION 7.3. Amendment. This Agreement may be amended by the parties
at any time before or after any required approval of matters presented in
connection with the Merger by the stockholders of the Company or Parent;
provided, however, that after any such approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
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SECTION 7.4. Extension; Waiver. At any time prior to the Effective
Time of the Merger, the parties may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or the other acts of the
other parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) subject to
the proviso of Section 7.3, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.1, an amendment of
this Agreement pursuant to Section 7.3 or an extension or waiver pursuant to
Section 7.4 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
SECTION 8.1. Takeover Defenses of the Company. As promptly as
practicable after the date of this Agreement, but in no event later than 10 days
following announcement of the execution of this Agreement, the Company will
amend the Company Rights Agreement, as necessary, (i) to prevent this Agreement
or the consummation of the transactions contemplated hereby from resulting in
the distribution of separate rights certificates or the occurrence of a
Distribution Date (as defined therein) or being deemed a Triggering Event (as
defined therein) and (ii) to provide that neither Parent nor Sub shall be deemed
to be an Acquiring Person (as defined therein) by reason of the transactions
contemplated by this Agreement. The Company shall take such action with respect
to any other anti-takeover provisions in its charter or afforded it by statute
to the extent necessary to consummate the Merger on the terms set forth in the
Agreement.
SECTION 8.2. No Solicitation. (a) The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any investment banker, attorney or other advisor,
agent or representative of the Company or any of its subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage the submission of any takeover
proposal, (ii) enter into any agreement (other than confidentiality and
standstill agreements in accordance with the immediately following proviso) with
respect to any takeover proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided, however, in the case of this clause (iii), that
prior to the vote of stockholders of the Company for approval of the Merger (and
not thereafter if the Merger is approved thereby) to the extent required by the
fiduciary obligations
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of the Board of Directors of the Company, determined in good faith by a majority
of the disinterested members thereof based on the advice of outside counsel, the
Company may, in response to an unsolicited request therefor, furnish information
to any person or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) pursuant to a confidentiality agreement on substantially the same terms as
provided in Section 5.4(b) hereof. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any officer, director or employee of the Company or any of its
subsidiaries or any investment banker, attorney or other advisor, agent or
representative of the Company, whether or not such person is purporting to act
on behalf of the Company or otherwise, shall be deemed to be a material breach
of this Agreement by the Company. For purposes of this Agreement, "takeover
proposal" means (i) any proposal, other than a proposal by Parent or any of its
affiliates, for a merger or other business combination involving the Company,
(ii) any proposal or offer, other than a proposal or offer by Parent or any of
its affiliates, to acquire from the Company or any of its affiliates in any
manner, directly or indirectly, an equity interest in the Company or any
subsidiary, any voting securities of the Company or any subsidiary or a material
amount of the assets of the Company and its subsidiaries, taken as a whole, or
(iii) any proposal or offer, other than a proposal or offer by Parent or any of
its affiliates, to acquire from the stockholders of the Company by tender offer,
exchange offer or otherwise more than 20% of the outstanding Shares.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except in connection with the termination of this Agreement
pursuant to Sections 7.1 (a), (b) or (g), (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub the approval or
recommendation by the Board of Directors of the Company or any such committee of
this Agreement or the Merger or take any action having such effect or (ii)
approve or recommend, or propose to approve or recommend, any takeover proposal.
Notwithstanding the foregoing, in the event the Board of Directors of the
Company receives a takeover proposal that, in the exercise of its fiduciary
obligations (as determined in good faith by a majority of the disinterested
members thereof based on the advice of outside counsel), it determines to be a
superior proposal, the Board of Directors may withdraw or modify its approval or
recommendation of this Agreement or the Merger and may (subject to the following
sentence) terminate this Agreement, in each case at any time after midnight on
the next business day following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Board of Directors has received a
takeover proposal which it has determined to be a superior proposal, specifying
the material terms and conditions of such superior proposal (including the
proposed financing for such proposal and a copy of any documents conveying such
proposal) and identifying the person making such superior proposal. The Company
may terminate this Agreement pursuant to the preceding sentence only if the
stockholders of the Company shall not yet have voted upon the Merger and the
Company shall have paid to Parent the Termination Fee (as defined in Section
8.3). Any of the foregoing to the contrary notwithstanding, the Company may
engage in discussions with any person or group that has made an unsolicited
takeover proposal for the limited purpose of determining whether such proposal
is a superior proposal. Nothing contained herein shall prohibit the Company
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from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) following Parent's receipt of a Notice of Superior Proposal.
(c) In the event that the Board of Directors of the Company or any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub the approval or recommendation by
the Board of Directors of the Company or any such committee of this Agreement or
the Merger or take any action having such effect or (ii) approve or recommend,
or propose to approve or recommend, any takeover proposal, Parent may terminate
this Agreement.
(d) For purposes of this Agreement, a "superior proposal" means any
bona fide takeover proposal to acquire, directly or indirectly, for
consideration consisting of cash, securities or a combination thereof, all of
the Shares then outstanding or all or substantially all the assets of the
Company, and otherwise on terms which a majority of the disinterested members of
the Board of Directors of the Company determines in its good faith reasonable
judgment (based on the written advice of a financial advisor of nationally
recognized reputation, a copy of which shall be provided to Parent) to be more
favorable to the Company's stockholders than the Merger.
(e) In addition to the obligations of the Company set forth in
paragraph (b), the Company shall promptly advise Parent orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal, the material terms and conditions of such inquiry or takeover
proposal (including the financing for such proposal and a copy of such documents
conveying such proposal), and the identity of the person making any such
takeover proposal or inquiry. The Company will keep Parent fully informed of the
status and details of any such takeover proposal or inquiry.
SECTION 8.3. Fee and Expense Reimbursements.
(a) The Company agrees to pay Parent a fee in immediately available
funds of $2,000,000 (the "Termination Fee") promptly upon the termination of the
Agreement in the event this Agreement is terminated by Parent or the Company as
permitted by Section 8.2. Further, in the event the stockholders of the Company
do not approve the Merger and this Agreement is terminated, the Company agrees
to pay to Parent the Termination Fee if, after the date hereof and before the
termination of this Agreement or within six months following the date of
termination of this Agreement, a takeover proposal shall have been made;
provided that such takeover is ultimately consummated. The Termination Fee shall
be payable promptly upon termination of this Agreement if the foregoing events
shall have occurred prior to termination. Otherwise, the Termination Fee shall
be payable promptly upon the consummation of such takeover following termination
of this Agreement.
(b) In the event the Board of Directors of Parent receives a takeover
proposal involving Parent because of which, in the exercise of its fiduciary
obligations (as determined in good faith by a majority of the disinterested
members thereof based on advice of outside counsel), it determines it is
necessary to withdraw or modify its
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approval or recommendation of this Agreement or the Merger, Parent may terminate
this Agreement at any time after midnight on the next business day following
such determination by advising the Company that the Board of Directors has
received a takeover proposal which it has determined requires such action,
specifying the material terms and conditions of such proposal (including the
proposed financing for such proposal and a copy of any documents conveying such
proposal) and identifying the person making such proposal. Parent may terminate
this Agreement pursuant to the preceding sentence only if the stockholders of
Parent shall not yet have voted upon the Merger and Parent shall have paid to
the Company the Parent Termination Fee (as hereinafter defined). Parent agrees
to pay the Company a fee in immediately available funds of $2,000,000 (the
"Parent Termination Fee") promptly upon (i) the termination of this Agreement
pursuant to the first sentence of this Section 8.3(b) or (ii) the stockholders
of Parent not approving the Merger as a result of a hostile takeover of the
Parent after the date of this Agreement. For purposes hereof, a "takeover
proposal involving Parent" shall mean (i) any proposal for a merger or other
business combination involving the Parent, (ii) any proposal or offer to acquire
from the Parent or any of its affiliates in any manner, directly or indirectly,
an equity interest in the Parent or any subsidiary, any voting securities of the
Parent or any subsidiary or a material amount of the assets of the Parent and
its subsidiaries taken as a whole, or (iii) any proposal or offer to acquire
from the stockholders of Parent by tender offer, exchange offer or otherwise,
more than 20% of the Parent common stock.
(c) In the event this Agreement is terminated by Parent or the Company
pursuant to Sections 7.1(b)(i) or (d), the Company shall assume and pay, or
reimburse Parent for, all reasonable fees and expenses incurred by Parent or Sub
(including the fees and expenses of its counsel, accountants and financial
advisors) through the date of termination and which are specifically related to
the Merger, this Agreement and the matters contemplated by this Agreement, but
not to exceed $300,000 in the aggregate, promptly, but in no event later than
two business days after submission of a request for payment of the same.
(d) In the event this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(b)(ii) or (e), Parent shall assume and pay, or reimburse
the Company for, all reasonable fees and expenses incurred by the Company
(including the fees and expenses of its counsel, accountants and financial
advisors) through the date of termination and which are specifically related to
the Merger, this Agreement and the matters contemplated by this Agreement, but
not to exceed $300,000 in the aggregate, promptly, but in no event later than
two business days after the submission of a request for payment of the same.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Representations and Warranties. None of
the representations, warranties, covenants or agreements in this Agreement or in
any instrument delivered by the Company pursuant to this Agreement shall survive
the
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Effective Time of the Merger, except any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time of the
Merger.
SECTION 9.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
facsimile or sent by overnight courier to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇ ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. A. ▇▇▇▇▇▇▇, III
President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇ ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Still, Esq.
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(b) if to the Company, to
Bettis Corporation
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
2500 First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: T. ▇▇▇▇ ▇▇▇▇▇, Esq.
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "knowledge" means, with respect to any matter stated herein to be
"to the Company's knowledge," or similar language, the actual knowledge of the
Chairman of the Board, the Chief Executive Officer, President, any Vice
President or Chief Financial Officer of the Company, and with respect to any
matter stated herein to be "to Parent's knowledge," or similar language, the
actual knowledge of the Chairman of the Board, the Chief Executive Officer,
President, any Vice President, Chief Financial Officer or General Counsel of
Parent.
(c) "material adverse effect" or "material adverse change" means, when
used in connection with any person, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that is materially adverse to the business, properties, assets,
condition (financial or otherwise) or results of operations of that person and
its subsidiaries, taken as a whole.
(d) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization or other entity; and
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(e) a "subsidiary" of any person means any corporation, partnership,
association, joint venture, limited liability company or other entity in which
such person owns over 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of directors or other
governing body of such other legal entity.
SECTION 9.4. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 9.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (b) except for the provisions of
Sections 5.6 and 5.7, are not intended to confer upon any person other than the
parties any rights or remedies hereunder.
SECTION 9.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect
wholly-owned subsidiary of Parent, and such assignment shall relieve Sub of all
of its obligations hereunder. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.9. Enforcement of the Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States located in the State of Texas or in any other Texas state court, this
being in addition to any
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other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal or state court sitting in the Southern District of Texas in the
event any dispute between the parties hereto arises out of this Agreement solely
in connection with such a suit between the parties, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement in any court other than a Federal or state court
sitting in the State of Texas or in the Southern District of Texas.
SECTION 9.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
▇▇▇▇▇▇ INDUSTRIES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President - Finance
BLUE ACQUISITION, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
▇▇▇▇▇▇ CORPORATION
By /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
W. ▇▇▇▇ ▇▇▇▇▇▇▇
President
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