Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX XXXXXX HOLDINGS PLC
XXXXXX XXXXXX OF PENNSYLVANIA, INC.
a wholly owned subsidiary of XxXxxx Xxxxxx Holdings PLC
and
TRION, INC.
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..........................................................1
Section 1.01 Effective Time of the Merger................................1
Section 1.02 Closing.....................................................2
Section 1.03 Effects of the Merger.......................................2
Section 1.04 Additional Actions..........................................2
ARTICLE II CONVERSION OF SECURITIES...........................................3
Section 2.01 Conversion of Capital Stock.................................3
Section 2.02 Exchange of Certificates....................................3
Section 2.03 No Further Transfers........................................5
Section 2.04 Dissenting Shares...........................................5
Section 2.05 Treatment of Stock Options..................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................7
Section 3.01 Organization................................................7
Section 3.02 Subsidiaries................................................7
Section 3.03 Corporate Power and Authority...............................7
Section 3.04 Capitalization..............................................8
Section 3.05 Conflicts: Consents and Approvals..........................9
Section 3.06 No Material Adverse Change.................................10
Section 3.07 SEC Filings: Financial Statements..........................10
Section 3.08 Taxes......................................................11
Section 3.09 Compliance with Law........................................11
Section 3.10 Intellectual Property Rights...............................11
Section 3.11 Title to Properties........................................12
Section 3.12 Proxy Statement............................................12
Section 3.13 Litigation.................................................13
Section 3.14 Brokerage and Finder's Fees: Expenses......................13
Section 3.15 Employee Benefit Plans and Related Matters; ERISA..........13
Section 3.16 Undisclosed Liabilities....................................16
Section 3.17 Environmental Matters......................................16
Section 3.18 Contracts and Leases.......................................17
Section 3.19 Labor Matters..............................................17
Section 3.20 Disclosure.................................................17
Section 3.21 No Existing Discussions....................................17
Section 3.22 Opinion of Financial Advisor...............................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB................18
Section 4.01 Organization of Acquiror and Sub...........................18
Section 4.02 Capitalization of Sub......................................18
Section 4.03 Corporate Power and Authority..............................18
Section 4.04 Conflicts: Consents and Approval...........................19
Section 4.05 Financial Statements.......................................19
Section 4.06 Financing..................................................20
Section 4.07 Absence of Certain Changes or Events.......................20
Section 4.08 Litigation.................................................20
Section 4.09 Proxy Statement............................................20
Section 4.10 Interim Operations of Sub..................................20
ARTICLE V COVENANTS..........................................................21
Section 5.01 Solicitation...............................................21
Section 5.02 Shareholder Approvals......................................23
Section 5.03 Conduct of the Business of the Company.....................23
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Section 5.04 Access to Information......................................26
Section 5.05 Required Authorizations....................................27
Section 5.06 Public Announcements.......................................27
Section 5.07 Benefit Plans..............................................27
Section 5.08 Employee Arrangements......................................28
Section 5.09 Officers' and Directors' Insurance: Indemnification........28
Section 5.10 Company Transactional Expenses.............................29
Section 5.11 Company Subsequent Events..................................29
Section 5.12 Acquiror Subsequent Events.................................29
Section 5.13 Settlement Agreement Payment...............................29
ARTICLE VI CONDITIONS TO MERGER............................................30
Section 6.01 Conditions to Each Party's Obligation To Effect the
Merger.....................................................30
Section 6.02 Additional Conditions to Obligations of Acquiror
and Sub....................................................30
Section 6.03 Additional Conditions to Obligations of The Company........31
ARTICLE VII TERMINATION AND AMENDMENT........................................32
Section 7.01 Termination................................................32
Section 7.02 Effect of Termination......................................33
Section 7.03 Fees and Expenses..........................................33
Section 7.04 Amendment..................................................34
Section 7.05 Extension, Waiver..........................................34
ARTICLE VIII MISCELLANEOUS...................................................34
Section 8.01 Nonsurvival of Representations, Warranties and Agreements..34
Section 8.02 Notices....................................................34
Section 8.03 Interpretation.............................................35
Section 8.04 Counterparts...............................................35
Section 8.05 Entire Agreement: No Third Party Beneficiaries.............36
Section 8.06 Governing Law..............................................36
Section 8.07 Assignment.................................................36
Section 8.08 Arbitration................................................36
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of August 14,
1998 by and among XXXXXX XXXXXX HOLDINGS PLC, a company incorporated under the
laws of England and Wales ("Acquiror"), XXXXXX XXXXXX OF PENNSYLVANIA, INC., a
Pennsylvania corporation ("Sub"), and TRION, INC., a Pennsylvania corporation
(the "Company"). The Company and Sub are the only parties to the merger hereby
contemplated and are sometimes referred to herein as the "Constituent
Corporations" and the Company is sometimes referred to herein as the "Surviving
Corporation."
WHEREAS, Acquiror desires to combine its businesses with the businesses of
the Company through the merger of Sub with and into the Company, with the
Company as the Surviving Corporation (the "Merger"), pursuant to which each
share of Common Stock, par value $.50 per share, of the Company ("Company Common
Stock") outstanding at the Effective Time (as defined in Section 1.01) will be
converted into the right to receive $7.27 per share in cash as more fully
provided herein;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of the Company and the Company desires to combine its businesses with the
businesses operated by Acquiror;
WHEREAS, the Board of Directors of Acquiror has determined that the Merger
is consistent with the long-term business strategy of Acquiror;
WHEREAS, the respective Boards of Directors of Acquiror, Sub and the
Company have determined the Merger to be desirable and in the best interests of
their respective shareholders and, by resolutions duly adopted, have approved
and adopted this Agreement.
NOW, THEREFORE, in consideration of these premises and the covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.01 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, articles of merger ("Articles of Merger") in such form as
required by the relevant provisions of the Business Corporation Law of
Pennsylvania ("BCL") shall be duly prepared, executed and acknowledged by the
Surviving Corporation and thereafter
delivered to the Secretary of State of the Commonwealth of Pennsylvania, for
filing, as provided in the BCL, as soon as practicable on or after the Closing
Date. The Merger shall become effective upon the filing of the Articles of
Merger with the Secretary of State of the Commonwealth of Pennsylvania or at
such time thereafter as is provided in the Articles of Merger (the "Effective
Time").
Section 1.02 CLOSING. The closing of the transactions contemplated hereby
(the "Closing") will take place at 10:00 a.m., prevailing time, on a date to be
specified by Acquiror and the Company, which shall be as soon as practicable
after all of the conditions to the Merger set forth in Article VI have been
satisfied or waived, subject to the rights of termination and abandonment
hereinafter set forth (the "Closing Date"), at a place mutually agreed to in
writing by Acquiror and the Company. For all tax purposes, the Closing shall be
effective at the end of the day on the Closing Date.
Section 1.03 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) the separate existence of Sub shall cease
and Sub shall be merged with and into the Company, (ii) the Articles of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as set forth in Exhibit A, (iii) the Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until amended after the Effective Time, (iv) the directors of Sub at
the Effective Time shall be the directors of the Surviving Corporation and hold
office as provided in the Bylaws of the Surviving Corporation, and (v) the
officers of the Surviving Corporation shall consist of the officers of the
Company immediately prior to the Effective Time, such officers to hold office
from the Effective Time until their respective successors are duly elected and
qualify.
(b) The Merger will have the effects specified in the BCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all of the properties, rights, privileges, powers, franchises, debts,
liabilities, obligations and duties of the Constituent Corporations will
continue in the Surviving Corporation unaffected by the Merger.
Section 1.04 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of the Company, or (b) otherwise carry out the
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provisions of this Agreement, the Company and its officers and directors shall
be deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments or assurances in law
and to take all acts necessary, proper or desirable to vest, perfect or confirm
title to and possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the provisions of this Agreement, and the
officers and directors of the Surviving Corporation are authorized in the name
of the Company or otherwise to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquiror, Sub or the
Company or their respective shareholders:
(a) Each share of common stock, no par value, of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock, $0.50 par value, of the Surviving Corporation. Such newly
issued shares shall thereafter constitute all of the issued and outstanding
capital stock of the Surviving Corporation.
(b) Each issued and outstanding share of Company Common Stock, but other
than shares of Company Common Stock issued and held in the treasury of the
Company or owned of record by Acquiror, Sub or any direct or indirect subsidiary
thereof and except for Dissenting Shares in respect of which dissenters rights
are properly demanded and perfected, shall be converted into and shall become,
by virtue of the Merger and without any further action by the holder thereof the
right to receive $ 7.27 in cash (the "Per Share Purchase Price").
(c) Each share of Company Common Stock issued and held in the treasury
of the Company or owned of record by Acquiror, Sub or any direct or indirect
subsidiary thereof immediately prior to the Effective Time shall automatically
be cancelled and retired without any conversion thereof, and no consideration
shall be exchangeable therefor.
Section 2.02 EXCHANGE OF CERTIFICATES.
(a) Promptly following the Effective Time, Acquiror shall deposit with
First Union National Bank of North Carolina or such other exchange agent as may
be designated by Acquiror (the "Exchange Agent"), for the benefit of holders of
shares of Company Common Stock ("Company Shareholders"), for exchange in
accordance with this Section
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2.02, immediately available funds in an amount equal to the Per Share Purchase
Price times the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time (the "Exchange Fund"). The Exchange Fund shall not
be used for any purpose other than as provided herein.
(b) As soon as practicable after the Effective Time, Acquiror shall
instruct the Exchange Agent to mail to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose shares were
converted into the right to receive cash pursuant to Section 2.01(b), (i) a
letter of transmittal (the form and substance of which shall have been
reasonably approved by the Company prior to the Effective Time) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
cash. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor a check
representing the cash which such holder has the right to receive pursuant to
Section 2.01(b), after giving effect to any required withholding tax. The shares
represented by the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable to holders of shares of
Company Common Stock. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered on the transfer records of the
Company, cash in the proper amount may be issued to such transferee if the
Certificate representing such shares of Company Common Stock held by such
transferee is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon surrender,
cash, as provided in this Article II.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Surviving Corporation will
issue in exchange for such lost, stolen or destroyed Certificate, cash in the
proper amount, as determined in accordance with this Article II. When
authorizing such cash in exchange therefor, the Board of Directors of the
Surviving Corporation may, in its discretion and as a condition precedent to the
issuance thereof require the owner of such lost, stolen or destroyed Certificate
to give the Surviving Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Surviving
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Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(d) Any portion of the Exchange Fund which remains undistributed to
Company Shareholders nine (9) months after the date of the mailing required by
Section 2.02(b) shall be delivered to Acquiror, upon demand therefor, and
holders of Certificates previously representing shares of Company Common Stock
who have not theretofore complied with this Section 2.02 shall thereafter look
only to Acquiror for payment of any claim to cash, in respect thereof.
(e) None of Acquiror, the Surviving Corporation or the Exchange Agent
shall be liable to any person in respect of any shares of Company Common Stock
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) The Exchange Agent shall invest the Exchange Fund, as directed by
Acquiror, on a daily basis, provided that substantially all such investments
shall be in obligations of or generated by the United States of America, in
commercial paper obligations receiving the highest rating from either Xxxxx'x
Investors Services, Inc. or Standard & Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or bankers' acceptances of commercial banks
with capital exceeding $1,000,000,000 (collectively, "Permitted Investments") or
in money market funds which are invested in Permitted Investments. Any interest
and other income resulting from such investments shall be paid to Acquiror upon
termination of the Exchange Fund pursuant to Section 2.02(d).
Section 2.03 NO FURTHER TRANSFERS. All cash issued upon surrender of
Certificates in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Company
Common Stock represented thereby prior to the Effective Time, and there shall be
no further registration of transfers on the stock transfer books of the Company
of shares of Company Common Stock outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
Section 2.02.
Section 2.04 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of Company Common Stock held by a holder who has demanded and perfected
his or her right to receive payment of the fair value of his or her shares
pursuant to Chapter 15, Subchapter D of the BCL and as of
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the Effective Time has not effectively withdrawn or lost his or her right to
such fair value payment (the "Dissenting Shares"), shall not be converted into
or represent a right to receive cash pursuant to Section 2.01(b), but the holder
thereof shall only be entitled to such rights as are granted by Chapter 15,
Subchapter D of the BCL.
(b) Notwithstanding the provisions of Section 2.04(a), if any holder of
shares of Company Common Stock who demands payment of the fair value of his or
her shares under the BCL shall effectively withdraw or lose (through failure to
perfect or otherwise) his or her right to payment of the fair value of his or
her shares, then as of the Effective Time or the occurrence of such event,
whichever last occurs, such holder's shares shall automatically be converted
into and represent only the right to receive cash as provided in Section
2.01(b), without interest thereon, upon surrender of the certificate or
certificates representing such shares.
(c) The Company shall give Acquiror prompt notice of any Dissenting
Shares, withdrawals of Dissenting Shares and any other instruments served
pursuant to Chapter 15, Subchapter D of the BCL received by the Company.
Section 2.05 TREATMENT OF STOCK OPTIONS. Prior to the Effective Time,
Acquiror and the Company shall take all such actions as may be necessary to
cause each of the unexpired and unexercised options to acquire Company Common
Stock listed on Schedule 2.05 (each, a "Company Option") to be automatically
converted at the Effective Time into an amount of cash equal to the difference
between the Per Share Purchase Price and the exercise price of that Company
Option, multiplied by the number of shares of Company Common Stock issuable
immediately prior to the Effective Time upon exercise of that Company Option
(without regard to restrictions on exercisability). Such cash shall be paid by
the Surviving Corporation immediately after the Effective Time to the owners of
the Company Options, after giving effect to any required withholding tax.
Notwithstanding anything herein to the contrary, this Section 2.05 shall only
apply to Company Options that are exercisable at a price below the Per Share
Purchase Price; all other Company Options shall automatically be cancelled at
the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror and Sub as follows:
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Section 3.01 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. Each of the Company and each Subsidiary of
the Company is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the property
it owns, leases or operates requires it to so qualify, except where the failure
to be so qualified or in good standing in such jurisdiction would not reasonably
be expected to have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole. The Company is not in default in the
performance, observance or fulfillment of any provision of its Amended and
Restated Articles of Incorporation, as amended and restated (the "Company
Articles"), or its amended and restated Bylaws, as in effect on the date hereof
(the "Company Bylaws"). The Company has heretofore furnished to Acquiror a
complete and correct copy of the Company Articles and the Company Bylaws.
Section 3.02 SUBSIDIARIES. The Company does not own, directly or
indirectly, any equity or other ownership interest in any corporation,
partnership, joint venture or other entity or enterprise, except for the
Subsidiaries and other entities set forth in Schedule 3.02. Except as set forth
in Schedule 3.02, the Company owns directly or indirectly each of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such subsidiary) of each of the
Company's Subsidiaries. Each of the outstanding shares of capital stock of each
of the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company free and
clear of all Liens, pledges, security interests, claims or other encumbrances.
Other than as set forth in Schedule 3.02, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale
or transfer of any securities of any Subsidiary of the Company, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of any Subsidiary of the Company, and neither the
Company nor any Subsidiary of the Company has any obligation of any kind to
issue any additional securities of any Subsidiary of the Company or to pay for
or repurchase any securities of any Subsidiary of the Company or any Predecessor
thereof.
Section 3.03 CORPORATE POWER AND AUTHORITY. The Company has all requisite
corporate power and authority to
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enter into and deliver this Agreement, to perform its obligations hereunder and,
subject to approval of the Merger by the Company Shareholders, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company have been duly authorized by all necessary corporate
action on the part of the Company, subject to approval of the Merger and the
transactions contemplated hereby by the Company Shareholders. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Acquiror and Sub,
constitutes the legal, valid and binding obligation of the Company enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
Section 3.04 CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, $.50 par value per share. As of
August 13, 1998, (i) 7,149,247 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
zero (0) shares of Company Common Stock were held in the treasury of the Company
or by Subsidiaries of the Company, (iii) 235,858 shares of Company Common Stock
were reserved for issuance pursuant to stock options granted and outstanding
under the Company 1985 Stock Incentive Plan and the Company 1995 Stock Incentive
Plan (the "Stock Option Plans") and (iv) 169,000 shares of Company Common Stock
were reserved for issuance pursuant to options granted under agreements entered
into other than pursuant to the Stock Option Plan. All shares of Company Common
Stock subject to issuance as specified above are accounted for in Schedule 2.05
and, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. Other than as set forth in the first sentence
hereof or in Schedule 3.04, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, repurchase or transfer by
the Company of any securities of the Company, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of capital
stock of the Company, and neither the Company nor any of its Subsidiaries has
any obligation of any kind to issue any additional securities or to pay for or
repurchase any securities of the Company or any Predecessor. The Company has no
agreement, arrangement or understandings to register any securities of the
Company or any of its Subsidiaries under the United States Securities Act of
1933, as amended (the "Securities Act"), or under any state
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securities law and has not granted registration rights to any person or entity
(other than agreements, arrangements or understandings with respect to
registration rights that are no longer in effect as of the date of this
Agreement); copies of all such agreements have previously been provided to
Acquiror.
Section 3.05 CONFLICTS: CONSENTS AND APPROVALS. Neither the execution
and delivery of this Agreement by the Company, nor the consummation of the
transactions contemplated hereby or thereby will:
(a) conflict with, or result in a breach of any provision of, the
Company Articles or the Company Bylaws;
(b) except as set forth in Schedule 3.05, violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with the giving of notice, the passage of time or otherwise, would
constitute a default) under, or entitle any party (with the giving of notice,
the passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any Lien upon any of the properties
or assets of the Company under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or their
properties or assets may be bound;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation of any court or Governmental Authority applicable to the Company or
any of its Subsidiaries or any of their respective properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by the Company with, any Governmental Authority, other
than (i) approval of the Merger and the transactions contemplated hereby by the
Company Shareholders, (ii) actions required by the U.S. Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") or any other applicable foreign Antitrust
Law, (iii) the filing of the proxy statement of the Company (the "Proxy
Statement") with the United States Securities and Exchange Commission ("SEC") in
accordance with the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (iv) consents or approvals of any Governmental
Authority set forth in Schedule 3.05;
except in the case of (b), (c) and (d) for any of the foregoing that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on
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the Company and its Subsidiaries, taken as a whole, or a material adverse effect
on the ability of the parties to consummate the Merger.
Section 3.06 NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Company SEC Reports (as defined in Section 3.07 hereof) or in Schedule 3.06,
since June 30, 1998, there has been no change in the business or financial
condition of the Company which would constitute a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole, or any event, occurrence or
development which would have a Material Adverse Effect on the ability of the
Company and its Subsidiaries, taken as a whole, to consummate the Merger.
Section 3.07 SEC FILINGS: FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC all forms, reports, schedules,
statements and other documents required to be filed by it and has previously
furnished to Acquiror a true and complete copy of each of (i) its Annual Report
on Form 10-K for the year ended December 31, 1997 (ii) its Quarterly Report on
Form I0-Q for the period ended Xxxxx 00, 0000, (xxx) a copy of its proposed
Quarterly Report on Form 10-Q for the period ended June 30, 1998 (which is to be
filed on August 14, 1998), and (iv) all other reports or other correspondence
filed by it with the SEC pursuant to Exchange Act since January 1, 1998, in each
case as filed (or to be filed) with the SEC (collectively, together with any
forms, reports and documents filed by the Company with the SEC after the date
hereof until the Closing, the "Company SEC Reports"). Each such report, when
filed, complied in all material respects with the requirements of the Exchange
Act and the applicable rules and regulations thereunder and, as of their
respective dates, none of such reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the Company SEC Reports complied as to
form in all material respects with the applicable rules and regulations of the
SEC with respect thereto, was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements)
and fairly presented the consolidated financial position of the Company as of
the dates indicated and the consolidated results of their operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements (i) were or are subject to normal year-end
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adjustments which were not or are not expected to be material in amount, and
(ii) do not contain footnote disclosure. The unaudited balance sheet of the
Company as of June 30, 1998 is referred to herein as the "Company Balance
Sheet."
Section 3.08 TAXES. The Company and its Subsidiaries have filed or
caused to be filed with the appropriate Federal, state, local and other
governmental agencies, all tax returns, information returns and reports required
to be filed which, if not filed, would have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole, and have paid in full or made
adequate provision (in accordance with generally accepted accounting principles)
for the payment of all taxes (including taxes withheld from employees' salaries
and other withholding taxes and obligations) which are due and payable pursuant
to such tax returns or pursuant to any assessment with respect to taxes in any
jurisdiction, whether or not in connection with such tax returns. The Company
has made available to Acquiror true, complete and correct copies of its federal
income tax returns for the last three taxable years and made available all other
tax returns requested by Acquiror.
Section 3.09 COMPLIANCE WITH LAW. The Company and each of its
Subsidiaries is in compliance with all Applicable Laws relating to the Company,
each Subsidiary or its respective business or properties, except where the
failure to be in compliance with such Applicable Laws (individually or in the
aggregate) would not reasonably be expected to have a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole. Except as disclosed in
Schedule 3.09, no investigation or review by any Governmental Authority with
respect to the Company or any of its Subsidiaries is pending, or, to the
knowledge of the officers of the Company or any of its Subsidiaries, threatened,
nor has any Governmental Authority indicated in writing an intention to conduct
the same, other than those the outcome of which would not reasonably be expected
to have a Material Adverse Effect on the Company and its Subsidiaries, taken as
a whole.
Section 3.10 INTELLECTUAL PROPERTY RIGHTS. Except as would 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, the
Company owns or possesses adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights, trade names, trade dress,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the businesses of the
Company and each of its Subsidiaries ("Intellectual Property") as currently
conducted, and there
11
has not been any written assertion or claim against the Company or any of its
Subsidiaries challenging the validity or the use by the Company or any of its
Subsidiaries of any of the foregoing.
Section 3.11 TITLE TO PROPERTIES. The Company and its Subsidiaries have
good and valid title to or valid leasehold interests in the properties reflected
in the Company Balance Sheet or acquired after the date of the Company Balance
Sheet, and, except for matters that would not have a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole, all of such properties are
held free and clear of all title defects, liens, encumbrances and restrictions,
except as disclosed on Schedule 3.11. Set forth on Schedule 3.11 is a true and
complete list of all leases and agreements of the Company or its Subsidiaries
granting possession of or rights to real or personal property and involving an
annual commitment or annual payment of more than $10,000 (the "Scheduled
Leases"). All such Scheduled Leases are in full force and effect and constitute
the legal, valid, binding and enforceable obligations of the Company or its
Subsidiaries, and, to the best knowledge of the Company, are legal, valid ,
binding and enforceable in accordance with their respective terms with respect
to each other party to a Scheduled Lease. Such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally and (ii) the availability
of injunctive relief and other equitable remedies. There are no existing
defaults of the Company or its Subsidiaries with respect to such Scheduled
Leases or, to the best knowledge of the Company, any of the other parties to
such Scheduled Leases (or events or conditions which, with notice or lapse of
time, or both, would constitute a default), except for defaults that would not
have a Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole.
Section 3.12 PROXY STATEMENT; CIRCULAR TO SHAREHOLDERS.
(a) The information supplied by the Company for inclusion in the Proxy
Statement to be sent to the Company Shareholders in connection with the meeting
of the Company Shareholders (the "Shareholders' Meeting") to consider this
Agreement and the Merger shall not, on the date the Proxy Statement is first
mailed to Company Shareholders, at the time of the Shareholders' Meeting and at
the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made in the Proxy Statement not false or
misleading; or omit to state any material fact necessary to
12
correct any statement with respect to the Company in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meeting which
has become false or misleading.
(b) The information supplied by the Company for inclusion in the
Circular to be sent to the stockholders of the Acquiror in connection with the
extraordinary general meeting of the stockholders of the Acquiror (the "EGM") to
consider and (if thought fit) approve the Merger shall not, on the date the
Circular is first mailed to the stockholders of the Acquiror, at the time of the
EGM and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Circular not false or misleading; or
omit to state any material fact necessary to correct any statement with respect
to the Company in any earlier communication with respect to the solicitation of
proxies for the EGM which has become false or misleading.
Section 3.13 LITIGATION. Except as set forth in Schedule 3.13 or as
indicated in any of the Company SEC Reports, there are no suits, litigation,
investigations, actions or proceedings of any kind pending, nor (to the
knowledge of the officers of the Company) threatened against the Company, which,
(individually or in the aggregate), if adversely determined, would have a
Material Adverse Effect with respect to the Company and its Subsidiaries, taken
as a whole, or a material adverse effect on the ability of the Company to
consummate the Merger.
Section 3.14 BROKERAGE AND FINDER'S FEES; EXPENSES. Except for the
Company's obligation to Xxxxxx, Xxxxxxxx & Co., neither the Company nor any
stockholder, director, officer or employee thereof, has incurred or will incur
on behalf of the Company, any brokerage, finder's or similar fee in connection
with the transactions contemplated by this Agreement.
Section 3.15 EMPLOYEE BENEFIT PLANS AND RELATED MATTERS; ERISA.
(a) EMPLOYEE BENEFIT PLANS. Schedule 3.15(a) sets forth a complete and
correct list of each "employee benefit plan", as such term is defined in section
3(3) of ERISA, and each written bonus, incentive or deferred compensation,
severance, termination, retention, change of control, stock option or other
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding that provides or
may provide benefits or compensation in respect of any employee or Independent
Contractor or under which any
13
employee or independent contractor is or may become eligible to participate or
derive a benefit and that is or has been maintained or established by the
Company or its Subsidiaries or any other trade or business, whether or not
incorporated, which, together with the Company or its Subsidiaries, is treated
as a single employer under section 414 of the Code (such other trades and
businesses hereinafter referred to as the "Related Persons"), or to which the
Company or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which the Company may have any
liability (collectively, the "Plans"). With respect to each such Plan, the
Company has provided the Acquiror with complete and correct copies of: (i) such
Plan, if written, or a description of such Plan if not written, and (ii) to the
extent applicable to such Plan, all trust agreements, insurance contracts or
other funding arrangements, the two most recent actuarial and trust reports, the
two most recent Forms 5500 required to have been filed with the IRS and all
schedules thereto, the most recent IRS determination letter, all current summary
plan descriptions, any actuarial study of any post-employment life or medical
benefits provided under any such Plan, if any, statements or other
communications regarding withdrawal or other multi-employer plan liabilities, if
any, and all amendments and modifications to any such document. Except as set
forth on Schedule 3.15(a), the Company has not communicated to any Employee or
any Independent Contractor any intention or commitment to modify any Plan or to
establish or implement any other employee, retiree or independent contractor
benefit or compensation plan or arrangement. Except as set forth on Schedule
3.15(a), neither the Company, nor any of its Subsidiaries, has any unwritten
Plans.
(b) QUALIFICATION. Each Plan intended to be qualified under section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely effect such
qualification or tax-exempt status.
(c) COMPLIANCE LIABILITY.
(i) To the Knowledge of the Company, neither the Company nor any
Related Person has incurred (either directly or indirectly, including as a
result of an indemnification obligation) any material liability under or
pursuant to Title I or IV of ERISA or the penalty, excise Tax or joint and
several liability provisions of the Code relating to employee benefit
plans. All material contributions and premiums
14
required to have been paid by the Company and each Related Person to any
employee benefit plan (within the meaning of Section 3(3) of ERISA)
(including each Plan) under the terms of any such plan or its related
trust, insurance contract or other funding arrangement, or pursuant to any
Applicable Law or collective bargaining agreement have been paid within
the time prescribed by any such plan, agreement or Applicable Law.
(ii) Each of the Plans has been operated and administered in all
material respects in compliance with its terms, all Applicable Laws and
all applicable collective bargaining agreements, except for any failures
so to comply that, individually and in the aggregate, could not reasonably
be expected to result in a material liability or obligation on the part of
the Company or, following the Closing, the Acquiror or any of its
affiliates. There are no material pending or, to the Knowledge of the
Company, threatened claims by or on behalf of any of the Plans, by any
employee or independent contractor or otherwise involving any such Plan or
the assets of any Plan (other than routine claims for benefits).
(iii) No Plan is a "multiemployer plan" within the meaning of
section 4001(a)(3) or section 3(37) of ERISA. No Plan is a "multiple
employer plan" within the meaning of section 4064 of ERISA.
(iv) Except as set forth on Schedule 3.15(c), to the Knowledge of
the Company, the consummation of the Merger will not result in an increase
in the amount of compensation or benefits or the acceleration of the
vesting or timing of payment of any compensation or benefits payable to or
in respect of any employee or independent contractor. The Company Balance
Sheet reflects, to the extent required by US GAAP, any and all liabilities
and obligations of the Company relating to any period ending on or prior
to June 30, 1998 to or in respect of the employees, independent
contractors or Plans for (A) unpaid compensation, salaries, wages,
vacation and sick pay, disability payments, severance payments, other
payroll items and fees (including, without limitation, bonus, incentive
and deferred compensation) and (B) unpaid contributions, insurance
premiums, Pension Benefit Guaranty Corporation premiums, costs and
expenses to or in respect of any Plan.
(d) EXCESS PARACHUTE PAYMENTS. Except as set forth on Schedule 3.15(d),
no payment required to be made to any employee associated with the Company or
its Subsidiaries as a result of the Merger under any contract or otherwise will,
15
if made, constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
Section 3.16 UNDISCLOSED LIABILITIES. Except (i) as and to the extent
disclosed or reserved against on the Company Balance Sheet included in the
Company SEC Reports, (ii) as incurred after the date thereof in the ordinary
course of business consistent with prior practice or (iii) as incurred in
connection with or as a result of this Agreement or the transactions
contemplated hereby, the Company, together with its Subsidiaries, does not have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto and which, individually or in the
aggregate, have or would have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
Section 3.17 ENVIRONMENTAL MATTERS. Except for matters disclosed in
Schedule 3.17 and except for matters that would 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, to the knowledge of the officers
of the Company (a) the properties, operations and activities of the Company and
its Subsidiaries are and, for the past five (5) years, have been in compliance
with all applicable Environmental Laws (as defined below) and all past
noncompliance of the Company or any Subsidiary with any Environmental Laws or
Environmental Permits (as defined below) that has been resolved with any
Governmental Authority has been resolved without any pending, ongoing or future
obligation, cost or liability; (b) the Company and its Subsidiaries and the
properties and operations of the Company and its Subsidiaries are not subject to
any existing, pending or threatened, action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority under any
Environmental Law; and (c) there has been no release of any Hazardous Materials
into the environment by the Company or its Subsidiaries. The term "Environmental
Laws" means all Federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all
16
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder, as in effect on
the date hereof. "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
Section 3.18 CONTRACTS AND LEASES. Neither the Company nor any of its
Subsidiaries is in default, and no event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default, under any contract or lease to which the Company or
any of its Subsidiaries is a party or by which it or any of them is bound except
of such which would not individually or in the aggregate have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
Section 3.19 LABOR MATTERS. Except as disclosed on Schedule 3.19, there
are no collective bargaining or other labor union agreements to which the
Company or any Subsidiary is a party or by which any of them is bound. To the
best knowledge of the officers of the Company, since January 1, 1996, neither
the Company nor any Subsidiary has had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts.
Section 3.20 DISCLOSURE. This Agreement and the schedules attached
hereto, together with the information contained in the data room of the Company
and made available to the Acquiror as part of its due diligence review of the
Company and its Subsidiaries, taken as a whole, do not contain any untrue
statement of a material fact.
Section 3.21 NO EXISTING DISCUSSIONS. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiations with any other party
with respect to an Acquisition Proposal.
Section 3.22 OPINION OF FINANCIAL ADVISOR. The financial advisor of the
Company, Xxxxxx Xxxxxxxx & Co., has delivered to the Company, with a copy to the
Acquiror, an opinion dated the date of this Agreement to the effect that the
consideration to be received by the Company Shareholders in the Merger is fair
to the Company Shareholders from a financial point of view.
17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
Each of Acquiror and Sub represents and warrants to the Company as
follows:
Section 4.01 ORGANIZATION OF ACQUIROR AND SUB. Each of Acquiror and Sub
is a corporation duly organized, validly existing and in good standing under its
respective jurisdiction of incorporation with full corporate power and authority
to own, lease, use and operate its properties and to conduct its business as and
where now owned, leased, used, operated and conducted. Each of Acquiror and Sub
is duly qualified to do business and in good standing in each jurisdiction in
which the nature of the business conducted by it or the property it owns, leases
or operates, makes such qualification necessary, except where the failure to be
so qualified or in good standing in such jurisdiction would not reasonably be
expected to have a Material Adverse Effect on the ability of Acquiror to
consummate the Merger. Acquiror is not in default in the performance, observance
or fulfillment of any provision of its Certificate of Incorporation, as amended
("Acquiror Certificate") or its Articles and Memorandum of Association
("Acquiror Articles") and Sub is not in default in the performance, observance
or fulfillment of any provisions of its Certificate of Incorporation or Bylaws.
Section 4.02 CAPITALIZATION OF SUB.
The authorized capital stock of Sub consists of 100,000 shares of common
stock, no par value per share, of which 10,000 shares are issued and
outstanding, all of which are duly authorized and validly issued and are fully
paid and nonassessable, and owned, beneficially and of record, by Acquiror.
Section 4.03 CORPORATE POWER AND AUTHORITY. Each of Acquiror and Sub has
all requisite corporate power and authority to enter into and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of Acquiror and
Sub. This Agreement has been duly executed and delivered by each of Acquiror and
Sub, and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes the legal, valid and binding obligation of
each of Acquiror and Sub enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors' rights generally and (ii) the availability of injunctive
relief and other equitable remedies.
18
Section 4.04 CONFLICTS: CONSENTS AND APPROVAL. Neither the execution
and delivery of this Agreement by Acquiror or Sub nor the consummation of the
transactions contemplated hereby will:
(a) conflict with, or result in a breach of any provision of
the Acquiror Certificate or Acquiror Articles or the Certificate of
Incorporation or Bylaws of Sub;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or result in the creation
of any Lien upon any of the properties or assets of Acquiror under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, contract, undertaking, agreement, lease or other instrument or
obligation to which Acquiror or any of its Subsidiaries is a party or by which
any of them or their properties or assets may be bound;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation of any court or Governmental Authority applicable to Acquiror or any
of its Subsidiaries or any of their respective properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by Acquiror with, any Governmental Authority, other than
(i) approval of the Merger and the transactions contemplated hereby by the
stockholders of Acquiror, (ii) actions required by the HSR Act or any other
applicable foreign Antitrust Law, and the rules and regulations promulgated
thereunder and (iii) consents or approvals of any Governmental Authority as set
forth in Schedule 4.04;
except in the case of (b), (c) and (d) for any of the foregoing that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the ability of the parties to consummate the Merger.
Section 4.05 FINANCIAL STATEMENTS. Each of the consolidated financial
statements (including, in each case, any related notes) of Acquiror and its
Subsidiaries for the most recent three fiscal years and for any interim period
between the end of the most recent fiscal year and March 31, 1998 (and any
corresponding interim period from a prior year) was prepared in accordance with
generally accepted accounting principles in the United Kingdom applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements)
19
and fairly presented the consolidated financial position of Acquiror and its
Subsidiaries as of the indicated dates and the consolidated results of their
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements (i) were or are subject to normal year-end
adjustments which were not or are not expected to be material in amount, and
(ii) do not contain footnote disclosure. The unaudited balance sheet of Acquiror
as of May 29, 1998 is referred to herein as the "Acquiror Balance Sheet."
Section 4.06 FINANCING. Acquiror and Sub have received commitments from
responsible financial institutions for, or otherwise have available, funds
sufficient to acquire all the shares of Company Common Stock pursuant to the
Merger, to fulfill their obligations under this Agreement and pay related fees
and expenses (the "Financing"). True and complete copies of such commitments and
agreements have been delivered to the Company.
Section 4.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Schedule 4.07, since March 31, 1998, there has been no change in the business or
financial condition of Acquiror or any other event, occurrence or development
which would have a material adverse effect on the ability of Acquiror to
consummate the Merger.
Section 4.08 LITIGATION. Except as set forth in Schedule 4.08, there are
no suits, litigation, investigations, actions or proceedings of any kind
pending, nor (to the knowledge individually or in the aggregate, of the officers
of Acquiror) threatened against Acquiror, which, if adversely determined, would
have a Material Adverse Effect on the ability of Acquiror to consummate the
Merger.
Section 4.09 PROXY STATEMENT. The information supplied by Acquiror for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to Company Shareholders, at the time of the Shareholders' Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Proxy Statement not false or
misleading; or omit to state any material fact necessary to correct any
statement with respect to Acquiror and its Subsidiaries in any earlier
communication with respect to the solicitation of proxies for the Shareholders'
Meeting which has become false or misleading.
Section 4.10 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the
20
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
ARTICLE V
COVENANTS
Section 5.01 SOLICITATION. Until the earlier of the termination of this
Agreement in accordance with Article VII and the Effective Time:
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company, (i) solicit,
initiate or take action to facilitate any inquiries or proposals with respect to
a merger, consolidation, business combination, sale of substantial assets or
similar transactions involving the Company, other than the transactions
contemplated by this Agreement (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "Acquisition Proposal"), (ii) engage
in negotiations or discussions concerning, or provide any non-public information
to any person or entity relating to, any Acquisition Proposal, or (iii) agree
to, approve or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or the Board of
Directors of the Company (the "Company Board") from (A) issuing a press release
or otherwise publicly disclosing the terms of this Agreement including, without
limitation, this Section, only as required by law and only after first advising
Acquiror in writing of such disclosure; (B) making any disclosure to the Company
Shareholders which, in the judgment of the Board of Directors with advice of
counsel should reasonably be made under applicable law (including, without
limitation, laws relating to the fiduciary duties of directors); (C) furnishing
nonpublic information to, or entering into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide written Acquisition
Proposal by such person or entity or recommending an unsolicited bona fide
written Acquisition Proposal to the Company Shareholders, if (1) counsel to the
Company Board advises the Company Board that in the exercise of its fiduciary
responsibilities such information should be provided or discussions or
negotiations held, (2) the Company Board determines in good faith (after
consultation with and based upon the written advice of its financial advisor)
that such Acquisition Proposal would, if consummated, result in a transaction
(an "Acquisition Transaction") more favorable to the Company Shareholders from a
financial point of view than the transaction contemplated by this Agreement (any
such more favorable Acquisition Transaction being referred to in this Agreement
21
as a "Superior Proposal") and that the person or entity making such Superior
Proposal has the financial means to conclude such transaction, and (3) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity, the Company Board receives from such
person or entity an executed confidentiality agreement with confidentiality
covenants not materially less favorable to the Company than those contained in
the Confidentiality Agreements; or (D) taking any position with regard to an
Acquisition Proposal pursuant to Rules 14d-9 and 14e-2 under the Exchange Act
which is consistent with the advice of counsel concerning the Company Board's
fiduciary duties under applicable law with respect to a tender offer commenced
by a third party (other than by public announcement alone).
(b) The Company shall notify Acquiror no later than twenty-four (24)
hours after receipt by the Company (or its advisors) of any Acquisition Proposal
or any request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company by any
person or entity. Such notice to Acquiror shall be made orally and shall be
confirmed in writing within forty-eight (48) hours after initially being
communicated and shall indicate in reasonable detail the identity of the person
or entity making such proposal, inquiry or contact and the terms and conditions
thereof; provided, however, to the extent the Company's legal counsel shall
advise the Company Board that complying with such notification requirements will
result in the breach of the terms of any confidentiality agreement executed by
the Company on or prior to the date hereof, then the Company shall be entitled
to comply with such notice requirement to the maximum extent possible without
breaching the terms of such confidentiality agreement.
(c) If prior to the approval of the Merger by the Company Shareholders
and subject to Section 5.01(a), the Company Board shall determine with respect
to any written proposal from a third party for an Acquisition Transaction
received after the date hereof, that failure to enter into such Acquisition
Transaction would create a reasonable possibility of a breach of the fiduciary
duties of the Company Board under applicable law and that such Acquisition
Transaction is more favorable to the Company Shareholders than the transactions
contemplated by this Agreement (including any adjustment to the terms and
conditions of such transaction proposed in writing by Acquiror in response to
such Acquisition Transaction), the Company may terminate this Agreement and
enter into an acquisition agreement or other similar definitive agreement (each,
an "Acquisition Agreement") with respect to such Acquisition Transaction. Prior
to terminating this Agreement pursuant to this Section 5.01(c), the Company
shall endeavor to provide Acquiror with
22
a reasonable opportunity to respond to any Acquisition Transaction which the
Company may wish to accept, including in any case advising Acquiror of the
material terms of any Acquisition Transaction.
Section 5.02 SHAREHOLDER APPROVALS.
(a) As promptly as practicable following the execution and delivery of
this Agreement, unless this Agreement shall have been previously terminated in
accordance with Section 5.01(c) or Article VII, the Company shall prepare and
file the Proxy Statement with the SEC pursuant to the Exchange Act and, upon
clearance of any comments received from the staff of the SEC or confirmation
that the staff will have no comments, submit this Agreement and the Merger to
its shareholders for approval and adoption at a meeting of its shareholders
called by the Company for such purpose in the manner prescribed by the Exchange
Act. Unless this Agreement shall have been previously terminated in accordance
with Section 5.01(c) or Article VII, and subject to its fiduciary duties under
Applicable Laws, the Company Board shall unanimously recommend that the Company
Shareholders vote to approve and adopt this Agreement and the Merger and the
other matters to be submitted to the Company Shareholders in connection
therewith and shall use its best efforts to solicit and secure from the Company
Shareholders their approval and adoption of this Agreement and the Merger.
(b) Unless this Agreement shall have been previously terminated in
accordance with Section 5.01(c) or Article VII, Acquiror shall prepare and lodge
the Circular with the London Stock Exchange and, upon approval of the Circular
by the London Stock Exchange dispatch the Circular to its stockholders. Unless
this Agreement shall have been previously terminated in accordance with Section
5.01(c) or Article VII, the Board of Directors of Acquiror shall recommend that
the stockholders of Acquiror vote to approve the Merger and other matters to be
submitted to the stockholders of Acquiror in connection therewith and shall use
its best efforts to solicit and secure from the stockholders of Acquiror their
approval of the Merger and, once the Merger is approved by the stockholders of
Acquiror, cause Sub to consent in writing to the approval and adoption of this
Agreement and the Merger.
Section 5.03 CONDUCT OF THE BUSINESS OF THE COMPANY. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement in accordance with Section 5.01(c) or Article VII
and the Effective Time, the Company agrees with respect to itself and its
Subsidiaries (except to the extent that Acquiror shall otherwise consent in
writing):
23
(a) to preserve and maintain its corporate existence and all of its
rights, privileges and franchises reasonably necessary or desirable in the
normal conduct of its business, except to the extent contemplated by any
transactions specifically permitted by this Agreement;
(b) not to acquire any stock or other interest in, nor (except in the
ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to the Company or any
of its Subsidiaries as part of any bankruptcy or other creditor settlement or
pursuant to a plan of reorganization), nor agree to do any of the foregoing;
(c) not to sell, lease, assign, transfer or otherwise dispose of any of
its assets (including, without limitation, patents, trade secrets or licenses),
nor suffer to exist or create any Lien on any of its assets, except as permitted
by this Agreement or in the ordinary course of business and except that the
Company and each of its Subsidiaries may sell or otherwise dispose of any assets
which are obsolete;
(d) not to incur any indebtedness, other than as a result of borrowings
or drawdowns, the issuance of letters of credit for the account of the Company
and the incurrence of interest, letter of credit reimbursement obligations and
other obligations under the terms of the Credit Agreement dated September 8,
1995 as amended, among the Company and Wachovia Bank, N.A., as agent, and
Wachovia Bank, N.A. and First Union National Bank of North Carolina, as lenders,
which indebtedness shall be incurred only for working capital purposes in the
ordinary course of business;
(e) not to (x) alter, amend or repeal any provision of its Articles of
Incorporation or Bylaws, (y) change the number of its directors (other than as a
result of the death, retirement or resignation of a director), (z) form or
acquire any Subsidiaries not existing as of the date of this Agreement, (xx)
enter into, modify or terminate any contracts or leases which have a Material
Adverse Effect on the Company or agree to do so, (yy) enter into, modify or
terminate any Employment Arrangement, or (zz) declare, pay, commit to or incur
any obligation of any kind for the payment of any bonus, additional salary or
compensation or retirement, termination, welfare or severance benefits or change
in control benefits payable or to become payable to any of its employees or such
other persons, except for such matters as are required pursuant to the terms of
any existing Employment Arrangement or Benefit Plan;
24
(f) to maintain its books, accounts and records in the usual, ordinary
and regular manner and in material compliance with all applicable laws;
(g) to pay and discharge all taxes imposed upon it or upon its income or
profits, or upon any property belonging to it, prior to the date on which
penalties attach thereto, except to the extent that the Company is currently
contesting, in good faith and by proper proceedings, the payment of such taxes
and the Company maintains appropriate reserves with respect thereto;
(h) not to settle any tax claim against the Company or any of its
Subsidiaries or any litigation (net of applicable insurance proceeds) in excess
of $25,000 in the aggregate;
(i) to meet its obligations under all contracts and leases and not
become in default thereunder, where such default would have a Material Adverse
Effect on the Company;
(j) to maintain its business and assets in good repair, order and
condition, reasonable wear and tear excepted, and maintain insurance upon such
business and assets at least comparable in amount and kind to that in effect on
the date hereof,
(k) to maintain its present relationships and goodwill with suppliers,
brokers, manufacturers, representatives, distributors, customers and others
having business relations with it (provided that it may pursue overdue accounts
and otherwise exercise lawful remedies in its customary fashion);
(l) not to declare, set aside, make or pay any dividends or other
distributions with respect to the Company Common Stock, or purchase or redeem
any shares of the Company Common Stock, or agree to take any such action;
(m) except for those capital expenditures listed on Schedule 5.03(m)
which have been previously approved by the Company Board, not to authorize or
make any single capital expenditure in excess of $50,000, or if the aggregate of
the amount of such capital expenditure together with the amounts of all other
capital expenditures since the date of this Agreement shall exceed $100,000;
(n) not to violate any law or regulation applicable to it nor violate
any order, injunction or decree applicable to the conduct of its business; and
(o) not to increase the number of shares authorized or issued and
outstanding of the Company Common Stock, nor grant or make any pledge, option,
warrant, call, commitment, right or agreement of any character relating to the
Company
25
Common Stock, nor issue or sell any shares of the Company Common Stock, or
securities convertible into such capital stock, or any bonds, promissory notes,
debentures or other corporate securities or become obligated so to sell or issue
any such securities or obligations, except, in any case, issuance of shares of
the Company Common Stock pursuant to the exercise of options outstanding as of
the date hereof and referred to in Section 3.04;
(p) not to make any change to its accounting methods, principles or
practices, except as may be required by U.S. generally accepted accounting
principles;
(q) not to waive any right or cancel any debt owed to the Company or any
Subsidiary or claim against any person or entity, except in the ordinary course
of business and provided the value of the right waived or debt cancelled does
not exceed $25,000; and
(r) not to authorize, or commit or agree to take, any of the foregoing
actions.
Section 5.04 ACCESS TO INFORMATION. Upon reasonable notice, the Company
shall (i) afford to the officers, employees, accountants, counsel and other
representatives of Acquiror, access, during normal business hours during the
period prior to the earlier of the termination of this Agreement and the
Effective Time, to all its properties, books, contracts, commitments, records,
officers, employees, accountants, accountants' work papers, correspondence and
affairs, and (ii) cause its and their officers and employees to furnish, to
Acquiror, Sub and their authorized representatives, any and all financial,
technical and operating data and other information pertaining to the businesses
of the Company as Acquiror or Sub shall from time to time reasonably request. In
addition, without limiting the generality of the foregoing, the Company will,
and will cause each of its Subsidiaries to, make available to Acquiror and Sub
for examination true and complete copies of all tax returns filed by the
Company, together with all available revenue agents' reports, all other reports,
notices and correspondence concerning tax audits or examinations and analyses of
all provisions for reserves or accruals of taxes, including deferred taxes.
Acquiror, Sub and the Company will each hold such information which is subject
to the reciprocal Confidentiality Agreements dated as of May 11, 1998 and July
4, 1998 between Acquiror and the Company (the "Confidentiality Agreements") in
accordance with and subject to the restrictions contained in the Confidentiality
Agreements. No information or knowledge obtained in any investigation pursuant
to this Section 5.04 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
26
Section 5.05 REQUIRED AUTHORIZATIONS.
(a) Acquiror, Sub and the Company shall each, as promptly as
practicable, take all reasonable actions necessary to obtain all Required
Authorizations (if any) required to be given or obtained by it, respectively, to
permit Acquiror and Sub, on the one hand, and the Company, on the other, to
consummate the transactions contemplated by this Agreement and to realize the
respective benefits to each party contemplated hereby.
(b) Without limiting the generality of the foregoing, Acquiror, Sub and
the Company shall each cooperate with the others in filing in a timely manner
any applications, requests, reports, registrations or other documents,
including, without limitation, all reports and documents required to be filed by
or under the HSR Act, Securities Act or the Exchange Act (including, without
limitation, the Proxy Statement), with any Governmental Authority having
jurisdiction with respect to the transactions contemplated hereby and in
consulting with and seeking favorable action from any Governmental Authority.
(c) Each of Acquiror, Sub and the Company shall use its reasonable best
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the conditions set forth in Section 6 below).
Section 5.06 PUBLIC ANNOUNCEMENTS. Neither Acquiror, Sub nor the Company
shall make any press release or other written public statement concerning the
matters covered by this Agreement without the approval of the other parties
hereto, except as required by law or applicable regulation, and each shall in
all events use its best efforts to permit such other parties an opportunity to
review and comment upon any such release or statement prior to dissemination.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
Section 5.07 PLANS. Except as required by law or the terms of any Plan,
from the date hereof until the Effective Time or the earlier termination of this
Agreement in accordance with Section 5.01(c) or Article VII, no award or grant
under the Plans shall be made without the consent of Acquiror; it being
understood that no options, warrants or other rights to acquire securities of
the Company shall be granted by the Company. No amendment to (other than
revisions required to comply with the Code or ERISA), or termination of, any of
the Plans shall be made without the
27
consent of Acquiror; provided, however, that the Company may proceed with the
termination of its defined benefit/cash balance plan.
Section 5.08 EMPLOYEE ARRANGEMENTS.
(a) Acquiror hereby acknowledges and agrees that the employment
agreements and severance agreements set forth on Schedule 5.08(a) constitute
binding obligations of the Company and Acquiror will cause the Surviving
Corporation to honor such agreements after the Effective Time in accordance with
their terms as in effect on the date hereof.
(b) For a period of three (3) years following the Effective Time,
Acquiror shall cause the Surviving Corporation to continue to maintain employee
benefit plans, programs and policies for the employees of the Company which, in
the aggregate, provide benefits that are no less favorable to those provided to
such employees under the plans, programs and policies maintained for such
employees by the Company as of the date hereof; provided, however, that the
aggregate cost per employee of maintaining such benefits does not increase by
more than five percent (5%) during such period.
Section 5.09 OFFICERS' AND DIRECTORS' INSURANCE: INDEMNIFICATION.
(a) For six (6) years after the Effective Time, Acquiror or the
Surviving Corporation shall maintain, if available, officers' and directors'
liability insurance covering the persons who are presently covered by the
Company's officers' and directors' liability insurance policies (copies of which
have been delivered to Acquiror) with respect to actions and omissions occurring
prior to the Effective Time, on terms which are not materially less favorable
than the terms of such current insurance in effect for the Company on the date
hereof, provided, HOWEVER, that in no event shall Acquiror or the Surviving
Corporation be obligated to pay annual premiums greater than 150% of such
premiums paid or payable as of the date hereof; provided, further, that if any
annual premium for such coverage and amount of insurance would exceed 150% of
such annual rate, the Surviving Corporation shall provide the maximum coverage
which shall then be available at an annual premium equal to 150% of such rate.
(b) For six (6) years after the Effective Time, Acquiror and the
Surviving Corporation shall maintain the right to indemnification of officers
and directors provided for in the Company Bylaws as in effect on the date
hereof, with respect to indemnification for acts and omissions occurring prior
to the Effective Time, including without limitation, the transactions
contemplated by this Agreement.
28
(c) This Section shall survive the closing of the transactions
contemplated by this Agreement, is intended to benefit the Company, Acquiror,
Sub or the Surviving Corporation and each of the Indemnified Parties (each of
whom shall be entitled to enforce this Section against the Company, Acquiror,
Sub or the Surviving Corporation, as the case may be) and shall be binding on
all successors and assigns of Acquiror and the Surviving Corporation.
(d) In the event Acquiror, 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 such person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Acquiror or the
Surviving Corporation assume the obligations set forth in this Section.
Section 5.10 COMPANY TRANSACTIONAL EXPENSES. The Company agrees that, in
connection with this Agreement and transaction contemplated hereby, the amount
of fees, costs and expenses to be incurred by its financial advisors,
accountants and counsel shall not exceed $1,050,000; provided, however, that any
such additional fees, costs and expenses incurred in an amount up to $50,000
shall not constitute a breach of this Section 5.10. The Company shall use its
reasonable best efforts not to exceed the $1,050,000 limitation described above.
The Company further agrees not to engage any other advisors, accountants or
counsel in connection with this Agreement and the transaction contemplated
hereby and to periodically apprise Acquiror of the aggregate amount of the
transaction fees and expenses incurred and anticipated to be incurred in
connection with this Agreement and the matters contemplated hereby.
Section 5.11 COMPANY SUBSEQUENT EVENTS. If at any time prior to the
Effective Time any event relating to the Company or any of its Affiliates,
officers or directors should become known to the Company which should be set
forth in a supplement to the Circular, the Company shall promptly inform the
Acquiror.
Section 5.12 ACQUIROR SUBSEQUENT EVENTS. If at any time prior to the
Effective Time any event relating to the Acquiror or any of its Affiliates,
officers or directors should become known to Acquiror which should be set forth
in a supplement to the Proxy Statement, Acquiror shall promptly inform the
Company.
Section 5.13 SETTLEMENT AGREEMENT PAYMENT. The Company shall comply with
the terms of that certain
29
Settlement Agreement dated August 10, 1998, between the Company and Xxxxxx
International, Inc. (the "Settlement Agreement") and make the payments required
pursuant to the terms of the Settlement Agreement to Xxxxxx as and when they
become due.
ARTICLE VI
CONDITIONS TO MERGER
Section 6.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. (i) This Agreement shall have been approved
and adopted by the affirmative vote of the holders of at least a majority of the
votes cast by the holders of Company Common Stock entitled to vote thereon at a
special meeting called for such purpose and (ii) the Merger shall have been
approved by the passing of a resolution by at least a majority of the votes cast
by the holders of outstanding shares of the Acquiror entitled to vote thereon at
the EGM held for such purpose.
(b) Required Authorizations. All Required Authorizations shall have
been obtained.
(c) No Injunctions or Restraints; illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall have been issued, nor shall
there be any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal.
(d) HSR Waiting Period. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated.
Section 6.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR AND SUB.
The obligations of Acquiror and Sub to effect the Merger are subject to the
satisfaction of each of the following additional conditions, any of which may be
waived in writing exclusively by Acquiror and Sub:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in
30
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations and warranties
are made as of an earlier date, which representations and warranties shall be
true and correct in all material respects at and as of such date) as of the
Closing Date as though made on and as of the Closing Date, in each case except
for changes contemplated by this Agreement, and Acquiror shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of The Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Acquiror shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) Resignation of Directors. Acquiror shall have received letters of
resignation, effective as of the Effective Time, executed and tendered by each
of the existing directors of the Company, or, to the extent such resignations
are not obtained, such other evidence, satisfactory to Acquiror, that such
directors shall have been duly and lawfully removed (without cost or other
liability to the Company other than pursuant to any agreement or other
arrangements with such directors existing and in effect as of the date hereof)
effective as of the Effective Time.
(d) Employment Agreement. Sub shall have entered into an employment
agreement with Xxxxxx X. Xxxxxxxxx, President and Chief Executive Officer of the
Company, in substantially the same form as the employment agreement attached to
this Agreement as Exhibit B and Xx. Xxxxxxxxx shall be ready, willing and able
to perform his duties under said employment agreement.
Section 6.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) Representations and Warranties. The representations and warranties
of Acquiror and Sub set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such
31
date) as of the Closing Date as though made on and as of the Closing Date, in
each case except for changes contemplated by this Agreement, and the Company
shall have received a certificate signed on behalf of Acquiror by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of Acquiror and Sub. Acquiror and Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Acquiror by the
Chief Executive Officer and the Chief Financial Officer of Acquiror to such
effect.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.01 TERMINATION. This Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time, whether before or
after approval by the Company Shareholders, by written notice by the terminating
party to the other party under the circumstances set forth below:
(a) by mutual written consent of Acquiror and the Company; or
(b) by either Acquiror or the Company if the Merger shall not have been
consummated by March 31, 1999 (provided that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been a cause
of or has resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Acquiror or the Company if a court of competent
jurisdiction or other Governmental Authority shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(d) by either Acquiror or the Company, if, at the Shareholders' Meeting
(including any adjournment or postponement), the requisite vote of the Company
Shareholders in favor of this Agreement and the Merger shall not have been
obtained; or
(e) by either Acquiror or the Company, if, at the EGM (including any
adjournment or postponement), the requisite
32
vote of the stockholders of Acquiror in favor of the resolution approving the
Merger shall not have been obtained; or
(f) by either Acquiror or the Company if the other party has breached
any material representation, warranty or covenant contained in this Agreement
and, if such breach is curable, after notice of such breach by the non-breaching
party the breach has not been cured within ten (10) days; or
(g) by the Company, as provided in Section 5.01(c) hereof.
Section 7.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Acquiror, the
Company, Sub or their respective officers, directors, shareholders or
Affiliates, except as set forth in Section 7.03 and further except that nothing
herein shall relieve any party from liability for any willful breach of this
Agreement.
Section 7.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated.
(b) The Company shall pay Acquiror a termination fee of three percent
(3%) of aggregate transaction value upon the termination of this Agreement
pursuant to Section 7.01(f) (only in the case of an affirmative act by the
Company which results in an intentional or bad faith breach by the Company as
determined pursuant to the procedure set forth in Section 8.08) or Section
7.01(g). The fee, payable in connection with the termination of this Agreement
pursuant to Section 7.01(g), shall be paid to Acquiror within two (2) days of
the termination of this Agreement pursuant to such Section.
(c) In addition to any termination fee paid pursuant to Section 7.03(b),
if this Agreement is terminated pursuant to Section 7.01, and the Company
consummates an Acquisition Transaction within twelve (12) months from the date
of this Agreement, the Company shall pay Acquiror a topping fee equal to fifteen
percent (15%) of the difference between the total consideration received in the
Acquisition Transaction and the total consideration offered pursuant to this
Agreement. For purposes of this subsection, the total consideration offered
pursuant to this Agreement shall equal the product of the Per Share Purchase
Price and the number
33
of shares of Company Common Stock issued and outstanding as of August 13, 1998.
All payments due under this Section 7.03(c) shall be payable in cash to Acquiror
and shall be paid within two (2) days of the Company having consummated an
Acquisition Transaction.
Section 7.04 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the Company Shareholders, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. Prior to the Effective Time, this
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the parties hereto.
Section 7.05 EXTENSION, WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto by the other parties hereto
and (iii) waive compliance with any of the agreements or conditions contained
herein for their benefit. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article II, Sections 5.08, 5.09,
7.02 and 7.03 and this Article VIII. The Confidentiality Agreements shall
survive the execution and delivery of this Agreement.
Section 8.02 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
34
(a) if to Acquiror, to:
XxXxxx Xxxxxx Holdings PLC
0 Xxxxxxxx Xxxxx, Xxxxxxxxxx Xxx
Xxxxxxxx Business Park
Abingdon, Xxxx XX00 0XX
XXXXXXX
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx & Xxx Xxxxx, PLLC
000 X. Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(b) if to Sub, to:
XxXxxx Xxxxxx of Pennsylvania, Inc.
c/o Xxxxxx X. Xxxxxx, Esq.
Xxxxx & Xxx Xxxxx, PLLC
000 X. Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(c) if to the Company, to:
Trion, Inc.
000 XxXxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Section 8.03 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of 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." The phrases "the date of this
Agreement", "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to August 14, 1998.
Section 8.04 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
35
Section 8.05 ENTIRE AGREEMENT: NO THIRD PARTY Beneficiaries. This
Agreement (including the documents and the instruments referred to herein)
constitutes 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 is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder, except with respect to the
Confidentiality Agreements and Sections 5.08 and 5.09 (which are intended for
the benefit of the persons referred to therein, and may be enforced by such
persons).
Section 8.06 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to any applicable conflicts of law.
Section 8.07 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign its rights, interests
and obligations hereunder to an entity owned and controlled by Acquiror without
the consent of the Company. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 8.08 ARBITRATION. For purposes of Section 7.03(b) only, the
parties agree to be bound by the results of arbitration, and judgment upon the
award so rendered may be entered and enforced in any court of competent
jurisdiction. The arbitrator(s) shall have the power and authority to render
equitable relief, including the issuance of an injucntion. The forum of such
arbitration shall be Charlotte, North Carolina to the exclusion of all other
jurisdictions. The parties further agree and consent to the jurisdiction of the
courts of the State of North Carolina for the purpose of enforcing this Section
and for the purpose of confirming an award and entering judgment upon said
award, and the parties further waive all objections to the jurisdiction of such
courts and to venue in any such courts. The procedure for such arbitration is as
follows:
Either party may notify the other party in writing that arbitration is
demanded (the "Demand for Arbitration") pursuant to this Section. Within twenty
(20) days after the date of the Demand for Arbitration, the parties will select
from the list of potential arbitrators provided by the American Arbitration
Association, an arbitrator to hear and determine the dispute. In the event that
the parties cannot agree upon the selection of a single arbitrator, the parties
agree that the American Arbitration Association in
36
Charlotte, North Carolina will select an independent attorney to serve as
arbitrator.
The arbitrator shall decide the dispute in accordance with the following
procedures:
(A) Within ten (10) days of the selection of an arbitrator, each
party shall submit to the arbitrator and the other party its written
position (the "Initial Submission") which shall not exceed 15 pages,
double-spaced plus such documentary evidence as the party deems necessary.
(B) Within ten (10) days of the delivery of the Initial Submission,
each party may submit to the arbitrator and the other party a reply
memorandum (the "Reply Submission") which shall not exceed 10 pages,
double-spaced plus such other documentary evidence as the party deems
necessary.
(C) Within ten (10) days of the expiration of the period for the
delivery of the Reply Submission, the arbitrator may call a hearing, which
may be by telephone conference (the "Hearing"). At any Hearing, the
arbitrator may ask representatives and counsel for the parties questions
with respect to the issue to be decided and positions of the parties.
(D) Within seven (7) days after the later to occur, if such is to
occur, of (a) the Hearing or (b) the Reply Submission, the arbitrator
shall render a decision and/or award.
(E) The arbitrator shall promptly notify the parties in writing of
the decision and/or award. The award shall not contain an explanation of
the decision.
37
IN WITNESS WHEREOF, Acquiror, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto, duly authorized
as of the date first written above.
TRION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Title: President and CEO
-----------------------
XXXXXX XXXXXX HOLDINGS PLC
By: /s/ Xxx X. Xxxxxxxxxx
-----------------------
Title: Chief Executive
-----------------------
XXXXXX XXXXXX OF PENNSYLVANIA, INC.
By: /s/ X. X. Xxxxxxxxx
-----------------------
Title: Vice President
-----------------------
38
ANNEX 1
DEFINITIONS
For purposes of this Agreement (to which this ANNEX 1 is attached and of
which this ANNEX 1 forms a part), the following terms shall have the meanings
set forth below:
"Acquiror" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Acquiror Balance Sheet" shall have the meaning assigned thereto in
Section 4.05 of this Agreement.
"Acquiror Bylaws" shall have the meaning assigned thereto in Section 4.01
of this Agreement.
"Acquiror Certificate" shall have the meaning assigned thereto in Section
4.01 of this Agreement.
"Acquiror Common Stock" shall have the meaning assigned thereto in Section
4.02(a) of this Agreement.
"Acquisition Agreement" shall have the meaning assigned thereto in Section
5.01(d) of this Agreement.
"Acquisition Proposal" shall have the meaning assigned thereto in Section
5.01(a) of this Agreement.
"Acquisition Transaction" shall have the meaning assigned thereto in
Section 5.01(a) of this Agreement.
"Affiliate" of the Company shall mean any "affiliate" of the Company as
defined in Rule 12b-2 under the Exchange Act and, without limiting the
generality of the foregoing, shall include any person that beneficially owns
(within the meaning of Rule 1 3d-3 under the Exchange Act) 5% or more of the
Company Common Stock, but shall not include Acquiror or Sub.
"Agreement" shall mean this Agreement and Plan of Merger.
"Antitrust Laws" shall mean the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and any
other federal, state or foreign statutes, rules, regulations, orders, decrees,
administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
39
"Applicable Laws" shall mean all applicable laws, statutes, orders, rules,
regulations or policies promulgated, or judgments, decisions or orders entered
by any Governmental Authority.
"Articles of Merger" shall have the meaning assigned thereto in Section
1.01 of this Agreement.
"BCL" shall have the meaning assigned thereto in Section 1.01 of this
Agreement.
"Certificates" shall have the meaning assigned thereto in Section 2.02(b)
of this Agreement.
"Circular" shall mean the circular prepared by Acquiror and mailed to the
stockholders of Acquiror in connection with the EGM and the Merger.
"Closing Date" shall have the meaning assigned thereto in Section 1.02 of
this Agreement.
`"Closing" shall have the meaning assigned thereto in Section 1.02 of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Company Articles" shall have the meaning assigned thereto in Section 3.01
of this Agreement.
"Company Balance Sheet" shall have the meaning assigned thereto in Section
3.07(b) of this Agreement.
"Company Board" shall have the meaning assigned thereto in Section 5.01(a)
of this Agreement.
"Company Bylaws" shall have the meaning assigned thereto in Section 3.01
of this Agreement.
"Company Common Stock" shall have the meaning assigned thereto in the
Preamble to this Agreement.
"Company Option" shall have the meaning assigned thereto in Section 2.05
of this Agreement.
"Company SEC Reports" shall have the meaning assigned thereto in Section
3.07(a) of this Agreement.
"Company Shareholders" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
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"Confidentiality Agreements" shall have the meaning assigned thereto in
Section 5.04 of this Agreement.
"Constituent Corporations" shall have the meaning assigned thereto in the
Preamble to this Agreement.
"Dissenting Shares" shall have the meaning assigned thereto in Section
2.04(a) of this Agreement.
"Effective Time" shall have the meaning assigned thereto in Section 1.01
of this Agreement.
"EGM" shall have the meaning assigned thereto in Section 3.12(b) of this
Agreement.
"Environmental Laws" shall have the meaning assigned thereto in Section
3.17 of this Agreement.
"Environmental Permits" shall have the meaning assigned thereto in Section
3.17 of this Agreement.
"ERISA" shall mean the Employment Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall have the meaning assigned thereto in Section 3.05(d)
of this Agreement.
"Exchange Agent" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
"Exchange Fund" shall have the meaning assigned thereto in Section 2.02(a)
of this Agreement.
"Financing" shall have the meaning assigned thereto in Section 4.06 of
this Agreement.
"Governmental Approval" means any permit, license, authorization, consent,
approval, waiver, exception, variance, order, or exemption issued by any
Governmental Authority.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of a
government with jurisdiction over the matter in question.
"HSR Act" shall have the meaning set forth in Section 3.05(d) of this
Agreement.
"Hazardous Materials" shall have the meaning assigned thereto in Section
3.17 of this Agreement.
41
"Indemnified Parties" shall have the meaning assigned thereto in Section
5.09(c) of this Agreement.
"Intellectual Property" shall have the meaning assigned thereto in Section
3.10 of this Agreement.
"IRS" shall mean the Internal Revenue Service of the United States
government.
"Knowledge" shall mean what a particular executive officer actually knows
or should have known (after making reasonable inquiry) given his position and
responsibilities for the Company, its Subsidiaries, Acquiror or Sub, as the case
may be.
"Liens" shall mean all mortgages, deeds of trust, pledges, liens, leases,
security interests, security agreements, conditional sales agreements,
easements, restrictions, encroachments and other encumbrances.
"London Stock Exchange" shall mean the London Stock Exchange Limited.
"Material Adverse Effect" shall mean, with respect to any party, any
event, change or effect, individually or in the aggregate with such other
events, changes or effects, that has occurred which has a material adverse
effect on the business or financial condition of such party and its
subsidiaries, taken as a whole; provided, however, that a Material Adverse
Effect with respect to any party shall not include any change in or effect upon
the business or financial condition of such party or any of its subsidiaries
directly or indirectly arising out of or attributable to or a consequence of
conditions, events, or circumstances generally affecting one or more of the
industries in which Acquiror (and its Subsidiaries) and the Company (and its
Subsidiaries), or their customers, operate or the economy in general.
"Merger" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Permitted Investments" shall have the meaning assigned thereto in Section
2.02(f) of this Agreement.
"Per Share Purchase Price" shall have the meaning assigned thereto in
Section 2.01(b) of this Agreement.
"Plans" shall have the meaning assigned thereto in Section 3.15(a) of this
Agreement.
"Predecessor" shall mean a predecessor entity which has been merged with
the Company or any Subsidiary of the Company.
42
"Proxy Statement" shall have the meaning assigned thereto in Section
3.05(d) of this Agreement.
"Related Persons" shall have the meaning assigned thereto in Section
3.15(a) of this Agreement.
"Required Authorizations" shall mean, with respect to any person, (i) all
consents, authorizations, approvals or other orders or actions of, or filings or
registrations with, any Federal, state, local or foreign governmental authority
or agency and (ii) all notices, permits, approvals, consents, qualifications,
waivers or other actions of third parties under any lease, note, mortgage,
indenture, agreement or other instrument (or, in the case of the Company, under
any material contract, employment agreement or any Governmental Approval) or
under any other third-party franchise, license or permit, other than any such
consents, authorizations, approvals, permits, qualifications, waivers, orders,
registrations, filings, applications or other actions, the absence of which
would not reasonably be expected to have a Material Adverse Effect with respect
to such person.
"Scheduled Leases" shall have the meaning assigned thereto in Section 3.11
of this Agreement.
"SEC" shall have the meaning assigned thereto in Section 3.05(d) of this
Agreement.
"Securities Act" shall have the meaning assigned thereto in Section 3.04
of this Agreement.
"Settlement Agreement" shall have the meaning assigned thereto in Section
5.13 of this Agreement.
"Shareholders' Meeting" shall have the meaning assigned thereto in Section
3.12 of this Agreement.
"Stock Option Plan" shall have the meaning assigned thereto in Section
3.04 of this Agreement.
"Sub" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Subsidiary" shall mean, with respect to any party, any corporation, other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other
43
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries.
"Superior Proposal" shall have the meaning assigned thereto in Section
5.01(a) of this Agreement.
"Surviving Corporation" shall have the meaning assigned thereto in the
Preamble to this Agreement.
"Title IV Plan" shall have the meaning assigned thereto in Section
3.15(c)(i) of this Agreement.
44
