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Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
APRIL 30, 1999
AMONG
PENTAIR, INC.,
NORTHSTAR ACQUISITION COMPANY
AND
ESSEF CORPORATION
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger........................................................2
Section 1.2 Effective Time of the Merger......................................2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles..........................................................2
Section 2.2 Regulations.......................................................2
Section 2.3 Board of Directors; Officer.......................................2
Section 2.4 Effects of Merger.................................................2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Shares of Company Common Stock......................3
Section 3.2 Surrender and Payment.............................................3
Section 3.3 Dissenting Shares.................................................5
Section 3.4 Stock Options.....................................................5
Section 3.5 Shareholders' Meetings............................................7
Section 3.6 Assistance in Consummation of the Merger..........................8
Section 3.7 Closing...........................................................8
Section 3.8 Filing of Certificate of Merger...................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Organization and Qualification....................................8
Section 4.2 Authority Relative to this Merger Agreemen........................8
Section 4.3 Consents and Approvals; No Violations.............................9
Section 4.4 Financial Advisor.................................................9
Section 4.5 Financing.........................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification...................................10
Section 5.2 Capitalization...................................................10
Section 5.3 Subsidiaries.....................................................10
Section 5.4 Authority Relative to this Merger Agreement......................11
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Section 5.5 Consents and Approvals; No Violations............................11
Section 5.6 Reports and Financial Statements.................................11
Section 5.7 Absence of Certain Changes or Events.............................12
Section 5.8 Litigation.......................................................12
Section 5.9 Information in Disclosure Documents..............................13
Section 5.10 Employee Benefit Plans...........................................13
Section 5.11 ERISA............................................................14
Section 5.12 Company Action...................................................15
Section 5.13 Fairness Opinion.................................................15
Section 5.14 Financial Advisor................................................15
Section 5.15 Compliance with Applicable Laws..................................15
Section 5.16 Liabilities......................................................15
Section 5.17 Taxes............................................................15
Section 5.18 Certain Agreements...............................................17
Section 5.19 Patents, Trademark, Etc..........................................17
Section 5.20 Title to Assets; Liens...........................................17
Section 5.21 Required Vote....................................................17
Section 5.22 Insurance........................................................18
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger............18
Section 6.2 Notice of Breach.................................................20
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information; Environmental and Year 2000 Compliance...20
Section 7.2 Shareholders' Meeting; Filings...................................23
Section 7.3 Employment Arrangements..........................................23
Section 7.4 Employee Benefits................................................23
Section 7.5 Indemnification..................................................24
Section 7.6 Consents.........................................................25
Section 7.7 Antitrust Filings................................................25
Section 7.8 Additional Agreements............................................26
Section 7.9 No Solicitation..................................................26
Section 7.10 Split-Off of A&S.................................................28
Section 7.11 Confidentiality..................................................29
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.......29
Section 8.2 Conditions to Obligation of the Company to Effect the Merger.....29
Section 8.3 Conditions to Obligation of Parent and Sub to Effect the Merger..30
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination......................................................30
Section 9.2 Effect of Termination............................................32
Section 9.3 Amendment........................................................32
Section 9.4 Waiver...........................................................32
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and Agreements.......32
Section 10.2 Notices..........................................................33
Section 10.3 Fees and Expenses................................................34
Section 10.4 Publicity........................................................35
Section 10.5 Specific Performance.............................................35
Section 10.6 Interpretation...................................................35
Section 10.7 Third Party Beneficiaries........................................36
Section 10.8 Miscellaneous....................................................36
Section 10.9 Cure Period......................................................36
Section 10.10 Validity.........................................................36
Exhibit A Transition Agreement
Exhibit B Tax Sharing Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"),
dated as of April 30, 1999, by and among PENTAIR, INC., a Minnesota corporation
("Parent"), NORTHSTAR ACQUISITION COMPANY, an Ohio corporation and a wholly
owned subsidiary of Parent ("Sub"), and ESSEF CORPORATION, an Ohio corporation
(the "Company").
RECITALS
WHEREAS, the respective boards of directors of Parent, Sub and
the Company have determined that it is fair to, and in the best interests of
their respective stockholders to consummate the acquisition of the Company
(other than the swimming pool installation business thereof) by Parent upon the
terms and subject to the conditions set forth herein; and
WHEREAS, as part of the Merger (as defined below), Xxxxxxx &
Sylvan Pools Corporation, an Ohio corporation and an indirect wholly-owned
subsidiary of the Company (including any successor in interest, "A&S"), will be
split-off from the Company, in a manner (as provided in the Transition
Agreement, dated as of the date hereof, among the Company, A&S and the Parent
attached hereto as Exhibit A (the "Transition Agreement")) whereby the holder
of shares of Company common stock, without par value ("Company Common Stock")
will receive 100% of the shares of common stock, without par value, of A&S (the
"Split-Off") in consideration for the redemption of a portion of their shares
of Company Common Stock; and
WHEREAS, in furtherance of the acquisition, the respective
boards of directors of Parent, Sub and the Company have approved the merger of
Sub with and into the Company (the "Merger") in accordance with the Ohio
General Corporation Law ("OGCL") whereby each issued and outstanding share of
Company Common Stock (other than shares of Company Common Stock held by the
Company as treasury stock or owned by Parent, Sub or any other Subsidiary (as
defined in Section 10.6 below) of Parent immediately prior to the Effective
Time and other than Dissenting Shares (as defined in Section 3.3 hereof)), will
be converted into the right to receive (i) the Cash Consideration (as defined
in Section 3.1(c) hereof) and (ii) the Split-Off Consideration (as defined in
Section 3.1(c) hereof) as set forth below; and
WHEREAS, as set forth in Section 7.10(a) hereof, as a condition
to and in consideration of the transactions contemplated hereby, following the
date hereof the Company, A&S and certain other parties will enter into a Tax
Sharing Agreement substantially in the form attached hereto as Exhibit B with
such changes as shall have been properly approved prior to the consummation of
the Merger (the "Tax Sharing Agreement" and together with the Transition
Agreement, hereafter collectively referred to as the "Ancillary Agreements");
and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
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NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof and in accordance with the OGCL, at the Effective Time (as
defined below in Section 1.2), Sub shall be merged into the Company and the
separate existence of Sub shall thereupon cease, and the name of the Company,
as the surviving corporation in the Merger (the "Surviving Corporation"), shall
by virtue of the Merger be "Essef Corporation."
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall
become effective when a properly executed Certificate of Merger is duly filed
with the Secretary of State of the State of Ohio in accordance with the OGCL,
which filing shall be made as soon as practicable after the closing of the
transactions contemplated by this Merger Agreement in accordance with Section
3.8. When used in this Merger Agreement, the term "Effective Time" shall mean
the date and time at which such filing shall have been made.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 ARTICLES. The Surviving Corporation shall adopt the
Articles of Incorporation of Sub in effect immediately prior to the Merger as
the Articles of Incorporation of the Surviving Corporation until amended in
accordance with its terms and as provided by law and this Merger Agreement.
Section 2.2 REGULATIONS. The Surviving Corporation shall adopt
the Regulations of Sub as in effect at the Effective Time as the Regulations of
the Surviving Corporation.
Section 2.3 BOARD OF DIRECTORS; OFFICERS. The directors of Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case until their
respective successors are duly elected and qualified in the manner provided in
the Articles of Incorporation and Regulations of the Surviving Corporation.
Section 2.4 EFFECTS OF MERGER. The Merger shall have the
effects set forth in the applicable provisions of the OGCL. Without limiting
the generality of the foregoing, and subject thereto at the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all restrictions, debts, liabilities and duties of
the Sub.
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ARTICLE III
CONVERSION OF SHARES
Section 3.1 CONVERSION OF SHARES OF COMPANY COMMON STOCK. At
the Effective Time:
(a) CANCELLATION OF CERTAIN STOCK. Each share of Company Common
Stock held by the Company as treasury stock or owned by Parent, Sub or any
other Subsidiary of Parent immediately prior to the Effective Time shall
automatically be cancelled and retired and cease to exist, and no payment shall
be made with respect thereto; provided, that shares of Company Common Stock
held beneficially or of record by any plan, program or arrangement sponsored or
maintained for the benefit of employees of Parent or the Company or any
Subsidiaries thereof shall not be deemed to be held by Parent or the Company
regardless of whether Parent or Company has, directly or indirectly, the power
to vote or control the disposition of such shares of Company Common Stock.
(b) CAPITAL STOCK OF SUB. Each share of common stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and non-assessable share of common
stock, par value $0.01, of the Surviving Corporation and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
(c) CONVERSION OF SHARES. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall, except as
otherwise provided in Sections 3.1(a) and 3.3 hereof, be converted into the
right to receive Nineteen Dollars and Nine Cents ($19.09) per share, without
interest (the "Cash Consideration") and 0.25 shares of A&S Common Stock (as
defined in the Transition Agreement) (the "Split-Off Consideration").
Section 3.2 SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, Parent and Company shall
jointly appoint a depositary (the "Depositary") for the purpose of exchanging
certificates representing shares of Company Common Stock for the Cash
Consideration and the Split-Off Consideration. The Depositary shall be Bank of
America National Trust and Savings Association. Parent will pay to the
Depositary immediately prior to the Effective Time, the Cash Consideration, and
the Company shall cause A&S to deposit with the Depositary the Split-Off
Consideration (comprised of shares of A&S Common Stock and cash sufficient to
pay any fractional shares), to be paid in respect of the shares of Company
Common Stock. For purposes of determining the Cash Consideration and the
Split-Off Consideration to be so paid, Parent and Company shall assume that no
holder of shares of Company Common Stock will perfect his right to appraisal of
his shares of Company Common Stock. Promptly after the Effective Time, Parent
will send, or will cause the Depositary to send, but in no event later than
three (3) business days after the Effective Time, to each holder of shares of
Company Common Stock at the Effective Time a letter of transmittal for use in
such exchange (which shall specify that the delivery shall be effected, and
risk of loss and title shall pass, only upon proper delivery of the
certificates representing shares of Company Common Stock to the Depositary) and
instructions for use in effecting the surrender of shares of Company Common
Stock in exchange for the Cash
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Consideration and Split-Off Consideration, and no interest shall accrue or be
paid on any Cash Consideration payable upon the surrender of certificates.
(b) Each holder of shares of Company Common Stock that have been
converted into the right to receive the Cash Consideration and Split-Off
Consideration, upon surrender to the Depositary of a certificate or
certificates properly representing such shares of Company Common Stock,
together with a properly completed letter of transmittal covering such shares
of Company Common Stock, will be entitled to receive the Cash Consideration and
Split-Off Consideration payable in respect of such shares of Company Common
Stock less any amounts required to be withheld under applicable federal, state,
local or foreign income tax regulations. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Cash Consideration and Split-Off Consideration. No
certificates representing fractional shares of A&S Common Stock shall be issued
upon the surrender for exchange of shares of Company Common Stock, and such
fractional share interests will not entitle the owner thereof to vote or to any
other rights as a shareholder of A&S. Each holder of shares of Company Common
Stock who would otherwise be entitled to receive a fractional share of A&S
Common Stock shall receive from the Depositary an amount in cash (the
"Fractional Share Payment") equal to the product obtained by multiplying (i)
the fractional share interest to which such holder (after taking into account
all shares of Company Common Stock held at the Effective Time by such holder)
would otherwise be entitled by (ii) the mean between the high and low trading
prices of A&S Common Stock on the first full day of trading following the
Closing (as defined in Section 3.7 below) (the "Trading Value").
(c) If any portion of the Cash Consideration and Split-Off
Consideration is to be paid to a Person other than the registered holder of the
shares of Company Common Stock represented by the certificate or certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Depositary any transfer or other taxes required as a
result of such payment to a Person other than the registered holder of such
shares of Company Common Stock or establish to the satisfaction of the
Depositary that such tax has been paid or is not payable. For purposes of this
Merger Agreement, "Person" means an individual, a corporation, limited
liability company, a partnership, an association, a trust or any other entity
or organization, including a government or political subdivision or any agency
or instrumentality thereof.
(d) After the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of shares of Company Common Stock. If, after the Effective Time,
certificates representing shares of Company Common Stock are presented to the
Surviving Corporation, they shall be cancelled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
this Article III. From and after the Effective Time, holders of certificates
theretofore evidencing shares of Company Common Stock shall cease to have any
rights as shareholders of the Company, except as provided herein or by law.
(e) Any portion of the Cash Consideration paid to the Depositary
pursuant to Section 3.2(a) that remains unclaimed by the holders of shares of
Company Common Stock one year
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after the Effective Time shall be returned to the Surviving Corporation,
including any interest thereon, and any portion of the Split-Off Consideration
(including, any interest on the cash deposited for Fractional Share Payments)
paid to the Depositary pursuant to Section 3.2(a) that remains unclaimed by the
holders of shares of Company Common Stock one year after the Effective Time
shall be returned to A&S, upon written demand, and any such holder who has not
exchanged his shares of Company Common Stock for the Cash Consideration and
Split-Off Consideration in accordance with this Section 3.2(a) prior to that
time shall thereafter look only to the Surviving Corporation for payment of the
Cash Consideration and A&S for payment of the Split-Off Consideration in
respect of his shares of Company Common Stock, without any interest thereon.
Notwithstanding the foregoing, Parent, Sub and the Surviving Corporation shall
not be liable to any holder of shares of Company Common Stock for any amount
paid to a public official pursuant to applicable abandoned property laws. Any
Cash Consideration or Split-Off Consideration remaining unclaimed by holders of
shares of Company Common Stock on the day immediately prior to such times as
such amounts would otherwise escheat to or become property of any governmental
entity shall, to the extent permitted by applicable law, in the case of the
Cash Consideration become the property of Parent, and in the case of the
Split-Off Consideration become the property of A&S, free and clear of any
claims or interest of any Person previously entitled thereto.
(f) Any portion of the Cash Consideration and Split-Off
Consideration paid to the Depositary pursuant to Section 3.2(a) hereof to pay
for shares of Company Common Stock for which appraisal rights have been
perfected shall be returned to the Surviving Corporation and A&S, respectively,
upon written demand.
Section 3.3 DISSENTING SHARES . Notwithstanding Section 3.1
hereof, shares of Company Common Stock issued and outstanding immediately prior
to the Effective Time and held by a holder who has properly exercised and
perfected appraisal rights under Section 1701.85 of the OGCL (the "Dissenting
Shares"), shall not be converted into the right to receive the Cash
Consideration and Split-Off Consideration, but the holders of Dissenting Shares
shall be entitled to receive such consideration as shall be determined pursuant
to said Section 1701.85; provided, however, that if any such holder shall have
failed to perfect or shall withdraw or lose his right to appraisal and payment
under the OGCL, such holder's shares shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Cash
Consideration and Split-Off Consideration, without any interest thereon, and
such shares of Company Common Stock shall no longer be Dissenting Shares. The
Company shall give Parent (i) prompt notice of any written demands for payment,
withdrawals of demands for payment and any other instruments served pursuant to
the OGCL received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for payment under the
OGCL. The Company will not voluntarily make any payment with respect to any
demands for payment and will not, except with the prior written consent of
Parent, settle or offer to settle any such demands.
Section 3.4 STOCK OPTIONS.
(a) Except as provided in Section 3.4(c) below, the Company
shall take all actions (including, but not limited to, obtaining any and all
consents from employees to the matters
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contemplated by this Section 3.4) necessary to provide that all outstanding
options and other rights to acquire shares ("Stock Options") granted under any
stock option or deferred compensation plan, program or similar arrangement or
any employment agreement of the Company or any Subsidiaries other than options,
if any, of A&S, each as amended (the "Option Plans"), shall become fully
exercisable and vested on the date (the "Vesting Date") which shall be set by
the Company and which, in any event, shall be not less than thirty (30) days
prior to the Effective Time, whether or not otherwise exercisable and vested.
All Stock Options which are outstanding immediately prior to the Effective Time
shall be cancelled as of the Effective Time and the holders thereof shall be
entitled to receive from the Company, for each share of Company Common Stock
subject to such Stock Option, (i) an amount in cash equal to the difference
between the Cash Consideration and the exercise price per share of such Stock
Option, which amount shall be payable at the Effective Time, plus (ii) 0.25
shares of A&S Common Stock (and in the case of fractional shares, the
Fractional Share Payment), which shall be held by the Depositary pending
delivery after the Effective Time. All applicable withholding taxes
attributable to the payments made hereunder or to distributions contemplated
hereby shall be deducted from the amounts payable under clauses (i) and (ii)
above and all such taxes attributable to the exercise of Stock Options on or
after the Vesting Date shall be withheld from the proceeds received in the
Merger, in respect of the shares of Company Common Stock issuable on such
exercise.
(b) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the Option Plans, (i) the Option Plans
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement, providing for the issuance or grant by the Company or
any of its Subsidiaries of any interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time
and (ii) the Company shall use all reasonable efforts to ensure that following
the Effective Time no holder of Stock Options or any participant in the Option
Plans or any other such plans, programs or arrangements shall have any right
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
(c) (i) With respect to the employees identified on Schedule
3.4(c) of the Company Disclosure Schedule who will remain as
employees or directors of A&S (the "Optionees" and individually
an "Optionee"), the Company agrees to take all actions
(including, but not limited to, obtaining any and all consents
from the Optionees to the matters contemplated by this Section
3.4(c) and causing A&S to take such actions as are necessary to
accomplish the matters contemplated by this Section 3.4(c))
necessary to provide that (A) the Stock Options identified on
Schedule 3.4(c) of the Company Disclosure Schedule are amended
in such a fashion that each Optionee has the right under such
options to purchase (subsequent to the Merger) that number of
shares of Company Common Stock that represents the same
proportionate interest in the Company that such Optionee had the
right to purchase prior to the Merger (such option hereafter
referred to as the "Post-Merger Company Option") with
appropriate adjustments (if necessary as specified below) in the
exercise price of such Option and (B) such Optionee is granted a
stock option (with terms equivalent to the terms in the
Optionee's option to purchase Company Common Stock and with an
exercise price as specified in this Section 3.4(c)) to purchase
that number of shares of A&S Common Stock that represents a
proportionate
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interest in A&S equal to the proportionate interest in the
Company that the Optionee's option to purchase Company Common
Stock represented (the "A&S Option").
(ii) (A) The amendment contemplated by Section
3.4(c)(i)(A) shall be accomplished by reducing the option price
of the Post-Merger Company Option to a price equal to the option
price (immediately before the Merger) multiplied by a fraction,
the numerator of which is the aggregate value of Company Common
Stock immediately subsequent to the Merger (utilizing $19.09 as
the per share value of such Common Stock) and the denominator of
which is the sum of such aggregate value of the Company Common
Stock and the aggregate value of A&S Common Stock immediately
subsequent to the Merger (based on the value of A&S Common Stock
as determined pursuant to Section 5 of the Tax Sharing
Agreement) and (B) the A&S Option shall have a per-share
exercise price that bears the same relation to the per-share
value of A&S Common Stock as the per-share exercise price of the
Post-Merger Company Option (adjusted as provided in clause (A))
bears to $19.09.
(iii) Immediately after the amendment contemplated
in Section 3.4(c)(i)(A), all Post-Merger Company Options shall
be cancelled and the holders thereof shall be entitled to
receive from the Company for each share of Company Common Stock
subject to such Post-Merger Company Option an amount in cash
equal to the difference between the Cash Consideration and the
exercise price of such Post-Merger Company Option.
(iv) For all purposes of this Section 3.4(c), the
term "proportionate interest" shall be determined on the basis
of the percentage interest of Company or A&S Common Stock (as
the case may be) that such Optionee would own after the exercise
of all Stock Options (as defined in Section 3.4(a)) in the case
of the Company and all A&S Options in the case of A&S.
Section 3.5 SHAREHOLDERS' MEETINGS. (a) In order to consummate
the Merger, the Company, acting through its board of directors, shall, in
accordance with applicable law, the Company's Third Amended Articles of
Incorporation and its Regulations:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders for the purpose of
considering and taking action upon this Merger Agreement (the
"Shareholders' Meeting");
(ii) subject to its fiduciary duties under
applicable laws as advised by counsel, include in the proxy
statement or information statement prepared by the Company for
distribution to shareholders of the Company in advance of the
Shareholders' Meeting in accordance with Regulation 14A
promulgated under the Exchange Act (the "Company Proxy
Statement") the recommendation of its board of directors; and
(iii) use its best efforts to (A) obtain and
furnish the information required to be included by it in the
Company Proxy Statement, and, after consultation with Parent,
respond promptly to any comments made by the Commission with
respect to the Company Proxy Statement and any preliminary
version thereof and cause the Company
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Proxy Statement to be mailed to its shareholders and (B) obtain
the necessary approvals of this Merger Agreement by its
shareholders.
(b) Parent will provide the Company with information concerning
Parent and Sub required to be included in the Company Proxy Statement and will
vote, or cause to be voted, all shares of Company Common Stock owned by it or
its Subsidiaries in favor of approval and adoption of this Merger Agreement.
Section 3.6 ASSISTANCE IN CONSUMMATION OF THE MERGER. Each of
Parent, Sub and the Company shall provide all reasonable assistance to, and
shall cooperate with, each other to bring about the consummation of the Merger
as soon as possible in accordance with the terms and conditions of this Merger
Agreement. Parent shall cause Sub to perform all of its obligations in
connection with this Merger Agreement.
Section 3.7 CLOSING. The closing (the "Closing") of the
transactions contemplated by this Merger Agreement shall take place (i) at the
offices of Squire, Xxxxxxx & Xxxxxxx L.L.P., 0000 Xxx Xxxxx, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000-0000, at 9:00 A.M. local time on the second business day
after the day on which the last of the conditions set forth in Article VII is
fulfilled or waived, provided, however, that the closing shall take place on or
within 10 days after the last day of a month, or (ii) at such other time and
place as Parent and the Company shall agree in writing (the "Closing Date").
Section 3.8 FILING OF CERTIFICATE OF MERGER. Upon the terms and
subject to the conditions hereof as soon as practicable following the Closing,
the Company shall execute and file a certificate of merger in the manner
required by the OGCL and the parties hereto shall take all such other and
further actions as may be required by applicable law to make the Merger
effective.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company, except as
set forth in a disclosure schedule delivered by Parent and Sub concurrently
herewith (the "Parent and Sub Disclosure Schedule"), as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
carry on its business as it is now being conducted or currently proposed to be
conducted.
Section 4.2 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT. Each
of Parent and Sub has the corporate power to enter into this Merger Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Merger Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the boards of directors of Parent and Sub. This
Merger Agreement constitutes a valid and binding obligation of each of Parent
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and Sub enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be brought. No
other corporate proceedings on the part of Parent or Sub are necessary to
authorize the Merger Agreement and the transactions contemplated hereby.
Section 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Neither
Parent nor Sub is subject to or obligated under (i) any charter, by-law,
indenture or other loan document provision or (ii) any other contract, license,
franchise, permit, order, decree, concession, lease, instrument, judgment,
statute, law, ordinance, rule or regulation applicable to either of them or any
of Parent's Subsidiaries or their respective properties or assets, which would
be breached or violated, or under which there would be a default (with or
without notice or lapse of time, or both), or under which there would arise a
right of termination, cancellation or acceleration of any obligation or the
loss of a material benefit, by its executing and carrying out this Merger
Agreement other than, in the case of clause (ii) only, the laws and regulations
referred to in the next sentence. Except as referred to herein or in
connection, or in compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934 (the "Exchange Act"), and other governmental approvals required under the
applicable laws of any foreign jurisdiction ("Foreign Laws") and the
environmental, corporation, securities or blue sky laws or regulations of the
various states ("State Laws") (all of which required consents and approvals
under Foreign Laws and State Laws are identified in Schedule 4.3 to the Parent
and Sub Disclosure Schedule), no filing by Parent or Sub or registration by
Parent with any public body or authority is necessary for, nor is any
authorization, consent or approval of any public body or authority required to
be obtained by Parent or Sub for, the consummation of the Merger or the other
transactions contemplated by this Merger Agreement.
Section 4.4 FINANCIAL ADVISOR. Except for Credit Suisse First
Boston Corporation, financial advisor to Parent and Sub ("Credit Suisse First
Boston"), no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Merger Agreement based upon arrangements made
by or on behalf of Parent and Sub.
Section 4.5 FINANCING. Sub currently has sufficient funds, or
has a firm written commitment from one or more financial institutions and/or
from Parent (copies of all of which have been delivered to the Company), to
enable it to finance the consummation of the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub, except as
set forth in a disclosure schedule delivered by the Company concurrently
herewith (the "Company Disclosure Schedule"), as follows:
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Section 5.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio and has all requisite corporate power and authority
to own, lease and operate its properties and carry on its business as it is now
being conducted or currently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to so qualify would not have a Company Material
Adverse Effect (as defined in Section 10.6). Complete and correct copies as of
the date hereof of the articles of incorporation and regulations of the Company
and each of its Subsidiaries have, to the extent requested, been delivered to
Parent as part of the Company Disclosure Schedule.
Section 5.2 CAPITALIZATION. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and 1,000,000
shares of Preferred Stock, without par value ("Company Preferred Stock"). As of
February 28, 1999 and as adjusted to reflect the stock dividend paid by the
Company on March 10, 1999 to the shareholders of record on February 19, 1999
(the "Stock Dividend"), 13,062,741 shares of Company Common Stock were validly
issued and outstanding, fully paid and nonassessable, 618,127 shares of Company
Common Stock were held in treasury, no shares of Preferred Stock had been
issued, and there have been no material changes (other than as a result of the
Stock Dividend) in such numbers of shares through the date hereof. Except for
Stock Option exercises, no shares of Company Common Stock have been issued
since February 28, 1999. Schedule 5.2 of the Company Disclosure Schedule sets
forth as of the date of this Merger Agreement each outstanding Stock Option
issued under the Option Plans, including the holder, date of grant, exercise
price and number of shares of Company Common Stock subject thereto. Except for
such Stock Options, there are no outstanding options, warrants, calls or other
rights, agreements or commitments obligating the Company to issue, deliver or
sell shares of its capital stock or debt securities or obligating the Company
to grant, extend or enter into any such option, warrant, call or other such
right, agreement or commitment.
Section 5.3 SUBSIDIARIES. Schedule 5.3 of the Company
Disclosure Schedule lists each Subsidiary of the Company. Each of such
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
corporate power to carry on its business as it is now being conducted or
currently proposed to be conducted. Each of such Subsidiaries is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to so qualify would not have a Company Material Adverse Effect. All
the outstanding shares of capital stock of each of such Subsidiaries are
validly issued, fully paid and nonassessable and those owned by the Company or
by a Subsidiary of the Company are owned free and clear of any liens, claims or
encumbrances. There are no existing options, warrants, calls or other rights,
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of any of the Subsidiaries of the Company
other than A&S. Except as set forth in Schedule 5.3 of the Company Disclosure
Schedule, the Company does not directly or indirectly own any interest in any
other corporation, partnership, joint venture or other business association or
entity.
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Section 5.4 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT. The
Company has the corporate power to enter into this Merger Agreement, subject to
the requisite approval of this Merger Agreement by the holders of Company
Common Stock, and to carry out its obligations hereunder. The execution and
delivery of this Merger Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the board of directors of the
Company and to the extent necessary by the board of directors of A&S. This
Merger Agreement constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms except as enforcement may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. Except for the
requisite approval of the holders of Company Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize this Merger
Agreement and the transactions contemplated hereby.
Section 5.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The Company
is not subject to or obligated under (i) any charter, by-law, indenture or
other loan document provision or (ii) any other contract, license, franchise,
permit, order, decree, concession, lease, instrument, judgment, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets which would be breached
or violated, or under which there would be a default (with or without notice or
lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit, by its executing and carrying out this Merger Agreement,
other than, in the case of clause (ii) only, the laws and regulations referred
to in the next sentence. Except as referred to herein or, with respect to the
Merger or the transactions contemplated thereby, in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act, the
Exchange Act, the Foreign Laws and the State Laws (all of which required
consents and approvals under Foreign Laws and State Laws are identified in
Schedule 5.5 to the Company Disclosure Schedule), no filing by the Company or
registration by the Company with any public body or authority is necessary for,
nor is any authorization, consent or approval of any public body or authority
required to be obtained by the Company for, the consummation of the Merger or
the other transactions contemplated hereby.
Section 5.6 REPORTS AND FINANCIAL STATEMENTS. The Company has
previously furnished Parent with true and complete copies of its (i) Annual
Reports on Form 10-K for the three years ended September 30, 1996, 1997, and
1998, as filed with the Commission, (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 30, 1998, June 30, 1998, and December 31, 1998 as filed
with the Commission, (iii) proxy statements related to all meetings of its
shareholders (whether annual or special) since December 31, 1996 and (iv) all
other reports or registration statements filed by the Company with the
Commission since December 31, 1996 which are all the documents (other than
preliminary materials) that the Company was required to file with the
Commission since that date (such documents identified in clauses (i) through
(iv) (except registration statements on Form S-8 relating to employee benefit
plans and the Form S-1 (as defined in the Transition Agreement (or any other
registration statement contemplated to be filed pursuant to the terms of the
Transition Agreement)) being referred to herein collectively as the "Company
SEC Reports")). As of their respective dates, the Company SEC Reports
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complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Company SEC Reports, and did not
contain any untrue statement of a material fact or omit 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. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, and the
financial statements included in the Company SEC Reports have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of the Company and its
Subsidiaries as at the dates thereof and the results of their operations and
changes in financial position for the periods then ended subject, in the case
of the unaudited interim financial statements, to normal year-end audit
adjustments and any other adjustments described therein.
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Reports, since December 31, 1998, there has not
been (i) any event, condition, transaction, commitment, dispute or other
circumstance (financial or otherwise) of any character (whether or not in the
ordinary course of business) individually or in the aggregate having a Company
Material Adverse Effect; (ii) any damage, destruction or loss, whether or not
covered by insurance, which, insofar as reasonably can be foreseen, in the
future would have a Company Material Adverse Effect; (iii) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to the capital stock of the Company; or
(iv) any entry into any commitment or transaction material to the Company and
its Subsidiaries taken as a whole (including, without limitation, any borrowing
or sale of assets) except in the ordinary course of business consistent with
past practice.
Section 5.8 LITIGATION.
(a) Except as disclosed in the Company SEC Reports, there is no
suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries which,
either alone or in the aggregate, has, or is reasonably likely to have, a
Company Material Adverse Effect or would prevent, delay or otherwise interfere
with any of the transactions contemplated by this Merger Agreement, nor is
there any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against the Company or any of its Subsidiaries having, or
reasonably likely to have, either alone or in the aggregate, a Company Material
Adverse Effect or would prevent, delay or otherwise interfere with any of the
transactions contemplated by this Merger Agreement. Schedule 5.8 of the Company
Disclosure Schedule sets forth all claims with respect to the Company or any of
its Subsidiaries, whether or not accrued for or covered by insurance, where the
amount in controversy exceeds $200,000. Schedule 5.8 of the Company Disclosure
Schedule sets forth all claims with respect to Products (as defined in
5.8(b)(i) below) liability that have not been accrued for by the Company in its
consolidated financial statements or are not covered by the Company's insurance
policies. There has not been any adverse change in the number, type or severity
of claims with respect to Products during the last three years. To the
knowledge of the Company, none of the Products is
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the subject of any Recall Campaign (as defined in 5.8(b)(ii) below) and no
facts or conditions exist which could reasonably be expected to result in such
a Recall Campaign, in each case, where the costs of such a Campaign would
exceed $200,000.
(b) For purposes of this Section 5.8, capitalized terms have the
following meanings:
(i) "Products" shall mean any and all products
currently or at any time previously designed, manufactured,
distributed or sold by the Company or its Subsidiaries, or by
any predecessor of the Company or its Subsidiaries.
(ii) "Recall Campaign" shall mean any formal
action by the Company or its Subsidiaries to order the return of
any Product from all known customers for such Product for
repair, substitution or replacement.
Section 5.9 INFORMATION IN DISCLOSURE DOCUMENTS. None of the
information with respect to the Company or its Subsidiaries to be included or
incorporated by reference in the Company Proxy Statement or the Form S-1 (or
any other registration statement contemplated to be filed pursuant to the terms
of the Transition Agreement) will, in the case of the Company Proxy Statement
or any amendments or supplements thereto, and at the time of the Shareholders'
Meeting to be held in connection with the Merger, or in the case of Form S-1
(or any other registration statement contemplated to be filed pursuant to the
terms of the Transition Agreement), at the time it becomes effective and at the
Effective Time contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. The Company Proxy Statement and the Form S-1 (or any
other registration statement contemplated to be filed pursuant to the terms of
the Transition Agreement) will comply in all material respects with the
Exchange Act (and the rules and regulations promulgated thereunder) and the
Securities Act (and the rules and regulations promulgated thereunder).
Section 5.10 EMPLOYEE BENEFIT PLANS. Except as disclosed in the
Company SEC Reports or as set forth in Schedule 5.10 of the Company Disclosure
Schedule, there are no employee benefit, compensation or severance plans,
agreements or arrangements, including "employee benefit plans," as defined in
Section 3(3) of Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and including, but not limited to, plans, agreements or arrangements
relating to former employees, including, but not limited to, retiree medical
plans or post-employment life insurance plans, maintained by the Company or any
of its Subsidiaries or collective bargaining agreements to which the Company or
any of its Subsidiaries is a party (together, the "Company Benefit Plans"). To
the knowledge of the Company, no default exists with respect to the obligations
of the Company or any of its Subsidiaries under such Company Benefit Plans.
Since December 31, 1998, there have been no disputes or grievances subject to
any grievance procedure, unfair labor practice proceedings, arbitration or
litigation occurring or threatened under such Company Benefit Plans, which have
not been finally resolved, settled or otherwise disposed of, nor is there any
default, or any condition which, with notice or lapse of time or both, would
constitute such a default, under any such Company Benefit Plans, by the Company
or its Subsidiaries or, to the knowledge of the Company and its Subsidiaries,
any other party thereto. Since December 31, 1998, there have been no strikes,
lockouts or work stoppages
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or slowdowns, or to the knowledge of the Company and its Subsidiaries,
jurisdictional disputes or organizing activity occurring or threatened with
respect to the business or operations of the Company or its Subsidiaries.
Except as disclosed in the Company SEC Reports or as set forth in Schedule 5.10
of the Company Disclosure Schedule, neither the execution of the Merger
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or upon the occurrence of additional events or acts) result in,
cause the accelerated vesting or delivery of, or increase the amount or value
of, any payment or benefit to any employee of the Company or any of its
Subsidiaries. Notwithstanding anything stated in this Section 5.10 to the
contrary, with respect to the severance plans or arrangements for the officers
of the Company and its Subsidiaries, Schedule 5.10 of the Disclosure Schedule
sets forth to the knowledge of the Company only such plans or arrangements for
which the costs will exceed $100,000 per individual plan or arrangement or
$500,000 in the aggregate for all such plans or arrangements.
Section 5.11 ERISA. The Company Benefit Plans have been
administered in compliance in all material respects with applicable laws and
regulations such that no condition exists with respect to the Company Benefit
Plans that could have a Company Material Adverse Effect. Each of the Company
Benefit Plans which is intended to meet the requirements of Section 401(a) of
the Code has been determined by the Internal Revenue Service to be "qualified,"
within the meaning of such section of the Code, and the Company knows of no
fact which is likely to have a material adverse effect on the qualified status
of such plans. To the knowledge of the Company, there are not now nor have
there been any non-exempt "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, involving the Company Benefit
Plans which could subject the Company, its Subsidiaries or Parent to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of the
Code. Except as set forth in Schedule 5.11 of the Company Disclosure Schedule,
no Company Benefit Plan which is subject to Title IV of ERISA has been
completely or partially terminated, no proceedings to completely or partially
terminate any Company Benefit Plan have been instituted within the meaning of
Subtitle C of said Title IV of ERISA; and no reportable event, within the
meaning of Section 4043(c) of said Subtitle C for which the 30-day notice
requirement of ERISA has not been waived, has occurred with respect to any
Company Benefit Plan. Neither the Company nor any of its Subsidiaries has made
a complete or partial withdrawal, within the meaning of Section 4201 of ERISA,
from any multiemployer plan which has resulted in, or is reasonably expected to
result in, any withdrawal liability to the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has engaged in any transaction
described in Section 4069 of ERISA within the last five (5) years. To the
knowledge of the Company, there does not now exist, nor do any circumstances
exist that could result in, any material liability of the Company or any of its
Subsidiaries (or any entity, trade or business that is or was at any time
required to be aggregated with the Company or any of its Subsidiaries under
Section 414(b), (c), (m) or (o) of the Code) under Title IV of ERISA, Section
302 of ERISA, Sections 412 and 4971 of the Code, the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and
similar provisions of foreign laws or regulations, other than such liabilities
that arise solely out of, or relate solely to, the Company Benefit Plans, that
would have a Company Material Adverse Effect or a Parent Material Adverse
Effect (as defined in Section 10.6) following the Effective Time.
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Section 5.12 COMPANY ACTION. The board of directors of the
Company (at a meeting duly called and held) has by the requisite vote of
directors (a) determined that the Merger is advisable and fair and in the best
interests of the Company and its shareholders, (b) approved the Merger in
accordance with the provisions of Section 1701.78 of the OGCL, and (c)
recommended the approval of this Merger Agreement and the Merger by the holders
of the Company Common Stock and directed that the Merger be submitted for
consideration by the Company's shareholders entitled to vote thereon at the
Shareholders' Meeting.
Section 5.13 FAIRNESS OPINION. The Company has received the
opinion of Rhone Group LLC, financial advisor to the Company ("Rhone Group"),
dated the date hereof, to the effect that the Cash Consideration and Split-Off
Consideration to be received by the holders of shares of Company Common Stock
pursuant to the terms of this Merger Agreement are fair from a financial point
of view to such holders, a copy of which has been or will be delivered to
Parent.
Section 5.14 FINANCIAL ADVISOR. Except for Rhone Group, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Merger Agreement and the Transition Agreement based upon
arrangements made by or on behalf of the Company. Schedule 5.14 of the Company
Disclosure Schedule contains a true and correct copy of the Company's
engagement letter with Rhone Group.
Section 5.15 COMPLIANCE WITH APPLICABLE LAWS. (i) The Company
and its Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals (the "Company Permits") of all courts, administrative agencies or
commissions or other governmental authorities or instrumentalities, domestic or
foreign (each, a "Governmental Entity") necessary for the operation of the
businesses of the Company and its Subsidiaries; (ii) to the knowledge of the
Company, the Company and its Subsidiaries are in compliance with the terms of
the Company Permits; (iii) except as disclosed in the Company SEC Reports, the
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity; and
(iv) no investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending, or threatened, nor has any
Governmental Entity indicated an intention to conduct the same.
Section 5.16 LIABILITIES. As of December 31, 1998, neither the
Company nor any of its Subsidiaries had any liabilities or obligations
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are not disclosed
or provided for in the most recent Company SEC Reports or which could result in
a Company Material Adverse Effect. To the knowledge of the Company, there was
no basis, as of December 31, 1998, for any claim or liability (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which is not reflected in the Company SEC
Reports.
Section 5.17 TAXES. Except as otherwise disclosed in Schedule
5.17 of the Company Disclosure Schedule or as reflected in the Company SEC
Reports and except for those matters
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which, either individually or in the aggregate, would not result in a Company
Material Adverse Effect:
(a) The Company and each of its Subsidiaries have filed (or have
had filed on their behalf) or will file or cause to be filed, all Tax Returns
(as defined in Section 5.17(h)(iii) hereof) required by applicable law to be
filed by any of them prior to the Effective Time.
(b) The Company and each of its Subsidiaries have paid (or have
had paid on their behalf) all Taxes (as defined in Section 5.17(h)(ii) hereof)
due with respect to any period ending prior to or as of the Effective Time), or
where payment of Taxes is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established before the consummation of the Merger, an
adequate accrual for the payment of all such Taxes which have accrued prior to
the Effective Time other than Taxes directly attributable to the transactions
contemplated by the Transition Agreement.
(c) No Audit (as defined in Section 5.17(h)(i)) is pending with
respect to any Taxes due from the Company or any Subsidiary. There are no
outstanding waivers extending the statutory period of limitations relating to
the payment of Taxes due from the Company or any Subsidiary for any taxable
period ending prior to the Effective Time which are expected to be outstanding
as of the Effective Time.
(d) Neither the Company nor any Subsidiary is a party to, is
bound by, or has any obligation under, a tax sharing contract or other
agreement or arrangement for the allocation, apportionment, sharing,
indemnification, or payment of Taxes, other than the Tax Sharing Agreement.
(e) Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(f) Neither the Company nor any of its Subsidiaries has received
any written notice of deficiency, assessment or adjustment from the Internal
Revenue Service or any other domestic or foreign governmental taxing authority
that has not been fully paid or finally settled, and any such deficiency,
adjustment or assessment shown on such schedule is being contested in good
faith through appropriate proceedings and adequate reserves have been
established on the Company's financial statements therefor. To the knowledge of
the Company, there are no other deficiencies, assessments or adjustments
threatened, pending or assessed with respect to the Company or any of its
Subsidiaries.
(g) Except as contemplated by this Agreement and the Ancillary
Documents or as disclosed in the Company SEC Reports, neither the Company nor
any of its Subsidiaries is a party to any agreement, contract or other
arrangement that would result, separately or in the aggregate, in the
requirement to pay any "excess parachute payments" within the meaning of
Section 280G of the Code or any gross-up in connection with such an agreement,
contract or arrangement. Schedule 5.17 of the Company Disclosure Schedule lists
any agreement, contract or other arrangement in which the Company or any
Retained Subsidiary is a party providing for any such "excess parachute
payments" or gross-ups.
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(h) For purposes of this Section 5.17, capitalized terms have
the following meanings:
(i) "Audit" shall mean any audit, assessment or
other examination of Taxes or Tax Returns by the Internal
Revenue Service or any other domestic or foreign governmental
authority responsible for the administration of any Taxes,
proceedings or appeal of such proceedings relating to Taxes.
(ii) "Taxes" shall mean all federal, state, local
and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, excise and other
taxes, duties and assessments, charges, or other fees imposed by
a governmental authority, together with any interest, additions
to tax, or penalties imposed with respect thereto.
(iii) "Tax Returns" shall mean all federal, state,
local and foreign tax returns, declarations, statements,
reports, schedules, forms and information returns and any
amended Tax Return relating to Taxes.
Section 5.18 CERTAIN AGREEMENTS. Except as filed as an exhibit
to the Company SEC Reports, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract, agreement, arrangement, commitment or
understanding (whether written or oral) which as of the date hereof, is a
"material contract" (as defined in Item 601(b)(10) of Regulation S-K of the
Commission). Schedule 5.18 to the Company Disclosure Schedule contains true and
correct copies of all indemnification agreements between the Company and
officers, directors and employees of the Company and its Subsidiaries.
Section 5.19 PATENTS, TRADEMARK, ETC. The Company and its
Subsidiaries owns or possesses adequate licenses or other valid rights to use
all patents, trademarks, trade names, service marks, trade secrets, copyrights
and licenses and other proprietary intellectual property rights and licenses
("Intellectual Property Rights") as are necessary in connection with the
conduct of the businesses of the Company and its Subsidiaries. The Company does
not have any knowledge of any infringement by any other person of the Company's
or its Subsidiaries' Intellectual Property Rights and, to the knowledge of the
Company, the Company and its Subsidiaries are not infringing the Intellectual
Property Rights of another person.
Section 5.20 TITLE TO ASSETS; LIENS. The Company has good and
marketable title to all of its inventory, accounts receivable, property,
equipment and other assets, and except as disclosed in the Company's SEC
Reports such assets are free and clear of any mortgages, liens, charges,
encumbrances, or title defects of any nature whatsoever. The Company and its
Subsidiaries have valid and enforceable leases for the premises and the
equipment, furniture and fixtures purported to be leased by them.
Section 5.21 REQUIRED VOTE. The affirmative vote of the holders
of shares of Company Common Stock representing at least two-thirds of the votes
entitled to be cast at the Shareholders' Meeting is required to approve this
Merger Agreement. No other vote of any class or series of stock of the Company
is required by law, the Third Amended Articles of
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Incorporation or Regulations of the Company or otherwise in order for the
Company to consummate the Merger and the transactions contemplated hereby.
Section 5.22 INSURANCE. The Company has previously delivered to
Parent a schedule of all policies of property, casualty, worker's compensation,
product liability, general liability and other insurance as maintained by the
Company and its Subsidiaries. All such policies are valid, outstanding and
enforceable and no notice of cancellation or termination has been received with
respect to any such policy.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. Prior to the Effective Time and except as provided in Section 7.10 or
the Transition Agreement, unless Parent shall otherwise agree in writing after
written notice provided by the Company specifying in reasonable detail the
basis for any action by the Company or its Subsidiaries outside the scope of
agreed upon activities set forth in this Section 6.1 and at Parent's election,
a meeting with officials from the Company or its Subsidiaries, as the case may
be, to discuss the basis for such action:
(i) the Company shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in the same manner as
heretofore conducted, and shall, and shall cause its
Subsidiaries to, use their diligent efforts to preserve intact
their present business organizations, keep available the
services of their present officers and employees and preserve
their relationships with customers, suppliers and others having
business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time.
The Company shall, and shall cause its Subsidiaries to (A)
maintain insurance coverages and its books, accounts and records
in the usual manner consistent with prior practices; (B) comply
in all material respects with all laws, ordinances and
regulations of Governmental Entities applicable to the Company
and its Subsidiaries; (C) maintain and keep its properties and
equipment in good repair, working order and condition, ordinary
wear and tear excepted; and (D) perform in all material respects
its obligations under all contracts and commitments to which it
is a party or by which it is bound, in each case other than
where the failure to so maintain, comply or perform, either
individually or in the aggregate, would not reasonably be
expected to result in a Company Material Adverse Effect;
(ii) the Company shall not and shall not propose to
(A) sell or pledge or agree to sell or pledge any capital stock
owned by it in any of its Subsidiaries, (B) amend its Third
Amended Articles of Incorporation or Regulations, (C) split,
combine or reclassify its outstanding capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital
stock of the Company, or declare, set aside or pay any dividend
or other distribution payable in cash, stock or property (other
than dividends declared, set aside or paid in a manner
consistent with the Company's past practice), or (D) directly or
indirectly redeem, purchase or
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otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares of Company capital stock;
(iii) the Company shall not, nor shall it permit any
of its Subsidiaries to, (A) issue, deliver or sell or agree to
issue, deliver or sell any additional shares of, or rights of
any kind to acquire any shares of, its capital stock of any
class, or any option, rights or warrants to acquire, or
securities convertible into, shares of capital stock other than
issuances of Company Common Stock pursuant to the exercise of
Stock Options, (B) except as provided for in the Company's
capital expenditure budget for the fiscal year ending September
30, 1999 (the "Capital Expenditure Budget"), acquire, lease or
dispose or agree to acquire, lease or dispose of any capital
assets in excess of $1,000,000 or any other assets other than in
the ordinary course of business, (C) incur additional
indebtedness other than in the ordinary course of business for
working capital purposes or as provided for in the Capital
Expenditure Budget or encumber or grant a security interest in
any asset in connection with such indebtedness; or (D) enter
into any binding contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(iv) the Company shall not, nor shall it permit any
of its Subsidiaries to, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity
interest in, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof; provided, however, that if
after notice provided by the Company to Parent, Parent fails to
agree to any such merger, consolidation or acquisition and this
Agreement is later terminated, Parent and its respective
Affiliates shall be precluded from undertaking such merger,
consolidation or acquisition for a period of three (3) years
following the date of such termination;
(v) except as set forth in Schedule 6.1 of the
Company Disclosure Schedule, the Company shall not, nor shall it
permit, any of its Subsidiaries to, except as required to comply
with applicable law and except as provided in Section 7.4
hereof, (A) adopt, enter into, terminate, expand the
applicability of or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other Company
Benefit Plan, agreement, trust, fund or other arrangement for
the benefit or welfare of any director, officer or current or
former employee, (B) increase in any manner the compensation or
fringe benefit of any director, officer or employee (except for
normal increases in the ordinary course of business that are
consistent with past practice and that, in the aggregate, do not
result in a material increase in benefits or compensation
expense to the Company and its Subsidiaries relative to the
level in effect prior to such amendment), (C) pay any benefit
not provided under any existing plan or arrangement, (D) grant
any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Company Benefit Plan
(including, without limitation, the grant of stock options,
stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreements or
awards made thereunder) except in the ordinary course of
business or in a manner consistent with past practice, (E) take
any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement,
contract or arrangement or Company Benefit Plan other than in
the ordinary course of business consistent with past practice,
or
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(F) adopt, enter into, amend or terminate any binding contract,
agreement, commitment or arrangement to do any of the foregoing;
and
(vi) the Company shall not, nor shall it permit any
of its Subsidiaries to, make any investments in non-investment
grade securities; provided, however, that the Company will be
permitted to create new wholly owned Subsidiaries in the
ordinary course of business.
Section 6.2 NOTICE OF BREACH. Each party shall promptly give
written notice to the other party upon becoming aware of the occurrence or, to
its knowledge, impending or threatened occurrence, of any event which would
cause or constitute a breach of any of its representations, warranties or
covenants contained or referenced in this Merger Agreement and will use its
best efforts to prevent or promptly remedy the same. Any such notification
shall not be deemed an amendment of the Company Disclosure Schedule or the
Parent and Sub Disclosure Schedule.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS AND INFORMATION; ENVIRONMENTAL AND YEAR 2000
COMPLIANCE.
(a) Upon reasonable notice delivered to and at reasonable times
scheduled as soon as practicable following such notice by the Company's Vice
President-Finance all in a manner that will minimize disruptions of the
business and operations of the Company and its Subsidiaries and that is
sensitive to time and resource demands of the peak business periods of the
Company's pool equipment segment, (i) between the date of this Agreement and
the Cut-Off Date (as defined in Section 7.1(b) below), the Company will give
Parent and its authorized representatives, including Dames & Xxxxx Group or
another mutually agreed upon nationally recognized environmental consultant
("Parent's Environmental Consultant") and Deloitte & Touche LLP or another
mutually agreed upon nationally recognized year 2000 consultant ("Parent's Year
2000 Consultant"), access to all offices and other facilities and to senior
management of it and its Subsidiaries, and will cause its officers and those of
its Subsidiaries to furnish Parent with (A) such financial, environmental and
operating data and other information with respect to the Company and its
Subsidiaries as Parent may from time to time reasonably request, or (B) any
other financial, environmental and operating data which materially impacts the
Company and its Subsidiaries and (ii) between the period beginning on the
Cut-Off Date and continuing through the Effective Time, the Company will give
Parent full and complete access to the Company's continuing businesses,
personnel and records, including, without limitation, a review of business
plans, major customers and suppliers, potential synergies and cost savings,
post-acquisition management and organizational configuration, key employees,
and capital plans. Notwithstanding the foregoing if during the period beginning
on the date of this Agreement and ending on the Cut-Off Date, the parties
reasonably believe that the Established Claims (as determined in Section 7.1(b)
below) will not exceed the Claim Basket (as defined and determined in Section
7.1(b) below), then the Company will accommodate (subject to the notice
requirements and sensitivities described above) increased due diligence as
contemplated in clause (ii) above by the Parent prior to the Cut-Off Date.
Without limiting the foregoing,
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between the date of this Merger Agreement and the Effective Time, the Company
promptly will provide Parent with monthly management reports, including interim
financial statements of the Company, and such other management reports as and
when they are available.
(b) In connection with the performance of its due diligence,
Parent shall have the right at any time prior to the thirtieth day following
the date of this Agreement (the "Cut-Off Date") to deliver to the Company a
written claim (the "Claim Notice") specifying an amount reasonably determined
to be necessary to indemnify Parent for (i) the Company's Environmental
Non-Compliance Costs (as defined in Section 7.1(c)(ii) below), or (ii) the
Company's Year 2000 Non-Compliance Costs (as defined in Section 7.1(c)(iv)
below); provided, however, that if Parent's Environmental Consultant, based on
its initial environmental investigation, reasonably determines that additional
environmental investigation is required to assess the Company's Environmental
Non-Compliance Conditions (as defined in Section 7.1(c)(i) below), then Parent
shall have an additional fifteen (15) day period in which to deliver to the
Company a Claim Notice with respect to the Company's Environmental
Non-Compliance Conditions and the "Cut-Off Date" shall mean the forty-fifth day
following the date of this Agreement. The Claim Notice must set forth in
reasonable detail the nature of the claim and be accompanied by reports of
Parent's Environmental Consultant and Parent's Year 2000 Consultant with
respect to the Company's Environmental Non-Compliance Conditions and Year 2000
Non-Compliance Conditions (as defined in Section 7.1(c)(iii) below) providing
reasonable backup for such claims. If the cost of any claim resulting from the
Environmental Non-Compliance Conditions at a Company property or location is
equal to or exceeds $1,000,000 (an "Extraordinary Claim"), then the Company
shall have five (5) days after the Company's receipt of the Claim Notice to
provide Parent with a written notice disputing such Extraordinary Claims (a
"Counter Notice"). After providing a Counter Notice to Parent, the Company
shall have the right to retain Earth Sciences Consultants, Inc. ("Company's
Environmental Consultant") to consult, for a period of (15) days after the
Company's receipt of the Claim Notice, with Parent's Environmental Consultant
as to the appropriateness of, and the amount of costs of remediation associated
with, such Extraordinary Claims as set forth in Parent's Environmental
Consultant's Report. Within five (5) days after the end of such fifteen (15)
day period, Parent shall provide to the Company a revised Claim Notice (the
"Final Claim Notice") reflecting any modifications Parent's Environmental
Consultant have made, in their sole discretion, to their report after taking
into account such consultation with Company's Environmental Consultant. The
dollar amount of damages with respect to claims for the Company's Environmental
Non-Compliance Conditions and Year 2000 Non-Compliance Conditions (each, an
"Established Claim") shall be (i) the dollar amount of damages claimed by
Parent as set forth in its Claim Notice in the case of claims for the Company's
Year 2000 Non-Compliance Conditions and (ii) the dollar amount of damages
claimed by Parent as set forth in its Claim Notice, or if such Claim Notice is
disputed by the Company, as set forth in the Final Claim Notice, in the case of
claims for the Company's Environmental Non-Compliance Conditions. If, as of ten
(10) days after delivery of the Final Claim Notice to the Company, the sum of
all Established Claims is less than the amount (the "Claim Basket") equal to
(x) $5,000,000 less (y) any Excess Transaction Costs (as determined pursuant to
Section 10.3(c)), then Parent agrees to absorb all such costs without further
remedy. If, on the other hand, as of ten (10) days after delivery of the Final
Claim Notice to the Company, the sum of all Established Claims equals or
exceeds the Claim Basket, then each of the Parent and the Company shall have
the right to terminate this Agreement pursuant to Sections 9.1(d)(ii)
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and 9.1(e)(ii), respectively. Notwithstanding the foregoing, if the dollar
amount of damages with respect to claims relating to the Company's
Environmental Non-Compliance Conditions and Year 2000 Non-Compliance
Conditions, as set forth in either the Claim Notice, or if such Claim Notice is
disputed by the Company the Final Claim Notice, equals or exceeds the Claim
Basket, then the Company shall have the right to terminate this Agreement
pursuant to Section 9.1(d)(ii) immediately upon receipt of such a Claim Notice.
This Section 7.1(b) shall constitute Parent's sole and exclusive remedy with
regard to the Company's Environmental Non-Compliance Conditions and Year 2000
Non-Compliance Conditions and the Company's sole and exclusive remedy with
respect to disputes relating to claims with respect to the Company's
Environmental Non-Compliance Conditions and Year 2000 Non-Compliance
Conditions.
(c) For purposes of this Section 7.1, capitalized terms have the
following meanings:
(i) "Environmental Non-Compliance Condition" shall
mean (A) the presence of a hazardous substance discharge at any
property owned, leased or previously owned or leased by the
Company or its Subsidiaries or their predecessors in interest or
at any location where the Company or its Subsidiaries could be
held responsible for investigation or cleanup activities
resulting from actual or alleged offsite disposal of hazardous
substances or (B) non-compliance with any federal, state, local
or foreign statute, regulation, administrative order, rule, law,
license, permit or ordinance concerning human health or safety
or pollution or protection of the environment, including,
without limitation, all those relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing,
emission, reporting, notification, discharge, release,
threatened release, control, or clean-up of any hazardous
materials, substances or wastes, including, for the purposes of
this Section 7.1(c)(i), actual and reasonably anticipated fines,
penalties and forfeitures related to such Environmental
Non-Compliance, as such statutes, regulations and ordinances are
enacted and in effect on or prior to the Cut-Off Date.
(ii) "Environmental Non-Compliance Costs" shall
mean an amount reasonably determined based on good faith
estimates and assumptions by Parent and Parent's Environmental
Consultant to be necessary to indemnify Parent for any known or
reasonably anticipated claims, losses, damages, costs (including
attorneys' and consultants' fees and expenses) associated with
any action that would need to be taken to evaluate, defend a
proceeding, investigate, remediate or otherwise respond to, or
liabilities resulting from, an Environmental Non-Compliance
Condition, that (i) is the subject of an environmental claim by
a third party, (ii) in the opinion of Parent's environmental
counsel, imposes upon the Company or its Subsidiaries a duty to
act, or (iii) in the opinion of Parent's Environmental
Consultant or environmental counsel, is of a nature or severity
that it is proper environmental compliance practice or necessary
to act to avoid the risk of either non-compliance with
environmental law or for the avoidance or mitigation of any
environmental claims.
(iii) "Year 2000 Non-Compliance Condition" shall
mean (A) with respect to Date Data (as defined below), the
failure of such data to be in proper format for all dates in the
twentieth and twenty-first centuries, and (B) with respect to
Date Sensitive Systems (as defined below), the inability of each
such system to accurately process all Date Data,
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including for the twentieth and twenty-first centuries, without
loss of any functionality or performance, including but not
limited to calculating, comparing, sequencing, storing and
displaying such Date Data, when used as a stand-alone system or
in combination with other software or hardware. As used herein,
(x) "Date Data" means any data of the Company of any type that
includes date information or which is otherwise derived from,
dependent on or related to date information, and (y) "Date
Sensitive System" means any software, microcode or hardware
system or component or other personal property or equipment,
including any electric or electronically controlled system or
component, that processes any Date Data and that is installed,
in development or on order by the Company or any Subsidiary of
the Company for their internal use, or which the Company or any
Subsidiary of the Company sells, leases, licenses, assigns or
otherwise provides, or the provision or operation of which the
Company and any Subsidiary of the Company provides the benefit,
to its customers, vendors, suppliers, affiliates or any other
third party.
(iv) "Year 2000 Non-Compliance Cost" shall mean an
amount reasonably determined to be necessary based on good faith
estimates and assumptions by Parent or Parent's Year 2000
Consultant to be necessary to indemnify Parent for any known or
reasonably anticipated claims, losses, damages, costs (including
attorneys' and consultants' fees and expenses) associated with
any actions to avoid disruption of the Company's or its
Subsidiaries' business as a result of, or liabilities resulting
from a Year 2000 Non-Compliance Condition; except as provided
for in, or demonstrated by the Company to be part of, the
Capital Expenditure Budget.
Section 7.2 SHAREHOLDERS' MEETING; FILINGS. (a) In connection
with the Shareholders' Meeting, the Company shall (i) use its reasonable
efforts to obtain the necessary approval by its shareholders of this Merger
Agreement and the transactions contemplated hereby and (ii) otherwise comply in
all material respects with all legal requirements applicable to such meeting.
(b) Parent and the Company shall make all necessary filings with
respect to the Merger, under the Securities Act and the Exchange Act and the
rules and regulations thereunder, under applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto.
Section 7.3 EMPLOYMENT ARRANGEMENTS. After the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, honor in accordance
with their terms, all written or announced employment, severance, consulting
and other compensation contracts between the Company or any of its Subsidiaries
and any current or former director, officer or employee thereof, and all
provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under any Company Benefit Plan, each as of the date
hereof except for changes thereto which are (i) not material, (ii) permitted by
this Merger Agreement, or (iii) otherwise agreed to by the parties hereto.
Section 7.4 EMPLOYEE BENEFITS. Until December 31, 2000, Parent
shall provide, or shall cause the Surviving Corporation to provide, generally
to the officers and employees of the Surviving Corporation and its
Subsidiaries, employee benefits, including, without limitation,
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pension benefits, health and welfare benefits, severance arrangements, stock
option plans and other executive compensation arrangements, on terms and
conditions in the aggregate that are at least as favorable to employees as
those provided under the Company Benefit Plans as of the date hereof. To the
extent Parent provides employee benefit plans or arrangements maintained by the
Parent to employees of the Surviving Corporation and its Subsidiaries, Parent
will give full credit for purposes of eligibility and vesting under such
employee benefit plans or arrangements for such employees' service with the
Company or its Subsidiaries.
Section 7.5 INDEMNIFICATION. (a) From and after the Effective
Time, Parent shall indemnify, defend and hold harmless the officers, directors
and employees of the Company and its Subsidiaries (the "Indemnified Parties")
against all losses, expenses, claims, damages or liabilities (i) arising out of
the transactions contemplated by this Merger Agreement or arising as a result
thereof or (ii) otherwise arising prior to the Effective Time to the fullest
extent, in the case of (i) or (ii), permitted or required under (A) applicable
law, (B) any indemnification agreements between the Company and any such person
and (C) the Company's Third Amended Articles of Incorporation and Regulations
as filed in the Company SEC Reports as of the Effective Time. Notwithstanding
the foregoing, Parent shall have no responsibility to indemnify, defend or hold
harmless the Indemnified Parties against any losses, expenses, claims, damages
or liabilities (x) arising out of the transactions contemplated by the
Split-Off and the Transition Agreement (including, without limitation, any
liability with respect to the Form S-1 (or any other registration statement
filed pursuant to the terms of the Transition Agreement) under the Securities
Act) or (y) arising out of the Company Proxy Statement.
(b) From and after the Effective Time, A&S shall indemnify,
defend and hold harmless Parent, the Company and their Subsidiaries, officers,
directors, employees, agents and representatives against all losses, expenses,
claims, damages or liabilities (i) arising out of the Split-Off and the
Transition Agreement (including, without limitation, any liability with respect
to the Form S-1 (or any other registration statement filed pursuant to the
terms of the Transition Agreement) under the Securities Act) or (ii) arising
out of the Company Proxy Statement, except, in each case, for materials
contained in the Form S-1 (or such other registration statement) or the Company
Proxy Statement provided in writing by the Parent to the Company.
Notwithstanding the foregoing, A&S shall have no responsibility to indemnify,
defend, or hold harmless the Company, its Subsidiaries, the Sub, Parent and
each of their respective directors, officers, employees, representatives,
advisors, agents and Affiliates with respect to any claims for Taxes arising
out of the Split-Off and the Transition Agreement, except to the extent
otherwise provided in the Tax Sharing Agreement.
(c) For a period of three (3) years after the Effective Time,
Parent agrees to cause the Surviving Corporation to maintain in effect the
current policies of directors and officers liability insurance maintained by
the Company (provided that Parent may substitute therefor policies with
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous) with
respect to claims arising from or related to facts or events which occurred at
or before the Effective Time.
(d) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by this
Merger Agreement is commenced, whether before or after
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the Effective Time, the parties hereto agree to cooperate and use their
respective reasonable efforts to vigorously defend against and respond thereto.
(e) The provisions of this Section 7.5 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
Section 7.6 CONSENTS. Each of the parties shall cooperate and
use its reasonable best efforts to make all filings and obtain as promptly as
practicable all consents of any Governmental Entity or any other person
required in connection with, and waivers of any violations or rights of
termination that may be caused by, the consummation of the transactions
contemplated by this Agreement. Each of the parties hereto will furnish to the
other party such necessary information and reasonable assistance as such other
persons may reasonably request in connection with the foregoing.
Section 7.7 ANTITRUST FILINGS.
(a) In addition to and without limiting the agreements of Parent
and Sub contained in Section 7.6 hereof, Parent, Sub and the Company will (i)
take promptly all actions necessary to make the filings required of Parent, Sub
or any of their affiliates under the applicable Antitrust Laws (as defined in
Section 7.7(d) hereof), (ii) comply at the earliest practicable date with any
request for additional information or documentary material received by Parent,
Sub or any of their affiliates from the Federal Trade Commission or the
Antitrust Division of the Department of Justice pursuant to the HSR Act and
from the Commission or any other Governmental Entity pursuant to Antitrust
Laws, and (iii) cooperate with the Company in connection with any filing of the
Company under applicable Antitrust Laws and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement or the Ancillary Agreements commenced by any of the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state
attorneys general, the Commission, or any other Governmental Entity.
(b) In furtherance and not in limitation of the covenants of
Parent and Sub contained in Section 7.6 and Section 7.7(a) hereof, Parent, Sub
and the Company shall each use all reasonable efforts to resolve such
objections, if any, as may be asserted with respect to the Split-Off, the
Merger or any other transactions contemplated by this Agreement or the
Ancillary Agreements under any Antitrust Law. If any administrative, judicial
or legislative action or proceeding is instituted (or threatened to be
instituted) challenging the Split-Off, the Merger or any other transactions
contemplated by this Agreement or the Ancillary Agreements as violative of any
Antitrust Law, Parent, Sub and the Company shall each cooperate to contest and
resist any such action or proceeding.
(c) Each of the Company, Parent and Sub shall promptly inform
the other party of any material communication received by such party from the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
the Commission, any state attorney general or any other Governmental Entity
regarding any of the transactions contemplated hereby. Parent and/or Sub will
promptly advise the Company with respect to any understanding, undertaking or
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agreement (whether oral or written) which it proposes to make or enter into
with any of the foregoing parties with regard to any of the transactions
contemplated hereby.
(d) "Antitrust Law" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
Section 7.8 ADDITIONAL AGREEMENTS. (a) Subject to the terms and
conditions herein provided (including, without limitation, Section 7.6), each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Merger Agreement,
including, without limitation, (i) cooperating in the preparation and filing of
the Company Proxy Statement and any amendments thereof and (ii) using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings (including, but not limited to,
filings with all applicable Governmental Entities) and to lift any injunction
or other legal bar to the Merger (and, in such case, to proceed with the Merger
as expeditiously as possible), and the Split-Off. Notwithstanding the
foregoing, but subject to Section 7.6, there shall be no action required to be
taken and no action will be taken in order to consummate and make effective the
transactions contemplated by this Merger Agreement or the Transition Agreement
if such action, either alone or together with another action, would be
reasonably likely to result in a Company Material Adverse Effect or a Parent
Material Adverse Effect.
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement, the proper officers and/or directors of Parent, the Company and the
Surviving Corporation shall take all such necessary action.
Section 7.9 NO SOLICITATION. (a) Neither the Company nor any of
its Subsidiaries shall, directly or indirectly, take (nor shall the Company
authorize or permit its Subsidiaries, officers, directors, employees,
representatives, investment bankers, attorneys, accountants or other agents or
affiliates, to take) any action to (i) encourage, solicit or initiate the
submission of any Acquisition Proposal (as defined below), (ii) enter into any
agreement with respect to any Acquisition Proposal or (iii) participate in any
way in discussions or negotiations with, or furnish any information to, any
person in connection with, or take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or may reasonably be expected
to lead to, any Acquisition Proposal. The Company will promptly communicate to
Parent that such a solicitation or an inquiry has been received by the Company,
or that any such information has been requested from it or that such
negotiations or discussions have been sought to be initiated with it and will
keep Parent reasonably informed of the status and terms of any Acquisition
Proposal. As used herein, "Acquisition Proposal" shall mean any proposed (A)
merger, consolidation, share exchange or similar transaction involving the
Company or its Subsidiaries, (B) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise of assets of
the Company or its Subsidiaries representing 20% or more of the consolidated
assets of the Company and its Subsidiaries (other than A&S), (C) issue, sale or
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other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities) representing 20% or
more of the voting power of the Company, or (D) transaction (including a tender
offer or exchange offer) in which any person would acquire beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) of, or the right
to acquire beneficial ownership, of (whether itself, as a member of any "group"
(as such term is defined under the Exchange Act) or otherwise) 20% or more of
any class of equity securities of the Company or its Subsidiaries.
(b) Notwithstanding anything in this Merger Agreement to the
contrary (including without limitation clause (a) of this Section 7.9), the
Company's board of directors may engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any Person relating to, or otherwise facilitate any effort or attempt to make
or implement, a written Acquisition Proposal which was not solicited by the
Company or which did not otherwise result in a breach of Section 7.9(a), if and
only to the extent that (i) the Company's board of directors determines in good
faith after consultation with outside counsel that it is necessary to do so to
avoid a breach of its fiduciary duties to the Company or its shareholders under
applicable laws, (ii) the Company's board of directors determines in good
faith, after consultation with its financial advisors and outside counsel, that
such written proposal or indication of interest constitutes a Superior Proposal
(as defined below), (iii) the Shareholders' Meeting shall not have occurred and
(iv) the Company's board of directors provides prior written notice to Parent
of the information referred to in the second sentence of Section 7.9(a). Prior
to furnishing nonpublic information to, or entering into discussions or
negotiations with, any other Persons, the Company shall obtain from such person
or entity an executed confidentiality agreement with terms no less favorable,
taken as a whole, to the Company than those contained in the Confidentiality
Agreement, dated as of October 21, 1998, between Parent and the Company (the
"Confidentiality Agreement"), but which confidentiality agreement shall not
include any provision calling for an exclusive right to negotiate with the
Company, and the Company shall advise Parent of the nature of such nonpublic
information delivered to such person reasonably promptly following its delivery
to the requesting party. Nothing in this Section 7.9 shall (x) permit either
Parent or the Company to terminate this Merger Agreement (except as
specifically provided in Article IX hereof) or (y) affect any other obligation
of Parent or the Company under this Merger Agreement.
(c) A "Superior Proposal" means a bona fide written Acquisition
Proposal which the Company's board of directors concludes in good faith (after
consultation with its financial advisors and outside counsel), taking into
account all legal, financial, regulatory and other aspects of the proposal and
the person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to the shareholders of the Company than the
transactions contemplated by this Merger Agreement and (ii) is reasonably
capable of being completed (provided that for purposes of this definition, the
term Acquisition Proposal shall have the meaning assigned to such term in
Section 7.9(a) except that the references to "20%" shall be deemed references
to "50%").
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Section 7.10 SPLIT-OFF OF A&S.
(a) Simultaneously with the execution hereof, the Company and
A&S are entering into the Transition Agreement. Immediately prior to the
Closing Date, the Company, A&S and certain other parties will enter into the
Tax Sharing Agreement. From and after the Effective Time, Parent shall cause
the Surviving Corporation to perform any and all obligations and agreements of
the Company set forth herein or in the Ancillary Agreements or in any other
agreements contemplated herein or therein.
(b) The Company, as promptly as practicable, shall use its best
efforts to cause the shares of A&S to be registered pursuant to the Securities
Act and thereafter effect the Split-Off in accordance with the terms of the
Transition Agreement including, without limitation, by preparing and filing a
registration statement on Form S-1 (or any other registration statement
contemplated to be filed pursuant to the terms of the Transition Agreement) and
using its respective best efforts to cause such registration statement to be
declared effective and preparing and making such other filings as may be
required under applicable state securities laws. The Company shall promptly
provide to Parent copies of all filings made with the Commission in connection
with the Split-Off, including, without limitation, the Form S-1 (or any other
registration statement contemplated to be filed pursuant to the terms of the
Transition Agreement) and any amendments thereto, all comments made by the
Commission with respect to such filings and all Company responses to such
Commission comments. Prior to making such filings with the Commission or
entering into any other agreement with A&S other than the Transition Agreement,
the Company shall consult with Parent with respect to such filings and other
agreements and provide Parent with a reasonable opportunity to comment on such
filings and other agreements.
(c) Parent shall, and shall cause the Surviving Corporation to,
treat the Split-Off for purposes of all federal and state taxes as an integral
part of the Merger and thus report the Split-Off as a redemption, for purposes
of Section 302(a) of the Code, of a number of shares of Company Common Stock
equal in value to the value of the A&S Common Stock distributed in the
Split-Off.
(d) The treatment of any decrease in the net tax benefit
expected to be received by Parent in this Merger as a result of the Split-Off
is set forth in Section 4 of the Tax Sharing Agreement and the treatment of any
increase in the net tax benefit expected to be received by Parent in this
Merger as a result of the Split-Off is set forth in Section 4.1 of the
Transition Agreement.
(e) Prior to the Effective Time, the Company and A&S may elect
to form a holding company for the ownership of the A&S Common Stock. In such
event, (i) the Company shall transfer the shares of A&S Common Stock to the
holding company and shares of common stock of the holding company will be
issued in substitution of the shares of A&S Common Stock in the Split-Off and
(ii) the benefits and obligations of A&S from the transactions contemplated by
the Transition Agreement and Tax Sharing Agreement shall inure to and be
binding upon the holding company; provided that A&S shall not be released from
its obligations under such Agreements.
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Section 7.11 CONFIDENTIALITY. Parent, Sub and the Company agree
that the provisions of the Confidentiality Agreement shall remain binding and
in full force and effect (subject, however, to the provisions of Section 7.9(b)
hereof) and that the terms of the Confidentiality Agreement are incorporated
herein by reference.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Merger Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
holders of the Company Common Stock.
(b) No statute, rule, regulation, order or decree shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits or materially restricts the consummation of the
Merger.
(c) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and any
authorization, consent or approval required under any Antitrust Law shall have
been obtained or any waiting period applicable to the review of the
transactions contemplated hereby shall have expired or been terminated.
(d) The Split-Off Consideration shall have been deposited with
the Depositary.
(e) No preliminary or permanent injunction or other order by any
court or other judicial or administrative body of competent jurisdiction which
prohibits or prevents the consummation of the Merger shall have been issued and
remain in effect (each party, subject to Section 7.6, agreeing to use its best
efforts to have any such injunction lifted).
Section 8.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the additional
following conditions, unless waived by the Company:
(a) Parent and Sub shall have performed in all material respects
their agreements contained in this Merger Agreement and the Transition
Agreement required to be performed on or prior to the Effective Time.
(b) The representations and warranties of Parent and Sub
contained in this Merger Agreement shall be true in all material respects
(except that representations and warranties that expressly include a standard
of materiality shall be true in all respects) when made and on and as of the
Effective Time as if made on and as of such date, except for representations
and warranties which are by their express provisions made as of a specific date
or dates, which were or will be
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true in all material respects (except that representations and warranties that
expressly include a standard of materiality were or will be true in all
respects) at such time or times as stated therein.
(c) The Company shall have received a certificate of the
President or Chief Executive Officer or a Vice President of Parent to the
effect that each of the conditions specified above in Sections 8.2(a) and (b)
is satisfied in all respects.
(d) The Cash Consideration shall have been deposited with the
Depositary.
Section 8.3 CONDITIONS TO OBLIGATION OF PARENT AND SUB TO EFFECT
THE MERGER. The obligation of Parent and Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the additional
following conditions, unless waived by Parent:
(a) The Company and A&S shall have performed in all material
respects their agreements contained in this Merger Agreement and the Transition
Agreement required to be performed on or prior to the Effective Time.
(b) The representations and warranties of the Company contained
in this Merger Agreement shall be true in all material respects (except that
representations and warranties that expressly include a standard of materiality
shall be true in all respects) when made and on and as of the Effective Time as
if made on and as of such date, except for representations and warranties which
are by their express provisions made as of a specific date or dates which were
or will be true in all material respects (except that representations and
warranties that expressly include a standard of materiality were or will be
true in all respects) at such date or dates.
(c) Parent and Sub shall have received a certificate of the
President and Chief Executive Officer or the Chief Financial Officer of the
Company to the effect that each of the conditions specified in Sections 8.3(a)
and (b) is satisfied in all respects.
(d) Parent shall be reasonably satisfied with the final form of
promissory note referred to in Section 4(b)(v) of the Tax Sharing Agreement,
which promissory note shall be prepared by Parent and A&S in a manner
consistent with the terms set forth in Exhibit A to the Tax Sharing Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the shareholders of the Company:
(a) by mutual consent of the board of directors of Parent and
the board of directors of the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated on or before September 30, 1999; provided, that the
terminating party is not otherwise in material breach of its representations,
warranties or obligations under this Merger Agreement;
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(c) by Parent or the Company if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the consummation of the
Split-Off or the Merger and such order, decree, ruling or other action is or
shall have become nonappealable;
(d) by the Company (i) if any of the conditions specified in
Sections 8.1 and 8.2 have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction or (ii) if the sum of
Established Claims exceeds the Claim Basket, provided, however, that prior to
the exercise of this right of termination by the Company, Parent shall have the
right to waive the Claim Basket and elect to proceed with the transactions
contemplated by this Agreement without any adjustment to the Cash
Consideration; provided, further, that it shall be a condition to termination
by the Company pursuant to this Section 9.1(d)(ii) that the Company shall have
made all payments to Parent required by Section 10.3(b)(iii)(y);
(e) by Parent (i) if any of the conditions specified in Sections
8.1 and 8.3 have not been met or waived by Parent at such time as such
condition is no longer capable of satisfaction or (ii) if the sum of
Established Claims exceeds the Claim Basket, provided, however, that prior to
the exercise of this right of termination by the Parent, the Company shall have
the right to elect to make a financial adjustment to the Cash Consideration in
an amount equal to the difference between the sum of Established Claims and the
Claim Basket;
(f) by Parent if the Company's board of directors shall have
withdrawn, modified in a manner adverse to Parent, or refrained from making its
recommendation concerning the Merger referred to in Section 3.5 hereof, or
shall have disclosed its intention to change such recommendation; provided,
that (i) Parent is not otherwise in material breach of its representations,
warranties or obligations under this Merger Agreement and (ii) Parent has
sufficient funds to enable it to finance the consummation of the Merger;
(g) by Parent, if there has been a Company Material Adverse
Change other than as a result of the Company's Environmental Non-Compliance
Conditions or Year 2000 Non-Compliance Conditions.
(h) by Parent, upon becoming aware that the Company has entered
into a definitive agreement (other than a confidentiality agreement) providing
for, or if the Company's board of directors approves or recommends, a Superior
Proposal pursuant to Section 7.9;
(i) by the Company, at any time prior to the Shareholders'
Meeting, upon three business days' notice to Parent, if the Company's Board of
Directors shall approve a Superior Proposal; provided, however, that (i) the
Company shall have complied with Section 7.9 and (ii) prior to any such
termination, the Company shall, and shall cause its financial and legal
advisors to, negotiate with Parent to make such adjustments in the terms and
conditions of this Merger Agreement as would enable Parent to match or exceed
the consideration offered pursuant to such Superior Proposal, net of amounts
payable by the Company under Section 10.3(b), in order to proceed with the
transactions contemplated hereby; provided, further, that it shall be a
condition to termination by the Company pursuant to this Section 9.1(i) that
the Company shall have made all payments to Parent required by Section 10.3(b);
or
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(j) by either Parent or the Company, if the Shareholders'
Meeting shall have been concluded without having obtained votes of the
Company's shareholders sufficient for the requisite shareholder approval of
this Merger Agreement (provided that the terminating party is not otherwise in
material breach of its obligations under this Merger Agreement).
Section 9.2 EFFECT OF TERMINATION. In the event of termination
of this Merger Agreement by either Parent or the Company, as provided above,
this Merger Agreement shall forthwith become void and (except for the willful
breach of this Merger Agreement by any party hereto) there shall be no
liability on the part of either the Company, Parent or Sub or their respective
officers, directors or shareholders; provided that Sections 6.1(iv), 7.11, 9.2,
10.3, 10.7 and 10.8 shall survive the termination.
Section 9.3 AMENDMENT. This Merger Agreement may be amended by
the parties hereto, by or pursuant to action taken by their respective boards
of directors, at any time before or after approval hereof by the shareholders
of the Company, but, after such approval, no amendment shall be made which (i)
changes the consideration to be received by any class of capital stock of the
Company as provided in Section 3.1(c), (ii) alters or changes any term of the
Articles of Incorporation of the Surviving Corporation (except for such changes
that could otherwise be adopted by the directors of the Surviving Corporation),
or (iii) in any way materially adversely affects the rights of such
shareholders, without the further approval of such shareholders. This Merger
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 9.4 WAIVER. At any time prior to the Effective Time,
the parties hereto, by or pursuant to action taken by their respective Boards
of Directors, may (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
documents delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions contained herein; provided, however, that if such
waiver shall materially adversely affect the rights of the shareholders of the
Company, then no such waiver shall be made without the approval of such
shareholders. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. No representations, warranties or agreements in this Merger
Agreement shall survive the Merger, except for the agreements contained in
Sections 3.3, 3.4, 3.8, 7.3, 7.4, 7.5, 7.6, 7.11, 10.1, 10.3, 10.7 and 10.8.
Section 10.2 NOTICES. All notices or other communications under
this Merger Agreement shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex, telecopy or other standard form of
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telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
(a) If to the Company, to:
Essef Corporation
c/o Xxxxxxx & Sylvan Pools Corporation
000 Xxxx Xxxxx
Xxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
with a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxx Xxxxxxxxx, Esq.
(b) If to Parent or Purchaser, to:
Pentair, Inc.
Waters Edge Plaza
0000 Xxxxxx Xxxx X0 Xxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
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with a copy to:
Pentair, Inc.
Waters Edge Plaza
0000 Xxxxxx Xxxx X0 Xxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
with a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, III, Esq.
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section 10.2.
Section 10.3 FEES AND EXPENSES. (a) Whether or not the Merger
is consummated, all costs and expenses incurred in connection with this Merger
Agreement and the transactions contemplated by this Merger Agreement shall be
paid by the party incurring such expenses.
(b) Parent and the Company agree that (i) if the Company shall
terminate this Merger Agreement pursuant to Section 9.1(i); (ii) if (A) Parent
or the Company shall terminate this Agreement pursuant to Section 9.1(b), (B)
at the time of the event giving rise to such termination the Company shall have
received a solicitation or inquiry giving rise to the disclosure obligation set
forth in the second sentence of Section 7.9(a) and (C) within 12 months of the
termination of this Merger Agreement, the Company enters into a definitive
agreement or consummates a merger, consolidation, sale of substantially all of
the assets of the Company or other change in control transaction in connection
with such solicitation or inquiry; (iii) if (A) Parent or the Company shall
terminate this Agreement pursuant to Section 9.1(f) or (h), (B) at the time of
the event giving rise to such termination the Company shall have received an
Acquisition Proposal and (C) within 12 months of the termination of this Merger
Agreement, the Company enters into a definitive agreement with respect to such
Acquisition Proposal or consummates a transaction pursuant to such Acquisition
Proposal; or (iv) if Parent or the Company shall terminate this Merger
Agreement pursuant to Section 9.1(d)(ii) or (e)(ii), as the case may be, then
the Company shall pay to an account designated by Parent in immediately
available funds an amount equal to (x) 3% of the aggregate Cash Consideration
to be paid to holders of Company Common Stock pursuant to Article III in the
case of any termination referred to in clauses (i) or (iii) above; (y) 1 1/2%
of the aggregate Cash Consideration in the case of any termination referred to
in clause (ii) above or (z) an amount equal to the lesser of (1) the actual
out-of-pocket costs and expenses incurred by Parent in connection with this
Merger Agreement and (2) $500,000 in the case of any termination referred to in
clause (iv) above. The Termination Fee shall be paid prior to, and shall be a
condition to the effectiveness of, any termination referred to in clauses (i)
or (iv)
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above. Any payment required to be made pursuant to clauses (ii) and (iii) above
shall be made on the next business day after such a transaction pursuant to an
Acquisition Proposal is consummated.
(c) To the extent that the fees and expenses incurred after
December 31, 1998 by the Company to Rhone Group, Squire, Xxxxxxx & Xxxxxxx
L.L.P. and other advisers and service providers of the Company or its
Subsidiaries relating to the Split-Off and the Merger exceed $4,000,000, the
amount of the Claim Basket (as determined pursuant to Section 7.1(b)) shall be
reduced by the amount of the difference between (i) the sum of (x) the fees and
expenses relating to the Split-Off and the Merger actually incurred after
December 31, 1998 and (y) a good faith estimate of the fees and expenses
relating to the Split-Off and the Merger yet to be incurred, and (ii)
$4,000,000 ("Excess Transaction Fees"). Two business days prior to the Cut-Off
Date, the Company shall deliver to Parent a schedule that sets forth the actual
fees and expenses relating to the Split-Off and Merger incurred to date after
December 31, 1998 and an estimate of the additional fees and expenses to
complete the Split-Off and the Merger.
Section 10.4 PUBLICITY. So long as this Merger Agreement is in
effect, Parent, Sub and the Company agree to consult with each other before
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Merger Agreement, and none of them
shall issue any press release or make any public statement prior to such
consultation, except as may be required by law or by obligations pursuant to
any listing agreement with any national securities exchange. The commencement
of litigation relating to this Merger Agreement or the transactions
contemplated hereby or any proceedings in connection therewith shall not be
deemed a violation of this Section 10.4.
Section 10.5 SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Merger Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Merger Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 10.6 INTERPRETATION. (a) When a reference is made in
this Merger Agreement to subsidiaries of Parent or the Company, the word
"Subsidiaries" means corporations more than 50% of whose outstanding voting
securities are directly or indirectly owned by Parent or the Company, as the
case may be; provided, however, that in the case of the Company, A&S shall not
be considered as a Subsidiary. The headings contained in this Merger Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
(b) As used in this Merger Agreement, "Parent Material Adverse
Effect" shall mean a material adverse effect on the business, properties,
assets, financial condition, and results of operations of Parent and its
subsidiaries taken as a whole (excluding the effect of a change in general
economic conditions).
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(c) As used in this Merger Agreement, "Company Material Adverse
Effect" shall mean a material adverse effect on the business, properties,
assets, financial condition, and results of operations of the Company and its
Subsidiaries (other than A&S) taken as a whole (excluding the effect of a
change in general economic conditions).
(d) As used in this Merger Agreement, "knowledge" shall mean,
with respect to the matter in question, the actual knowledge of such matter by
an executive officer, with respect to Parent, and by Xxxxxx X. Xxxxxx, Xxxxxx
X. Xxxxxx or Xxxx X. Xxxxx, with respect to the Company, as applicable.
(e) The inclusion of an item on any schedule to this Merger
Agreement shall not be deemed to be indicative of the materiality of such item.
Section 10.7 THIRD PARTY BENEFICIARIES. Except as specifically
provided in Section 7.5, this Merger Agreement is not intended to confer upon
any other person any rights or remedies hereunder.
Section 10.8 MISCELLANEOUS. This Merger Agreement (including
the documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) shall not be assigned by operation of law or
otherwise, except that Sub shall have the right to assign to Parent or any
direct wholly owned Subsidiary of Parent any and all rights and obligations of
Sub under this Merger Agreement; and (c) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of Ohio
(without giving effect to the provisions thereof relating to conflicts of law).
This Merger Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
Section 10.9 CURE PERIOD. No party shall have any rights under
this Merger Agreement for any actual or threatened breach of a representation,
warranty, covenant or agreement contained herein, if such breach is capable of
being cured, until (i) the non-breaching party has notified the breaching party
of its determination of the existence (or threatened existence) of a basis for
termination, and (ii) the breaching party shall have had a reasonable time
(considering the nature of the breach and the actions required for cure, but in
no event longer than 15 days) to cure such breach.
Section 10.10 VALIDITY. (a) The invalidity or unenforceability
of any provision of this Merger Agreement shall not affect the validity or
enforceability of the other provisions of this Merger Agreement, which shall
remain in full force and effect.
(b) In the event any court of competent jurisdiction holds any
provision of this Merger Agreement to be null, void or unenforceable, the
parties hereto shall negotiate in good faith the execution and delivery of an
amendment to this Merger Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the parties hereto
with respect to such provision and the economic effects thereof.
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(c) Each party agrees that, should any court of competent
jurisdiction hold any provision of this Merger Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action inconsistent
herewith, or not take any action required herein, the other party shall not be
entitled to specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for breach thereof or
of any other provision of this Merger Agreement or part hereof as the result of
such holding or order.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be signed by their respective officers thereunder duly authorized
all as of the date first written above.
PENTAIR, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Executive Vice President
-----------------------------
NORTHSTAR ACQUISITION COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
-----------------------------
ESSEF CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------
Title: President
-----------------------------
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EXHIBIT A
---------
TRANSITION AGREEMENT
--------------------
[See Exhibit 2.2 filed herewith.]
44
EXHIBIT B
---------
TAX SHARING AGREEMENT
---------------------
[See Exhibit 2.3 filed herewith.]