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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 9, 1999
UNITOG COMPANY
--------------
(Exact name of registrant as specified in charter)
DELAWARE 0-6643 44-0529828
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
1300 WASHINGTON STREET, KANSAS CITY, MO 64105
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(Address of Principal Executive Offices) (Zip Code)
(816) 474-7000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 9, 1999, Unitog Company ("Unitog"), Cintas
Corporation ("Cintas") and Cintas Image Acquisition Company ("Sub") entered into
an Agreement and Plan of Merger (the "Merger Agreement") providing for a merger
("Merger") pursuant to which, and subject to the terms thereof, Unitog would
become a wholly-owned subsidiary of Cintas. As of the effective time of the
Merger, each outstanding share of common stock, $0.01 par value of Unitog
("Unitog Common Stock"), other than shares held in the treasury of Unitog and
shares owned by Cintas or any of its subsidiaries, would be converted into the
right to receive Cintas common stock, no par value ("Cintas Common Stock")
valued at $38.00, subject to adjustment as described below. The Merger has been
approved by the Boards of Directors of both Unitog and Cintas and is expected to
be completed by April 30, 1999.
The Merger Agreement provides for Unitog Common Stock to be
exchanged for Cintas Common Stock at the effective time of the Merger. The
actual number of shares of Cintas Common Stock to be exchanged for each share of
Unitog Common Stock is equal to a conversion number ("Conversion Number"), which
is defined as the quotient determined by dividing (i) $38, subject to reduction
for environmental liability estimates, described below (the "Unitog Share
Price") by (ii) the average of the high and low per share sales prices of Cintas
Common Stock as reported on Nasdaq for a period of 20 consecutive trading days
ending the third trading day prior to the meeting of Unitog stockholders for the
purpose of voting on the adoption of the Merger Agreement ("Cintas Share
Price"), subject to certain adjustments if the Cintas Share Price is less than
$52.00 or more than $66.43, as set forth below:
o if the Cintas Share Price is less than $52.00, the Cintas Share Price
shall be deemed to be $52.00 for purposes of determining the Conversion
Number (and thereby results in a value of less that $38 per share of
Unitog Common Stock), but in such event Unitog would have the right
(not the obligation) to terminate the Merger Agreement
o if the Cintas Share Price is greater than $66.43, the Cintas Share
Price shall be deemed to be equal to the sum of (i) $66.43 plus (ii)
fifty percent (50%) of the difference between the Cintas Share Price
and $66.43, for purposes of calculating the Conversion Number (and
thereby results in a value of more than $38 per share of Unitog Common
Stock).
Under the Merger Agreement, the Unitog Share Price of $38 is
subject to reduction if certain environmental liability estimates, determined in
accordance with the Merger Agreement on an after tax, net present value basis,
exceed $570,000 (any such reduction, an "Environmental Estimate Reduction"). The
Environmental Estimate Reduction, if any, reduces the Unitog Share Price by
$0.01 for each $100,000 that the environmental liability estimates exceed
$570,000, subject to certain conditions. In the event the Environmental Estimate
Reduction applies and would reduce the Unitog Share Price by more than $2,
Unitog and Cintas each have the right, but not the obligation, to terminate the
Merger Agreement.
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Illustrations of calculation of the Conversion Number
(assuming no Environmental Estimate Reduction applies) are provided below:
<TABLE>
<CAPTION>
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(1) (2) (3) (4)
MERGER CONSIDERATION PER
UNITOG SHARE BASED ON CINTAS
IF CINTAS SHARE PRICE IS: THEN CINTAS SHARE PRICE THE CONVERSION NUMBER SHARE PRICE IN COLUMN (1)
SHALL BE DEEMED TO BE: SHALL BE EQUAL TO: WOULD BE:
========================================================================================================================
<S> <C> <C> <C>
$50.00 $52.000 .7308 $36.54
- ------------------------------------------------------------------------------------------------------------------------
$52.00 $52.000 .7308 $38.00
- ------------------------------------------------------------------------------------------------------------------------
$60.00 $60.000 .6333 $38.00
- ------------------------------------------------------------------------------------------------------------------------
$66.43 $66.430 .5720 $38.00
- ------------------------------------------------------------------------------------------------------------------------
$70.00 $68.215 .5571 $39.00
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$75.00 $70.715 .5374 $40.30
- ------------------------------------------------------------------------------------------------------------------------
$80.00 $73.215 .5190 $41.52
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Consummation of the Merger is subject to satisfaction of
certain closing conditions, including the termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the effective
registration with the Securities and Exchange Commission of the shares of Cintas
Common Stock to be issued in the Merger, the requisite approval of the Merger by
the stockholders of Unitog and other customary closing conditions. The Boards of
Directors of Unitog and Cintas, respectively, have approved the Merger. Proxy
materials regarding the Merger are expected to be mailed to Unitog stockholders
by late February/early March 1999.
The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, a copy of which is attached hereto and filed herewith as
Exhibit 2.1 and is hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
2.1 Agreement and Plan of Merger dated January 9, 1999 by and
among Cintas Corporation, Cintas Image Acquisition Company and
Unitog Company.
99.1 Press release dated January 11, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
UNITOG COMPANY
Date: January 13, 1999 By: /s/ Robert M. Barnes
---------------------------------
Robert M. Barnes
Vice President-General Counsel
and Secretary
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EXHIBIT INDEX
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Exhibit No. Description of Exhibit
- ----------- ----------------------
2.1 Agreement and Plan of Merger dated January 9, 1999 by
and among Cintas Corporation, Cintas Image
Acquisition Company and Unitog Company.
99.1 Press release dated January 11, 1999.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Among
Cintas Corporation,
Cintas Image Acquisition Company
and
Unitog Company
January 9, 1999
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
1.1 Defined Terms.....................................................................................1
1.2 Additional Terms..................................................................................6
ARTICLE II TERMS OF THE MERGER....................................................................................6
2.1 The Merger........................................................................................6
2.2 Effective Time....................................................................................6
2.3 Closing...........................................................................................6
ARTICLE III CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING COMPANY......................................7
3.1 Certificate of Incorporation......................................................................7
3.2 The Bylaws........................................................................................7
ARTICLE IV DIRECTORS AND OFFICERS OF THE SURVIVING COMPANY........................................................7
4.1 Directors.........................................................................................7
4.2 Officers..........................................................................................7
ARTICLE V MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF COMPANY SHARES IN THE MERGER........................7
5.1 Merger Consideration..............................................................................7
5.2 Cancellation of Company Shares....................................................................8
5.3 Payment for Company Shares in the Merger..........................................................8
5.4 Transfer of Company Shares After the Effective Time...............................................9
5.5 Fractional Shares.................................................................................9
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................9
6.1 Company Shares....................................................................................9
6.2 Capitalization....................................................................................9
6.3 Corporate Organization, Qualification and Power..................................................10
6.4 Authorization of Agreement and Merger............................................................10
6.5 Enforceable Agreement............................................................................10
6.6 No Conflicts, Violations, Breaches or Defaults...................................................10
6.7 Company SEC Reports..............................................................................11
6.8 Financial Statements; Accounting Matters.........................................................11
6.9 Proxy Statement; S-4 Registration Statement......................................................12
</TABLE>
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<TABLE>
<S> <C>
6.10 Litigation.......................................................................................12
6.11 Taxes............................................................................................12
6.12 Environmental Laws and Regulations...............................................................13
6.13 Compliance with Applicable Laws..................................................................13
6.14 Title to Properties..............................................................................13
6.15 Insurance........................................................................................13
6.16 Employee Benefit Matters.........................................................................14
6.17 Broker's Fees....................................................................................14
6.18 Opinions of Financial Advisors...................................................................14
6.19 Absence of Certain Changes or Events.............................................................15
6.20 Intellectual Property............................................................................15
6.21 Contracts........................................................................................15
6.22 Labor Matters....................................................................................15
6.23 State Takeover Statutes..........................................................................15
6.24 Year 2000 Compatibility..........................................................................15
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............................................16
7.1 Capitalization...................................................................................16
7.2 Corporate Organization, Qualification and Power..................................................17
7.3 Authorization of Agreement and Merger............................................................17
7.4 Enforceable Agreement............................................................................17
7.5 No Conflicts, Violations, Breaches or Defaults...................................................17
7.6 Parent SEC Reports...............................................................................18
7.7 Financial Statements; Accounting Matters.........................................................18
7.8 Proxy Statement; S-4 Registration Statement......................................................18
7.9 Litigation.......................................................................................19
7.10 Taxes............................................................................................19
7.11 Environmental Laws and Regulations...............................................................19
7.12 Compliance with Applicable Laws..................................................................19
7.13 Broker's Fees....................................................................................19
7.14 Interim Operations of Merger Sub.................................................................19
7.15 Authorization for Parent Common Stock............................................................20
ARTICLE VIII CONDUCT PENDING THE CLOSING AND COVENANTS...........................................................20
8.1 Conduct of Business by Company and Parent........................................................20
8.2 Conduct of Business of Merger Sub................................................................21
8.3 Environmental Consultants, Adjustment to Company Share Price and Merger Consideration............21
8.4 Additional Covenants of the Company..............................................................22
8.5 Acquisition Proposals............................................................................23
8.6 Stockholders'Approval............................................................................23
8.7 All Reasonable Efforts...........................................................................24
</TABLE>
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<TABLE>
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8.8 Access to/Confidentiality of Information.........................................................24
8.9 Publicity........................................................................................25
8.10 Indemnification of Directors and Officers........................................................25
8.11 Employees........................................................................................26
8.12 Registration Statement...........................................................................26
8.13 Exchange Listing.................................................................................27
8.14 Affiliates.......................................................................................27
8.15 Letters of Accountants...........................................................................27
8.16 Reorganization...................................................................................27
8.17 Stock Options....................................................................................28
8.18 Pooling of Interests.............................................................................29
8.19 Standstill Agreements; Confidentiality Agreements................................................29
8.20 Company Stock Repurchase Plan....................................................................29
ARTICLE IX CONDITIONS............................................................................................29
9.1 Conditions to Each Party's Obligation to Close...................................................29
9.2 Additional Conditions to the Obligations of Parent and Merger Sub to Close.......................30
9.3 Additional Conditions to the Company's Obligation to Close.......................................31
9.4 Frustration of Closing Conditions................................................................32
ARTICLE X TERMINATION AND REMEDIES...............................................................................32
10.1 Termination......................................................................................32
10.2 Effect of Termination............................................................................34
ARTICLE XI GENERAL PROVISIONS....................................................................................39
11.1 Expenses.........................................................................................39
11.2 Nonsurvival......................................................................................39
11.3 Modification or Amendment........................................................................39
11.4 Waiver...........................................................................................39
11.5 Notices..........................................................................................39
11.6 Publishing of Financial Results..................................................................41
11.7 Governing Law....................................................................................41
11.8 Entire Agreement.................................................................................41
11.9 Construction.....................................................................................41
11.10 Binding Effect...................................................................................41
11.11 Assignment.......................................................................................41
11.12 Counterparts.....................................................................................41
11.13 Obligations of Subsidiaries......................................................................41
11.14 Severability.....................................................................................41
</TABLE>
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LIST OF EXHIBITS
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Exhibit 2.2 Certificate of Merger (To be delivered at Closing)
Exhibit 3.1 Certificate of Incorporation of the Surviving Company
Exhibit 5.1 Illustration of Calculation of Conversion Number
Exhibit 5.3 Exchange Agent Agreement
Exhibit 8.3(a)(1) Specified Plants
Exhibit 8.3(a)(2) Procedures Regarding Specified Plants
Exhibit 8.14 Affiliate Letter
Exhibit 9.2 Opinion of Company's Counsel
Exhibit 9.3 Opinion of Parent's Counsel
LIST OF SCHEDULES
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Company Disclosure Schedule
Parent Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as
of January 9, 1999, by and among CINTAS CORPORATION, a Washington corporation
("Parent"), CINTAS IMAGE ACQUISITION COMPANY, a Delaware corporation, which is a
wholly owned direct subsidiary of Parent ("Merger Sub"), and UNITOG COMPANY, a
Delaware corporation (the "Company").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and the Company each
have determined that it is in the best interests of their respective
stockholders that Merger Sub be merged with and into the Company, and, to that
end, have approved the merger of Merger Sub with and into the Company in
accordance with the laws of the State of Delaware and the provisions of this
Agreement and Plan of Merger.
B. Parent, Merger Sub and the Company desire to make certain representations,
warranties and agreements in connection with, and establish certain conditions
precedent to, the Merger.
AGREEMENT
In consideration of the mutual agreements, promises and
covenants set forth herein and the recitals set forth above, and other good and
valuable consideration, the receipt and adequacy of which are acknowledged, the
parties hereto, intending to be legally bound, agree as follows.
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein the following terms shall
have the following meanings:
Acquisition Proposal: Any proposal or offer from any Person relating to
the direct or indirect acquisition of a business that constitutes 51% or more of
the net revenues, income or assets of the Company or 51% or more of the Company
Stock or any proposal or offer for a merger or other business combination with
the Company, other than the Transactions.
Additional Agreements: Those agreements listed in this Agreement and
attached hereto, either as of the date hereof or, subject to the mutual
agreement of the parties, prior to Closing, as exhibits and incorporated herein
by reference, including but not limited to the Exchange Agent Agreement, as well
as all assignments and ancillary agreements necessary to effectuate the Merger.
Agreement: This Agreement and Plan of Merger, including the preamble,
recitals, exhibits and schedules hereto, all of which are hereby incorporated
herein by reference and made a part hereof.
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Certificates: The certificates representing Company Shares to be
surrendered pursuant to Section 5.3 in exchange for the Merger Consideration.
Certificate of Merger: The document to be prepared by the parties
hereto, in substantially the form attached hereto as Exhibit 2.2, in compliance
in all respects with the requirements of the DGCL and the provisions of this
Agreement and which shall be filed with the Secretary of State of the State of
Delaware.
Closing: A meeting for the purpose of concluding the Transactions to be
held at the place and on the date fixed in accordance with Section 2.3.
Code: The Internal Revenue Code of 1986, as amended.
Company: Unitog Company, a Delaware corporation, which will merge with
Merger Sub and continue after the Merger as the Surviving Company, as set forth
in Section 2.1.
Company Disclosure Schedule: That schedule from the Company to Parent
to be delivered upon the execution of this Agreement, and updated, subject to
approval of Parent, and redelivered at the Closing, which sets forth certain
disclosures concerning the Company and its business.
Company SEC Reports: The forms, reports and documents filed by the
Company with the SEC since January 1, 1996.
Company Shares: The Company Stock issued and outstanding immediately
prior to the Effective Time.
Company Share Price: Thirty-eight dollars ($38.00), as adjusted
pursuant to Section 8.3.
Company Stock: The shares of common stock, $.01 par value per share, of
the Company.
Company's Stockholder Meeting: The meeting of the stockholders of the
Company to be held in connection with the vote of such stockholders with respect
to the Merger.
Conversion Number: The Conversion Number shall be equal to the quotient
(rounded to the nearest 1/10,000) determined by dividing the Company Share Price
by the amount determined by calculating the average of the high and low sales
prices of Parent Common Stock as reported on the Exchange for the twenty (20)
consecutive trading days ending on the third trading day preceding the date of
the meeting of the Company's stockholders for the purpose of voting on the
adoption of this Agreement ("Parent Share Price"). Notwithstanding the
foregoing, if the Parent Share Price is less than $52.00, the Parent Share Price
shall be deemed to be $52.00 (for purposes of determining the Conversion Number)
and, if the Parent Share Price is greater than $66.43, the Parent Share Price
shall be deemed to be $66.43 plus fifty percent (50%) of the difference between
the Parent Share Price and $66.43. In the event that prior to the Effective Time
there is a change in the number of Company Shares or shares of Parent Common
Stock or securities convertible or exchangeable into or exercisable for Company
Shares or shares of Parent Common Stock issued and outstanding as a result of a
distribution, reclassification, stock split (including reverse stock split),
stock dividend or distribution, or other similar transaction, the Conversion
Number shall be equitably adjusted to eliminate the effects of such event.
Exhibit 5.1 illustrates the calculation of the Conversion Number under varying
circumstances.
DGCL: The General Corporation Law of the State of Delaware.
Director Plan: The Company's Outside Director Fee/Stock Program.
Effective Time: The date and time at which the Certificate of Merger
has been duly filed with the Secretary of State of the State of Delaware or such
other time as is agreed upon by the parties and specified in the Certificate of
Merger.
Environmental Claim: Any action, cause of action, claim, investigation,
demand or notice by any Person alleging liability under or non-compliance with
any environmental Law.
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ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Exchange: The NASDAQ Stock Market, on which the Parent Common Stock is
listed.
Exchange Act: The Securities Exchange Act of 1934, as amended (15
U.S.C. Section 78a et seq.).
Exchange Agent: The Fifth Third Bank, Cincinnati, Ohio, which shall act
as exchange agent in connection with payment of the Merger Consideration
pursuant to Section 5.3(a), or such other exchange agent selected by Parent and
reasonably acceptable to the Company for the benefit of the holders of Company
Shares and vested Options.
Exchange Agent Agreement: The agreement between Parent and the Exchange
Agent entered into for the benefit of the stockholders of the Company to provide
for the payment of the Merger Consideration and the management of the Merger
Payment Fund, pursuant to Section 5.3.
Facilities: The real property, plant and equipment owned or leased by
the Company and its Subsidiaries.
Governmental Authority: The Federal government, any state, county,
municipal, local or foreign government and any governmental agency, bureau,
commission, authority or body.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Judgment: Any judgment, writ, injunction, order or decree of or by any
court, judge, justice or magistrate, including any bankruptcy court or judge,
having appropriate jurisdiction, and any adjudicative order of or by a
Governmental Authority.
Law: The common law and any statute, ordinance, code or other law,
rule, regulation, order, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority or court.
Lien: Any mortgage, lien or encumbrance, which (i) creates or confers
an interest in property to secure payment or performance of a liability,
obligation or claim, or which retains or reserves such an interest for such
purpose; (ii) grants to any Person the right to purchase or otherwise acquire,
or obligates any Person to sell or otherwise dispose of, or otherwise results or
may result in any Person acquiring, any property or interest in property; (iii)
restricts the transfer of, or the exercise of any rights in or the enjoyment of
any benefits arising by reason of ownership of, any property; or (iv) otherwise
constitutes an interest in, or claim against, property, whether arising pursuant
to any Law, Judgment or any binding contract.
Material Adverse Effect: Any change, event, occurrence or state of
facts which is or which would reasonably be expected to lead to an adverse
change in the consolidated balance sheet or Facilities of the Company or any of
the Company's Subsidiaries, or Parent or any of Parent's Subsidiaries, as the
case may be, which is material to the Company and its Subsidiaries, or Parent
and its Subsidiaries, taken as a whole, as the case may be, other than any
change or effect (i) arising out of general economic conditions, (ii) arising
with respect to the industry in which Parent and the Company compete, but not
specifically relating to Parent or the Company, (iii) arising out of or as a
result of the public announcement of the Transactions, or (iv) arising out of
events or facts set forth on the Company Disclosure Schedule or the Parent
Disclosure Schedule.
Merger: The merger of Merger Sub into and with the Company at Closing,
as set forth in Section 2.1.
Merger Consideration: The Parent Common Stock to be paid to the holders
of Company Shares upon the effectiveness of the Merger, pursuant to Section 5.1.
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Merger Payment Fund: The aggregate number of shares of Parent Common
Stock constituting the Merger Consideration payable pursuant to Section 5.1,
which shall be delivered by Parent to the Exchange Agent pursuant to the
Exchange Agent Agreement.
Merger Sub: Cintas Image Acquisition Company, a Delaware corporation,
which is the wholly owned direct subsidiary of Parent and which will be merged
into and with the Company pursuant to the Merger.
Option: Each option to purchase Company Stock issued pursuant to any of
the Company's Option Plans, or otherwise granted by agreement to the Company's
directors or employees, outstanding immediately prior to the Effective Time,
whether or not vested.
Option Plans: The Company's 1992 Stock Option Plan, as amended, and the
Company's 1997 Stock Option Plan.
Parent: Cintas Corporation, a Washington corporation.
Parent Common Stock: Duly authorized shares of common stock, no par
value per share, of Parent.
Parent Disclosure Schedule: That schedule from Parent to the Company to
be delivered upon the execution of this Agreement, and updated, subject to the
approval of the Company, and redelivered at Closing, which sets forth certain
disclosures concerning Parent and Merger Sub and their businesses.
Parent Option Plans: Parent's Amended and Restated 1992 Stock Option
Plan, all predecessor stock option plans and the Parent's 1994 Directors' Stock
Option Plan.
Parent Preferred Stock: Duly authorized shares of preferred stock, no
par value per share, of Parent.
Parent Share Price: The amount calculated pursuant to the definition of
Conversion Number.
Parent SEC Reports: The forms, reports and documents filed by Parent
with the SEC since June 1, 1996.
Person: Any natural person, corporation, limited liability company,
general or limited partnership, joint venture, trust, association,
unincorporated entity of any kind or Governmental Authority.
Proxy Statement: The proxy statement and prospectus and forms of proxy
in connection with the votes of the stockholders of the Company with respect to
the Merger, this Agreement and the issuance of the Parent Common Stock pursuant
to the Merger, respectively, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's stockholders.
Representatives: Officers, employees, legal counsel, financial
advisors, accountants or other authorized representatives of any of the parties
hereto, to be provided access to information pursuant to Section 8.8.
S-4 Registration Statement: A registration statement on Form S-4, as
amended or supplemented, containing the Proxy Statement, in connection with the
registration under the Securities Act of Parent Common Stock issuable upon
conversion of the Company Shares.
SEC: The United States Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended (15 U.S.C.
Section 77a et seq.).
Subsidiary: In reference to any entity, any corporation, or limited
liability company a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity.
Substitute Option: An Option assumed by Parent as of the Effective
Time, pursuant to Section 8.17.
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Superior Proposal: A bona fide Acquisition Proposal made by a third
party, in each case on terms which the Board of Directors of the Company
determines in its good faith reasonable judgment after consultation with its
financial and legal advisors to be more favorable financially to the Company and
its stockholders than the Transactions.
Surviving Company: The Company, which shall be the survivor of the
Merger, as set forth in Section 2.1.
Taxes: All Federal, state, local, foreign and other taxes of any kind,
including without limitation, those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits, withholding,
payroll, employment, excise, severance, stamp, occupation, value added, windfall
profits taxes, customs duties or similar fees and assessments of any kind,
including interest, penalties and additions to tax or additional amounts imposed
by any governmental authority with respect thereto.
Tax Returns: All returns, declarations, reports, information returns
and statements with respect to Taxes of whatsoever kind.
Transactions: The transactions contemplated by this Agreement,
including the Merger and those contemplated by the Additional Agreements.
1.2 Additional Terms. Terms not set forth in Section 1.1, but
otherwise defined in the body of this Agreement, shall have the specific
meanings attributed to them in the text. Terms in the singular shall have the
same meanings when used in the plural and vice versa.
ARTICLE II
TERMS OF THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, the Company and Merger Sub shall
consummate the Merger in which (a) Merger Sub shall be merged into and with the
Company in accordance with the DGCL, (b) the separate existence of the Merger
Sub shall thereupon cease, (c) the Company shall be the survivor to the Merger
and, as the Surviving Company, shall continue its corporate existence under the
DGCL as a wholly owned subsidiary of Parent, retaining its corporate name, and
its other rights, privileges, immunities, powers and franchises, unaffected by
the Merger, and shall assume all the rights and obligations of Merger Sub. The
Merger shall have the effects set forth in the DGCL.
2.2 Effective Time. Subject to the terms and conditions of the
Agreement, the parties hereto shall prepare and execute a Certificate of Merger
substantially in the form of Exhibit 2.2, attached hereto. The Certificate of
Merger shall be filed on the date of Closing (or such other date as agreed by
Parent and the Company) with the Secretary of State of the State of Delaware in
the manner provided in the DGCL and the Merger shall be effective at the
Effective Time.
2.3 Closing. The Closing of the Merger shall occur at the
offices of Bryan Cave LLP, 1200 Main, Suite 3500, Kansas City, MO 64105,
commencing at 10:00 A.M., local time, on or before the third business day
following the date on which the last of the conditions set forth in Article IX
hereof shall have been fulfilled or waived (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions), or at such other place, time and date as Parent
and the Company may agree.
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ARTICLE III
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING COMPANY
3.1 Certificate of Incorporation. At the Effective Time and in
accordance with the DGCL, the Certificate of Incorporation of the Company shall
be amended and restated in its entirety in the Merger by adoption of the
Certificate of Incorporation attached as Exhibit 3.1 hereto, and such
Certificate of Incorporation shall become the Certificate of Incorporation of
the Surviving Company.
3.2 The Bylaws. At the Effective Time and without any further
action on the part of the Surviving Company, Parent, or the Merger Sub, the
Bylaws of the Merger Sub shall be the Bylaws of the Surviving Company and
thereafter may be amended or repealed in accordance with their terms, the
Certificate of Incorporation of the Surviving Company and as provided by law.
ARTICLE IV
DIRECTORS AND OFFICERS OF
THE SURVIVING COMPANY
4.1 Directors. The directors of Merger Sub at the Effective
Time shall, from and after the Effective Time, be the directors of the Surviving
Company until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Surviving Company's Certificate of Incorporation and Bylaws.
4.2 Officers. The officers of the Merger Sub at the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Company until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Surviving Company's Certificate of Incorporation and Bylaws.
ARTICLE V
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF COMPANY SHARES IN THE MERGER
5.1 Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, each Company Share, by virtue of the Merger
and without any action on the part of the holder thereof, other than Company
Shares owned by Parent, Merger Sub, or any direct or indirect wholly owned
Subsidiary of Parent, shall be converted into the right to receive as Merger
Consideration, that number of shares of Parent Common Stock equal to the
Conversion Number upon surrender of the Certificate representing such Company
Share, in accordance with Section 5.3. Exhibit 5.1 illustrates the calculation
of the Conversion Number under varying circumstances.
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5.2 Cancellation of Company Shares.
(a) All Company Shares to be converted into Parent Common
Stock pursuant to Section 5.1 shall, by virtue of the
Merger and without any action on the part of the
holders thereof, cease to be outstanding, be canceled
and cease to exist, and each holder of a Certificate
shall thereafter cease to have any rights with
respect to such Company Shares, except the right to
receive for each of the Company Shares, upon the
surrender of such Certificate in accordance with
Section 5.3, the Merger Consideration.
(b) At the Effective Time, each Company Share issued and
outstanding and owned by Parent, Merger Sub or any
direct or indirect wholly owned Subsidiary of Parent,
immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding,
be canceled and cease to exist without payment of any
consideration therefor.
(c) At the Effective Time, each share of common stock of
Merger Sub issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger
and without any action on the part of Merger Sub or
the holder thereof, be converted into shares of
common stock of the Surviving Company pursuant to the
Certificate of Merger.
5.3 Payment for Company Shares in the Merger. The manner of
making payment for Company Shares in the Merger shall be as follows:
(a) At the Effective Time, pursuant to the Exchange Agent
Agreement, attached hereto as Exhibit 5.3, Parent
shall make available to the Exchange Agent, the
aggregate number of shares of Parent Common Stock
constituting the Merger Consideration payable
pursuant to Section 5.1, which shall constitute the
Merger Payment Fund. The Exchange Agent shall,
pursuant to irrevocable instructions, make the
payments provided for in this Section 5.3 out of the
Merger Payment Fund. The Merger Payment Fund shall
not be used for any purpose other than as described
herein.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate
or Certificates (i) a form of letter of transmittal
(which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates
to the Exchange Agent) and (ii) instructions for use
in effecting the surrender of the Certificates for
payment therefor. Upon surrender of Certificates to
the Exchange Agent, together with such letter of
transmittal duly executed and any other required
documents, the holder of such Certificates shall be
entitled to receive for each of the Company Shares
represented by such Certificates the Merger
Consideration. Until so surrendered, such
Certificates shall represent solely the right to
receive the Merger Consideration with respect to each
of the Company Shares represented thereby. No
interest shall be paid or accrue on the Merger
Consideration payable upon surrender of the
Certificates. If any payment of the Merger
Consideration is to be made to a Person other than
the one in whose name the Certificate
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surrendered in exchange therefor is registered, it
shall be a condition of such payment that the
Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that
the Person requesting such payment shall pay to the
Exchange Agent any applicable transfer or other
similar Taxes, or shall establish to the satisfaction
of the Exchange Agent that any such Tax has been paid
or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall
be liable to a holder of Company Shares for any
Merger Consideration delivered to a public official
pursuant to applicable escheat law.
(c) Pursuant to the Exchange Agent Agreement, any portion
of the Merger Payment Fund (including any dividends
thereon or earnings or profits with respect thereto
on Parent Common Stock) which remains unclaimed by
the former stockholders of the Company for six months
after the Effective Time shall be delivered to the
Surviving Company, upon demand of the Surviving
Company, and any former stockholders of the Company
shall thereafter look only to the Surviving Company
for payment of their claim for the Merger
Consideration for the Company Shares. The Surviving
Company's obligations to former stockholders of the
Company with respect to the payment of Merger
Consideration shall be guaranteed by Parent.
5.4 Transfer of Company Shares After the Effective Time. No
transfers of Company Shares shall be made on the stock transfer books of the
Company after the close of business on the business day preceding the date of
the Effective Time.
5.5 Fractional Shares. No fractional shares of Parent Common
Stock shall be issued in the Merger. Each holder of Company Shares shall be
entitled to receive in lieu of any fractional shares of Parent Common Stock to
which such holder otherwise would have been entitled pursuant to Section 5.1
(after taking into account all Company Shares then held of record by such
holder) a cash payment in an amount equal to the product of (i) the fractional
interest of a share of Parent Common Stock to which such holder otherwise would
have been entitled and (ii) the Parent Share Price. Parent shall timely make
available to the Exchange Agent cash in an amount sufficient to make the
payments in lieu of fractional shares as aforesaid.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company SEC Reports filed prior to
the date of this Agreement and except as set forth in the Company Disclosure
Schedule (each section of which qualifies the correspondingly numbered
representation or warranty), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
6.1 Company Shares. The Company Shares, at the Effective Time,
will constitute all of the issued and outstanding capital stock of the Company
and all such shares of Company Shares will have been duly authorized, validly
issued and shall be fully paid and non-assessable.
6.2 Capitalization. The entire authorized capital stock of the
Company consists of
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30,000,000 shares of common stock, having a per share par value of $.01 per
share, and 150,000 shares of serial preferred stock, having a per share par
value of $.01 per share. As of the date hereof, 9,659,305 shares of such common
stock are issued (including treasury shares) and zero (0) shares of such serial
preferred stock are issued and 255,909 shares of common stock are held in
treasury. As of the date hereof, such shares constitute all of the issued and
outstanding capital stock of the Company, all of which have been duly
authorized, validly issued and are fully paid and non-assessable. All the
outstanding shares of capital stock of each Subsidiary of the Company are owned
by the Company, or by another wholly owned subsidiary of the Company, free and
clear of all Liens, and are duly authorized, validly issued, fully paid and
nonassessable. There are not as of the date hereof, and there will not be at the
Effective Time, any stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or to which it is bound relating
to the voting of any shares of the capital stock of the Company, or the capital
stock of any of its Subsidiaries. There are no outstanding or authorized
options, warrants, subscriptions, calls, demands or rights of any character
relating to the Company's capital stock, or the capital stock of its
Subsidiaries, whether or not issued, which the Company, or any of its
Subsidiaries, is a party to, including without limitation, securities
convertible into or evidencing the right to purchase any capital stock or other
securities of the Company or any of its Subsidiaries.
6.3 Corporate Organization, Qualification and Power. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and is duly qualified to conduct its business and in good standing
in every other jurisdiction in which its business is conducted, except where
failure to be so qualified, licensed or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. Each of the
Company and its Subsidiaries has the corporate power to own or lease its
respective properties and to carry on its business as now being conducted,
wherever located. The Company's Subsidiaries are listed on the Company
Disclosure Schedule and the Company owns no other interest in any corporation,
partnership, limited liability company, proprietorship or any other business
entity. The Company has heretofore made available to Parent complete and correct
copies of its Certificate of Incorporation, as amended, and Bylaws, as amended,
and the Articles of Incorporation and Bylaws, or other comparable charter or
organizational documents, of its Subsidiaries, in each case as amended to the
date of this Agreement.
6.4 Authorization of Agreement and Merger. The Company has the
requisite corporate power and authority to approve, authorize, execute and
deliver this Agreement and to consummate the Transactions (subject to the
requisite approval of the Merger by stockholders of the Company holding a
majority of the outstanding voting stock of the Company, pursuant to Section
251(c) of the DGCL). This Agreement, and the consummation by the Company of the
Transactions have been duly and validly authorized by the Board of Directors of
the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Transactions (other
than the requisite approval of the Merger by the stockholders of the Company and
other than in connection with the actions to be taken pursuant to Section 8.6).
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6.5 Enforceable Agreement. This Agreement has been duly and
validly executed and delivered by the Company and, assuming it constitutes the
valid and binding agreement of Parent and Merger Sub, constitutes a valid and
binding obligation of the Company, enforceable against the Company according to
its terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting the enforceability of
contractual obligations and creditor's rights generally and by the application
of equitable principles by courts of competent jurisdiction, sitting at law or
in equity.
6.6 No Conflicts, Violations, Breaches or Defaults. The
execution and delivery of this Agreement by the Company and its performance of
the obligations hereunder, including its execution, delivery and performance of
any Additional Agreements to which it is a party and the consummation of the
Transactions, do not (a) conflict with or result in any breach of any provision
of the Certificate of Incorporation, as amended, or Bylaws, as amended, of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries; (b) require any consent, approval, authorization or permit of, or
filing with, or notification to, any Governmental Authority, except (i) in
connection with the applicable requirements, if any, of the HSR Act; (ii)
pursuant to the applicable requirements of the Securities Act and the Exchange
Act, and the rules and regulations promulgated thereunder; (iii) the filing of
the Certificate of Merger pursuant to the DGCL and appropriate documents with
the relevant authorities of other states in which the Company is authorized to
do business; (iv) such filing or consent as may be required under any
environmental, health or safety Law; (v) such filing or consent as may be
required by applicable state securities, or "blue sky" Laws; (vi) approvals, if
any, required of state Governmental Authorities having jurisdiction over the
Company (identified on the Company Disclosure Schedule); (vii) such filings,
consents, approvals, orders, registrations, declarations and filings as may be
required under the laws of any foreign country in which the Company or any of
its Subsidiaries conducts any business or owns any assets; (viii) filings with,
and approval of, the Exchange; or (ix) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not, individually or in the aggregate, have a Material Adverse Effect or
materially adversely affect the ability of the Company to consummate the
Transactions; (c) except as would not, individually or in the aggregate, have a
Material Adverse Effect, conflict with or result in a breach or violation of, or
constitute a default under, or result in (or create in any party the right to
cause) the acceleration of any performance required by the Company or its
Subsidiaries under, (i) any Judgment or Law to which they are subject or bound
(subject to any consents, approvals, authorizations, permits, filings or
notifications required under (b) above), or (ii) any mortgage, bond, indenture,
agreement, contract, license or other instrument or obligation to which the
Company and/or its Subsidiaries are subject or bound; or (d) result in the
creation of any Lien on any of the assets of the Company or its Subsidiaries
which, individually or in the aggregate, would have a Material Adverse Effect.
6.7 Company SEC Reports. Since January 1, 1996, the Company
has filed all forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities Laws, all of which complied as of their
respective dates in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder. None of the Company SEC Reports, at the time filed,
contained any
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untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.8 Financial Statements; Accounting Matters.
(a) The consolidated balance sheets and the related
consolidated statements of earnings, stockholders'
equity and cash flows (including the related notes
thereto) of the Company included in the Company SEC
Reports complied as to form in all material respects
with the published rules and regulations of the SEC
with respect thereto, have been prepared in
accordance with generally accepted accounting
principles applied on a basis consistent with prior
periods (except as otherwise noted therein), and
present fairly the financial position of the Company
and its Subsidiaries as of their respective dates,
and the consolidated results of its operations and
its cash flows for the periods presented therein
(subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments
and except that the unaudited interim financial
statements do not contain all of the footnote
disclosure required by generally accepted accounting
principles).
(b) Neither the Company nor, to the actual knowledge of
the Company's officers, any of its affiliates, has
taken or agreed to take any action that would
jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a)
of the Code and the Company has no reason to believe
that the Merger will not qualify as "pooling of
interests" for accounting purposes.
6.9 Proxy Statement; S-4 Registration Statement. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement or inclusion in the S-4
Registration Statement required to be filed in connection with the Transactions
(or any amendment or supplement thereto) will, (a) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the times of
the Company's Stockholder Meeting, and (b) in the case of the S-4 Registration
Statement, 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 shall promptly notify Parent if at any time prior to the
Effective Time any event occurs with respect to the Company which is required to
be described in an amendment of, or a supplement to, the S-4 Registration
Statement, so that Parent can promptly file such with the SEC and disseminate it
as required by Law. If at any time prior to the Company's Stockholder Meeting
any event occurs with respect to the Company which is required to be described
in an amendment of, or a supplement to, the Proxy Statement, the Company shall
promptly notify Parent, file such with the SEC and disseminate it to the
Company's stockholders as required by Law. The Proxy Statement will (with
respect to the Company and other information supplied by the Company for
inclusion therein) comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
6.10 Litigation. Except as appropriately reserved for in the
financial statements
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included within the Company SEC Reports, there is no action, suit, claim,
governmental investigation, arbitration or other proceeding pending, or, to the
actual knowledge of the Company's officers, threatened in writing, against the
Company or any of its Subsidiaries which, if adversely determined, individually
or in the aggregate, would have a Material Adverse Effect.
6.11 Taxes. The Company and each of its Subsidiaries has
timely filed (or, as to its Subsidiaries, the Company has timely filed on their
behalf) all material Tax Returns required to be filed by it, has paid (or, as to
its Subsidiaries, the Company has paid on their behalf) all Taxes shown thereon
to be due and has provided (or, as to its Subsidiaries, the Company has made
provision on their behalf) reserves in accordance with generally accepted
accounting principles in its financial statements for any Taxes that have not
been paid, whether or not shown as being due on any Tax Returns, except where
the failure to pay or provide for such Taxes would not, individually or in the
aggregate, have a Material Adverse Effect, and (i) no material claim for unpaid
Taxes has been asserted against the Company or any of its Subsidiaries in
writing by a tax authority or has become a Lien (except for Liens for Taxes not
yet due and payable or for Taxes that are being disputed in good faith by
appropriate proceedings and that have been reserved against in accordance with
generally accepted accounting principles) against the property of the Company or
any of its Subsidiaries, except as to such matters as would not, individually or
in the aggregate, have a Material Adverse Effect, (ii) as of the date of this
Agreement, no audit of any Tax Return of the Company or any of its Subsidiaries
is being conducted by a tax authority, and (iii) as of the date of this
Agreement, no extension of the statute of limitations on the assessment of any
Taxes has been granted by Company or any of its Subsidiaries and is currently in
effect. Neither the Company nor any of its Subsidiaries is or has been a member
of any consolidated, combined, unitary or aggregate group for tax purposes
except such a group consisting only of the Company and its Subsidiaries.
6.12 Environmental Laws and Regulations. The Company and each
of its Subsidiaries are in compliance with Environmental Laws (as defined
below), except for non-compliance that would not, individually or in the
aggregate, have or could reasonably be expected to have a Material Adverse
Effect. There are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature that
reasonably could be expected to result in the imposition, on the Company or any
of its Subsidiaries, of any liability or obligation arising under common law
standards relating to environmental protection, human health or safety, or under
any local, state, federal, national or supernational environmental statute,
regulation or ordinance, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (collectively, "Environmental
Laws"), pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries, which liability or obligation would have a
Material Adverse Effect. To the knowledge of the Company, during or prior to the
period of (i) its or any of its Subsidiaries' ownership or operation of any of
their respective properties, (ii) its or any of its Subsidiaries' participation
in the management of any property, or (iii) its or any of its Subsidiaries'
holding of a security interest or other interest in any property, there was no
release of hazardous, toxic, radioactive or dangerous materials or other
materials regulated under Environmental Laws in, on, under or affecting any such
property which would reasonably be expected to have a Material Adverse Effect.
Neither the Company
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nor any of its Subsidiaries is subject to any agreement, order, judgment or
decree by or with any court, Governmental Authority, regulatory agency or third
party imposing any material liability or obligations pursuant to or under any
Environmental Law that would have a Material Adverse Effect.
6.13 Compliance with Applicable Laws. The businesses of the
Company and its Subsidiaries are not being conducted in violation of any Law,
except for possible violations which, individually or in the aggregate, would
not have a Material Adverse Effect.
6.14 Title to Properties. The Company and each of its
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all their respective properties and assets except for such as are no longer used
or useful in the conduct of their respective businesses or as have been disposed
of in the ordinary course of business and except for defects in title,
easements, encroachments, restrictive covenants and similar encumbrances or
impediments that would not, individually or in the aggregate, have a Material
Adverse Effect. All such assets and properties, other than assets and properties
in which the Company or any of its Subsidiaries has leasehold interests, are
free and clear of all Liens except for Liens that would not, individually or in
the aggregate, have a Material Adverse Effect.
6.15 Insurance. The Company and its Subsidiaries have obtained
and currently maintain in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is reasonably prudent, and each is maintaining in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with the activities of the
Company or its Subsidiaries or any properties owned, occupied or controlled by
the Company or its Subsidiaries, in such amount as reasonably deemed necessary
by the Company or its Subsidiaries.
6.16 Employee Benefit Matters.
(a) The Company has furnished to Parent true and complete
copies of all material employee benefit plans within
the meaning of Section 3(3) of ERISA that covers
employees, directors, former employees or former
directors of the Company and its Subsidiaries, all as
listed in the Company Disclosure Schedule. In
addition, the Company has furnished any trust
agreements or insurance contracts forming a part of
any such employee benefit plans maintained by the
Company, a copy of the most recent determination
letter for any such employee benefit plan which is an
employee pension benefit plan within the meaning of
Section 3(2) of ERISA and is intended to comply with
Section 401(a) of the Code, and a copy of the most
recent Form 5500, if applicable.
(b) Each of the employee benefit plans maintained by the
Company and its Subsidiaries is in substantial
compliance with all applicable Laws including ERISA
and the Code, except for any noncompliance that would
not have a Material Adverse Effect. The Company is
not aware of any event (i) that would adversely
affect any determination letter issued for any such
employee benefit plan that is an employee pension
benefit plan within the meaning of Section 3(2) of
ERISA and is intended to comply with Section 401(a)
of the Code or (ii) that has occurred to cause the
basis for imposition of an excise or penalty tax.
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(c) All contributions required to be made under the terms
of any such employee benefit plan have been timely
made or have been reflected on the latest
consolidated balance sheet of the Company in
accordance with generally accepted accounting
principles applied on a consistent basis. No
condition exists that is reasonably likely to subject
the Company or any of its Subsidiaries to any direct
or indirect liability under Title IV of ERISA or to a
civil penalty under Section 502 of ERISA or liability
under Sections 4975, 4976, or 4980B of the Code or
the loss of a federal tax deduction under Section
280G of the Code or other liability with respect to
such employee benefit plans that would have a
Material Adverse Effect.
(d) No employee benefit plan is a "multiemployer plan" as
such term is defined in Section 4001(a)(3) of ERISA
or Section 414(f) of the Code or a multiemployer plan
described in clauses (i) or (ii) of Section 3(37)(A)
of ERISA; is subject to Title IV of ERISA; or is a
part of a "multiple employer welfare arrangement"
within the meaning of Section 3(40) of ERISA.
(e) There are no pending, threatened, or anticipated
claims (other than routine claims for benefits or
immaterial claims) by, on behalf of or against any of
the employee benefit plans or any trusts related
thereto that would have a Material Adverse Effect.
6.17 Broker's Fees. Except for the fees and expenses payable
to Goldsmith, Agio, Helms and Company and George K. Baum & Company, the
Company's financial advisors, which are reflected in their agreements with the
Company, true and correct copies of which have been furnished to Parent, the
Company has not employed any investment bank, broker, finder, consultant or
other intermediary, which would be entitled to any fee or commission from the
Company in connection with the Transactions.
6.18 Opinions of Financial Advisors. The Board of Directors of
the Company has received the opinions of Goldsmith, Agio, Helms and Company and
George K. Baum & Company, the Company's financial advisors, to the effect that
the Merger Consideration is fair to the stockholders of the Company other than
Parent, from a financial point of view.
6.19 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports, since January 28, 1998, the Company has conducted
its business only in the ordinary course consistent with past practice, and
there is not and has not been: (i) any change which has had a Material Adverse
Effect, or (ii) any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.20 Intellectual Property. The Company and its Subsidiaries
own or have a valid and enforceable license to use all trademarks, service
marks, trade names, patents and copyrights (in each case, free and clear of any
material Liens) (collectively, "Company Intellectual Property") necessary to
carry on its business substantially as currently conducted, except for such
Company Intellectual Property the failure of which to own or validly license
individually or in the
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aggregate would not have a Material Adverse Effect and the consummation of the
Merger and the other Transactions will not result in the loss of any such rights
(or require the payment of any material additional fees or royalties in order to
maintain such rights). Neither the Company nor any Subsidiary has received any
notices of infringement of or conflict with, and, to the knowledge of the
Company, there are no infringements of or conflicts with the rights of others
with respect to, any Company Intellectual Property that individually or in the
aggregate, in either such case, would have a Material Adverse Effect.
6.21 Contracts. Neither the Company nor any of its
Subsidiaries is a party to or bound by any agreement (i) which would prohibit or
materially delay the consummation of the Merger or any of the Transactions
contemplated thereby or (ii) the performance of which, in accordance with the
terms thereof, would have a Material Adverse Effect.
6.22 Labor Matters. As of the date of this Agreement, neither
the Company nor any of its Subsidiaries is a party to or bound by, and none of
their employees is subject to, any collective bargaining agreement relating to
the term and conditions of employment for any group of employees (any such
agreement, memorandum or document, a "Collective Bargaining Agreement"), and as
of the date of this Agreement there are no labor unions or other organizations
representing or, to the knowledge of the Company, purporting to represent, any
employees employed by any of the Company and its Subsidiaries. As of the date of
this Agreement, no labor union is currently engaged in or, to the knowledge of
the Company, threatening, organizational efforts with respect to any employees
of the Company or any of its Subsidiaries.
6.23 State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the Transactions contemplated hereby and
such approval constitutes approval of the Merger and Transactions by the Company
Board of Directors under the provisions of Section 203 of the DGCL such that
Section 203 of the DGCL does not apply to this Agreement and the Transactions.
No other state takeover statute is applicable to the Merger or the Transactions
contemplated hereby.
6.24 Year 2000 Compatibility. The Company has developed and is
executing a plan (the "Y2K Plan") to address significant year 2000 compatibility
issues. In the case of certain equipment with imbedded chips where testing for
year 2000 compliance is impossible or impractical, the Y2K Plan may include
plans and strategies for replacing such capability with redundant capacity
within the Company or with alternative third party sourcing with comparable
quality and pricing, excluding any provider of basic services and utilities. The
Company represents and warrants that: (i) significant date-sensitive hardware,
software, processes, procedures, interfaces and similar operating systems used
within the Company's operations contain acceptable design and performance
specifications so that such systems will not abruptly end or provide invalid or
incorrect results during the operation of the Company's business on or after
January 1, 2000 or the Company's Y2K Plan makes reasonable provision for
addressing any noncompliant specifications; (ii) all such operating systems have
been designed to ensure year 2000 compatibility including, but not limited to:
date data century recognition, calculations that accommodate same century and
multi-century formulas and date values, date data interface
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values that reflect the century, and which include year 2000 leap year
calculations or the Company's Y2K Plan makes reasonable provision for modifying
the design and/or replacing such systems; (iii) the Company is making all
reasonable efforts to confirm with all of its material suppliers that all
date-sensitive hardware, software, processes, procedures, interfaces and similar
operating systems used within such supplier's operations contain acceptable
design and performance specifications so that such systems will not abruptly end
or provide invalid or incorrect results during the operation of the Company's
business on or after January 1, 2000 and that all such operating systems have
been designed to ensure year 2000 compatibility including, but not limited to:
date data century recognition, calculations that accommodate same century and
multi-century formulas and date values, date data interface values that reflect
the century, and which include year 2000 leap year calculations, so that such
material suppliers' operations will not cause a disruption in the Company's
supply, except to the extent that the failure of such representation or warranty
as set forth in this Section 6.24 to be true would not have a Material Adverse
Effect.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent SEC Reports filed prior to
the date of this Agreement and except as set forth in the Parent Disclosure
Schedule (each section of which qualifies the correspondingly numbered
representation or warranty), Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
7.1 Capitalization. The entire authorized capital stock of the
Parent consists of 300,000,000 shares of Parent Common Stock, no par value per
share and 100,000 shares of Parent Preferred Stock no par value. As of the date
hereof, 105,596,357 shares of Parent Common Stock and no shares of Parent
Preferred Stock are issued and outstanding and no shares of Parent Common Stock
or Parent Preferred Stock are held in treasury. As of the date hereof, such
shares constitute all of the issued and outstanding capital stock of the Parent,
all of which have been duly authorized, validly issued and are fully paid and
non-assessable. All outstanding shares of capital stock of Parent's Subsidiaries
are owned by Parent or a direct or indirect wholly owned subsidiary of Parent,
free and clear of all Liens, and are duly authorized, validly issued, fully paid
and nonassessable. There are not as of the date hereof, and there will not be at
the Effective Time, any stockholder agreements, voting trusts or other
agreements or understandings to which Parent is a party or to which it is bound
relating to the voting of any shares of the capital stock of Parent. As of the
date hereof, 925,050 shares of Parent Common Stock were reserved for issuance
upon exercise of outstanding options under the Parent Option Plans. Except
pursuant to the Parent Option Plans, and as set forth in the Parent Disclosure
Schedule, there are no outstanding or authorized options, warrants, agreements,
subscriptions, calls, demands or rights of any character relating to the
Parent's, or Parent's Subsidiaries' capital stock, whether or not issued,
including without limitation, securities convertible into or evidencing the
right to purchase any capital stock or other securities of Parent or any of its
Subsidiaries. Parent does not own, directly or indirectly, any capital stock of
the Company.
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7.2 Corporate Organization, Qualification and Power. Each of
Parent, its Subsidiaries and Merger Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and is duly qualified to conduct its business in every other
jurisdiction in which its business is conducted, except where failure to be so
qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent and its Subsidiaries has the
corporate power to own or lease its respective properties and to carry on its
business as now being conducted, wherever located. Neither Parent nor Merger Sub
owns any material interest in any corporation, partnership, proprietorship or
any other business entity. Each of Parent and Merger Sub has heretofore made
available to the Company complete and correct copies of their respective
Articles of Incorporation, Certificate of Incorporation and Bylaws.
7.3 Authorization of Agreement and Merger. Each of Parent and
Merger Sub has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
Transactions. This Agreement, and the consummation by Parent and Merger Sub of
the Merger and the other Transactions have been duly and validly authorized by
the respective Boards of Directors of Parent and Merger Sub and the sole
stockholder of Merger Sub and no other corporate proceedings on the part of
Parent and Merger Sub are necessary to authorize this Agreement or to consummate
the Transactions (other than in connection with the actions to be taken pursuant
to Section 8.6).
7.4 Enforceable Agreement. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming it
constitutes the valid and binding agreement of the Company, constitutes a valid
and binding obligation of each of Parent and Merger Sub, enforceable against
each of them according to its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar Laws affecting the
enforceability of contractual obligations and creditor's rights generally and by
the application of equitable principles by courts of competent jurisdiction,
sitting at law or in equity.
7.5 No Conflicts, Violations, Breaches or Defaults. The
execution and delivery of this Agreement by each of Parent and Merger Sub and
its performance of the obligations hereunder, including its execution, delivery
and performance of any Additional Agreements to which it is a party and the
consummation of the Transactions, do not (a) conflict with or result in any
breach of any provision of the respective Articles of Incorporation, Certificate
of Incorporation or Bylaws of Parent or Merger Sub; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except (i) in connection with the applicable
requirements, if any, of the HSR Act; (ii) pursuant to the applicable
requirements of the Securities Act and the Exchange Act, and the rules and
regulations promulgated thereunder; (iii) the filing of the Certificate of
Merger pursuant to the DGCL and appropriate documents with the relevant
authorities of other states in which Parent or any of its Subsidiaries is
authorized to do business; (iv) such filing or consent as may be required under
any environmental, health or safety Law; (v) such filing or consent as may be
required by applicable state securities, or "blue sky" Laws; (vi) approvals, if
any, required of state Governmental Authorities having jurisdiction over Parent
or any of its Subsidiaries; (vii) such filings, consents, approvals, orders,
registrations, declarations and filings as may be required
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under the laws of any foreign country in which Parent or any of its Subsidiaries
conducts any business or owns any assets; (viii) filings with, and approval of
the Exchange; or (ix) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not,
individually or in the aggregate, have a Material Adverse Effect on Parent or
its Subsidiaries or materially adversely affect the ability of Parent to
consummate the Transactions; (c) except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, conflict with or result in
a breach or violation of, or constitute a default under, or result in (or create
in any party the right to cause) the acceleration of any performance of the
Parent or its Subsidiaries under, (i) any Judgment or Law to which they are
subject or bound (subject to any consents, approvals, authorizations, permits,
filings or notifications required under (b) above), or (ii) any mortgage, bond,
indenture, agreement, contract, license or other instrument or obligations to
which Parent and/or its Subsidiaries are subject or bound; or (d) result in the
creation of any Lien on any of the assets of Parent or its Subsidiaries which,
individually or in the aggregate, would have a Material Adverse Effect on Parent
or Merger Sub.
7.6 Parent SEC Reports. Since June 1, 1996, Parent has filed
all forms, reports and documents with the SEC required to be filed by it
pursuant to the federal securities Laws, all of which complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder. None of the Parent SEC
Reports, at the time filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
7.7 Financial Statements; Accounting Matters.
(a) The consolidated balance sheets and the related
consolidated statements of income, stockholders'
equity and cash flows (including the related notes
thereto) of Parent included in the Parent SEC Reports
complied as to form in all material respects with the
published rules and regulations of the SEC with
respect thereto, have been prepared in accordance
with generally accepted accounting principles applied
on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly the
financial position of Parent and its Subsidiaries as
of their respective dates, and the consolidated
results of its operations and its cash flows for the
periods presented therein (subject, in the case of
the unaudited interim financial statements, to normal
year-end adjustments and except that the unaudited
interim financial statements do not contain all of
the footnote disclosure required by generally
accepted accounting principles).
(b) Neither Parent, Merger Sub nor, to the actual
knowledge of Parent's officers, any of their
affiliates, have taken or agreed to take any action
that would jeopardize the qualification of the Merger
as a reorganization within the meaning of Section
368(a) of the Code, and Parent has no reason to
believe that the Merger will not qualify as "pooling
of interests" for accounting purposes.
7.8 Proxy Statement; S-4 Registration Statement. None of the
information supplied or to be supplied by Parent or Merger Sub for inclusion or
incorporation by reference in the
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Proxy Statement or inclusion in the S-4 Registration Statement required to be
filed in connection with the Transactions (or any amendment or supplement
thereto) will, (a) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Company's Stockholder
Meeting and (b) in the case of the S-4 Registration Statement, 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. If at any time prior to
the Effective Time any event occurs with respect to Parent, its officers and
directors, or any of its Subsidiaries, which is required to be described in an
amendment of, or a supplement to, the S-4 Registration Statement, Parent will
promptly file such with the SEC and disseminate it as required by Law to the
stockholders of Parent. If at any time prior to the Company's Stockholder
Meeting any event occurs with respect to Parent which is required to be
described in an amendment of, or a supplement to, the Proxy Statement, Parent
shall promptly notify the Company, file such with the SEC and disseminate it to
Parent's stockholders as required by Law. The Proxy Statement will (except with
respect to information relating to the Company) comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, and the S-4 Registration Statement (except for
information relating to the Company) will comply as to form in all material
respects with the provisions of the Securities Act.
7.9 Litigation. Except as disclosed in or appropriately
reserved for in the financial statements included within the Parent SEC Reports,
there is no action, suit, claim, governmental investigation, arbitration or
other proceeding pending, or, to the actual knowledge of Parent's officers,
threatened in writing, against Parent which, if adversely determined,
individually or in the aggregate, would have a Material Adverse Effect on
Parent.
7.10 Taxes. Each of Parent and its Subsidiaries has (a) filed
all material Tax Returns that they are required to file through the date hereof
and shall prepare and file all material Tax Returns required to be filed after
the date hereof and on or before the Effective Time and (b) paid or provided for
the payment of all Taxes due and owing for the periods covered by such Tax
Returns and all Taxes, if any, required to be paid for which no return is
required, except in either case where the failure to file such returns or to pay
or provide for such Taxes would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
7.11 Environmental Laws and Regulations. Parent and each of
its Subsidiaries (a) are in compliance with Environmental Laws, except for
non-compliance that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, and (b) have not received written notice of, or, to
the actual knowledge of Parent's officers, is the subject of an Environmental
Claim which, individually or in the aggregate, would have a Material Adverse
Effect on Parent.
7.12 Compliance with Applicable Laws. The businesses of Parent
and its Subsidiaries are not being conducted in violation of any Law, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on the Parent.
7.13 Broker's Fees. Parent has not employed any investment
bank, broker, finder,
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consultant or other intermediary, which would be entitled to any fee or
commission from Parent in connection with the Transactions.
7.14 Interim Operations of Merger Sub. Merger Sub was formed
solely for the purpose of engaging in the Transactions and has not engaged in
any business activities or conducted any operations other than in connection
with the Transactions. Merger Sub has no Subsidiaries.
7.15 Authorization for Parent Common Stock. Prior to the
Effective Time, Parent will have taken all necessary action to permit it to
issue the number of shares of Parent Common Stock required to be issued pursuant
to Article V. Parent Common Stock issued pursuant to Article V will, when
issued, be validly issued, fully paid and nonassessable and no Person will have
any preemptive right of subscription or purchase in respect thereof. Such Parent
Common Stock will, when issued, be registered under the Securities Act and the
Exchange Act and registered or exempt from registration under any applicable
state securities laws and will, when issued, be listed on the Exchange, subject
to notice of official issuance.
ARTICLE VIII
CONDUCT PENDING THE CLOSING AND COVENANTS
8.1 Conduct of Business by Company and Parent. Each of the
Company and Parent covenants and agrees that prior to the Effective Time, unless
the other party agrees in writing or as otherwise contemplated by this
Agreement, it will conduct its business and day to day operations (including
those of any Subsidiary) in the ordinary and usual course of business,
consistent with its past custom and practice, and will seek to preserve intact
its business organization and goodwill, keep in full force and effect all
material rights, licenses, permits and franchises relating to such business, and
maintain satisfactory relationships with suppliers, customers and others having
business relationships with it. Each of the Company and Parent specifically
agrees that, prior to the Effective Time, unless the other party otherwise
agrees in writing or as otherwise contemplated by this Agreement, neither the
Company nor Parent, nor any of the Company's Subsidiaries or Parent's
Subsidiaries, will:
(a) except pursuant to the Option Plans, the Directors
Plan or the other obligations set forth on the
Company Disclosure Schedule or Parent Disclosure
Schedule or pursuant to the Parent Option Plans, or
in connection with acquisitions of stock or assets of
other businesses by Parent or its Subsidiaries,
issue, deliver, sell or dispose of, pledge or
otherwise encumber (i) any additional shares of
capital stock of any class, or any securities or
rights convertible into, exchangeable for or creating
the right to subscribe for any share of capital
stock, or any rights, warrants, options, calls, or
any other agreement of any kind to purchase or
acquire any share of capital stock or such
securities, or (ii) any securities exchangeable for,
in respect of, or in substitution for Company Stock
or Parent Common Stock currently outstanding;
(b) except pursuant to existing employee benefit plans,
redeem, purchase or otherwise acquire any of its
outstanding capital stock;
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(c) split, combine, subdivide or reclassify any share of
its capital stock, or declare, set aside or pay any
dividend, or make any distribution, on its capital
stock, except the declaration and payment of regular
quarterly, semi-annual or annual cash dividends in
accordance with past dividend policy (or dividends by
a wholly owned Subsidiary);
(d) amend its respective Certificate/Articles of
Incorporation or Bylaws;
(e) take any action, or fail to take any necessary action
that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code;
(f) except as contemplated by this Agreement, take any
action which would render, or which reasonably may be
expected to render, any representation or warranty
made by it in this Agreement untrue in any material
respect at the Effective Time;
(g) except as permitted by Section 8.5, take any action
that would, or that could reasonably be expected to,
cause any condition to Closing, as set forth in
Article IX hereof, to not be satisfied; or
(h) authorize, propose or announce an intention to do any
of the foregoing, or enter into any contract or
agreement to do any of the foregoing.
8.2 Conduct of Business of Merger Sub. During the period of
time from the date of this Agreement to the Effective Time, Merger Sub shall not
engage in any activities of any nature except as provided in or contemplated by
this Agreement.
8.3 Environmental Consultants, Adjustment to Company Share
Price and Merger Consideration.
(a) Counsel to Parent or Merger Sub has engaged the
services of Environ Corporation to perform specified
environmental investigation and testing with respect
to the specified plants listed on Exhibit 8.3(a)(1)
(the "Specified Plants"). The scope of the
investigation and testing to be conducted will be
subject to the terms of Exhibit 8.3(a)(2). All such
investigation and testing shall be completed as soon
as reasonably practicable after the date hereof.
(b) Counsel to Parent and the Company will each engage an
environmental expert (the selection of each expert
will be subject to the reasonable approval of the
other party) (the "Parties' Experts"), and counsel to
Parent and the Company will jointly engage a third
environmental expert, to be mutually selected by
Parent and the Company (if Parent and the Company are
unable to agree on the third expert, the Parties'
Experts shall select the third expert) (the
"Independent Expert"). Using the test results and
information developed pursuant to Section 8.3(a), the
Parties' Experts and the Independent Expert will each
prepare an estimate (the "Environmental Liability
Estimates") of the most likely out of pocket cost
(including, without limitation,
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environmental testing, remediation expenses,
environmental consulting fees, legal fees and
government agency costs) that will be incurred by the
Company in connection with any required remediation
of the soil and groundwater at the Specified Plants
(the "Environmental Liability"). Such estimates shall
be computed in accordance with the specifications and
assumptions set forth on Exhibit 8.3(a)(2).
(c) As soon as the Parties' Experts have completed their
Environmental Liability Estimates, each of the
Parties' Experts shall submit its Environmental
Liability Estimates to the Company and Parent, which
estimates shall be on a per plant basis and in such
detail so as to confirm that such estimates were
prepared in accordance with the provisions of this
Agreement. If the difference between such
Environmental Liability Estimates is in the aggregate
less than twenty-five percent (25%) of the higher of
the two estimates, then the Company Share Price shall
be adjusted pursuant to Section 8.3(d) using the
average of the two Environmental Liability Estimates;
provided, however, if the higher of the two
Environmental Liability Estimates is less than or
equal to $570,000, then no adjustment shall be made
to the Company Share Price. If the difference between
the Environmental Liability Estimates is equal to or
greater than twenty-five percent (25%) of the higher
of the two estimates and if the higher of the two
estimates is more than $570,000, representatives of
the Company and Parent shall meet as soon as
practicable, but not later than February 17, 1999, to
attempt to reach agreement as to the Estimate Average
(as defined below), and such amount, if determined,
shall be used to calculate the reduction in Company
Share Price, if any, pursuant to Section 8.3(d). If
the Company and Parent are unable to reach agreement
by February 19, 1999, (i) the Independent
Environmental Expert shall, as soon as practical,
deliver its Environmental Liability Estimate to the
Company and Parent, and (ii) the average of the two
Estimates closest in amount (among those prepared by
the three (3) environmental experts) shall equal the
Estimate Average for purposes of determining the
reduction in Company Share Price, pursuant to Section
8.3(d). In all instances, the Estimate Average and
the calculation of the reduction, if any, in the
Company Share Price shall be determined no later than
February 23, 1999.
(i) If the average of the Environmental
Liability Estimates calculated pursuant to
Section 8.3(c) (the "Estimate Average") is
less than or equal to the $570,000, then no
adjustment shall be made to the Company
Share Price;
(ii) If the Estimate Average exceeds $570,000,
the Company Share Price shall be reduced by
$.01 for each $100,000 (rounded to the
nearest $100,000) by which the Estimate
Average exceeds $570,000.
(e) Notwithstanding the foregoing, no adjustment shall be
made to the Company Share Price to the extent the
Company, prior to the determination of the Estimate
Average, has obtained a new insurance policy or
policies and/or has entered into a new contractual
arrangement whereby the Company shall be indemnified
for or relieved of responsibility for payment of the
particular Environmental Liability, which insurance
and/or contract are acceptable to Parent in its
reasonable discretion. Any premiums required to be
paid in connection with such insurance shall be
included in the Estimate Average.
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(f) Parent or Merger Sub shall pay for all costs under
Section 8.3(a)-(c), except (i) the Company will pay
for the fees and expenses of the environmental expert
it selected pursuant to Section 8.3(b), and (ii) the
Company shall pay one-half of the fees and expenses
of the Independent Expert.
(g) All costs incurred pursuant to this Section 8.3 shall
be included in the Estimate Average.
8.4 Additional Covenants of the Company. The Company agrees,
in addition to the covenants set forth in Section 8.1, that prior to the
Effective Time, without the express written consent of Parent, neither the
Company nor any of the Company's Subsidiaries will:
(a) adopt a plan of liquidation dissolution, merger
(other than the Merger), consolidation,
restructuring, or other reorganization of the Company
or any Subsidiary, except as set forth on the Company
Disclosure Schedule;
(b) terminate, establish, adopt, enter into, or make any
new grants or awards of stock based compensation or
other benefits under, amend or otherwise modify the
Option Plans, the Directors Plan or any Company
benefit plan or arrangement or, increase the salary,
wage, bonus or other compensation of directors,
officers or key employees (except the Company may
increase compensation for key employees in customary
amounts, but not in excess of 5%);
(c) except in the ordinary course of business, consistent
with past practice, incur any debt for borrowed money
or guarantee any such debt or encumber any asset in
connection with any such debt, or make any loans,
advances or capital contributions to, or investments
in any other Person, other than a wholly owned
Subsidiary;
(d) make any acquisition, through merger, consolidation
or otherwise, except as set forth on the Company
Disclosure Schedule;
(e) make any capital expenditure or commitment in excess
of $100,000; or
(f) purchase any shares of Company Stock pursuant to any
existing or hereinafter enacted stock repurchase plan
or otherwise purchase any shares of Company Stock.
8.5 Acquisition Proposals. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage, or take any other actions designed to facilitate, any
inquiries or the making of any proposal which constitutes an Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal. Further, the Company and its officers and
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directors will cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Board of Directors of the Company
reasonably determines that it has received a Superior Proposal, the Company may
furnish information and access to the Person who has submitted such Superior
Proposal pursuant to confidentiality agreements, and may participate in
discussions and negotiate with such Person concerning any proposed merger, sale
of assets, sale of shares of capital stock or similar transaction involving the
Company. Notwithstanding the foregoing, nothing herein shall require the
Company's Board of Directors on behalf of the Company (a) to act, or refrain
from acting, in any manner which, in the opinion of such Board of Directors
after consultation with its legal counsel, would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable Law, (b) to fail
to comply with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal, or (c) to fail to make any public statement
required by Law or the requirements of the Exchange. If the Company receives a
Superior Proposal, the Company shall immediately advise Parent in writing of the
terms of the Superior Proposal and the identity of the Person making the
Superior Proposal.
8.6 Stockholders' Approval.
(a) The Company shall promptly submit this Agreement and
the Transactions for the approval of its stockholders
at the Company's Stockholder Meeting. The Company
shall use all reasonable efforts to obtain
stockholder approval and adoption of this Agreement
and the Transactions (including the recommendation by
the Company, through its Board of Directors, to its
stockholders of the approval of the Transactions)
subject, in each case, to the determination of the
Board of Directors of the Company after consultation
with its counsel that the foregoing actions would not
be inconsistent with its fiduciary duties to the
Company's stockholders under applicable Law. The
Company will use all reasonable efforts to hold the
Company's Stockholder Meeting as soon as practicable
following the date upon which the S-4 Registration
Statement becomes effective. Without limiting the
generality of the foregoing, but subject to its right
to terminate this Agreement as set forth herein, the
Company agrees that its obligations pursuant to the
first sentence of this Section 8.6(a) shall not be
affected by an Acquisition Proposal, including any
Superior Proposal.
(b) Notwithstanding the foregoing, the Board of Directors
of the Company may at any time prior to the Effective
Time withdraw, modify or change any recommendation
and declaration regarding this Agreement, the Merger,
or the other Transactions, or recommend and declare
advisable a Superior Proposal, if in the opinion of
such Board of Directors, after consultation with its
counsel, the failure to so withdraw, modify or change
its recommendation and declaration would reasonably
likely be inconsistent with its fiduciary duties to
the Company's stockholders under applicable Law.
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8.7 All Reasonable Efforts.
(a) Subject to the terms and conditions herein, each of
the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and
make effective the Transactions, including using all
reasonable efforts to obtain all necessary or
appropriate waivers, consents and approvals, to
effect all necessary registrations, filings and
submissions, including, but not limited to, (i)
filings under the HSR Act and any other submissions
requested by any Governmental Authority and (ii)
required approvals under the applicable state Laws
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), subject, however, to
the requisite votes of the stockholders of the
Company, and Merger Sub.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to use all reasonable efforts to take
any action pursuant to this Section 8.7 if in the
opinion of its Board of Directors after consultation
with its counsel such actions would be reasonably
likely to be inconsistent with its fiduciary duties
to the Company's stockholders under applicable Law.
8.8 Access to/Confidentiality of Information. Upon reasonable
notice, each of the Company and Parent shall (and shall cause its Subsidiaries
to) afford to each other's Representatives, so that they may evaluate the
Transactions, reasonable access during normal business hours throughout the
period prior to the Effective Time, to its properties, personnel, books and
records and other information as reasonably requested under the circumstances,
and, during such period, furnish promptly to such Representatives the specific
information concerning its business, properties and personnel as listed on the
Parent Disclosure Schedule. Each of the Company and Parent agrees that it will
not, and will cause its Representatives not to, use any information obtained
pursuant to this Section 8.8 for any purpose unrelated to the consummation of
the Transactions.
8.9 Publicity. The parties will consult with each other and
will mutually agree upon any press releases or public announcement pertaining to
the Merger and the other Transactions and shall not issue any such press
releases or make any such public announcements prior to such consultation and
agreement, except as may be required by applicable Law or by obligations
pursuant to any listing agreement with the Exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
all reasonable efforts to consult in good faith with the other party before any
such issuance or announcement.
8.10 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Company to, indemnify and
hold harmless each present and former director and
officer of the Company and/or its Subsidiaries (when
acting in such capacity) determined as of the
Effective Time, against any costs or expenses
(including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities,
incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil,
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criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring
at or prior to the Effective Time, whether asserted
or claimed prior to, at or after the Effective Time,
to the fullest extent permitted under the DGCL (and
the Surviving Company shall also advance expenses as
incurred to the fullest extent permitted under
applicable law, provided the Person to whom expenses
are advanced provides an undertaking to repay such
advances if it is ultimately determined that such
Person is not entitled to indemnification).
Notwithstanding the above, such indemnification shall
not be applicable to any claims made against any
Indemnified Party if a judgment or other final
adjudication established that his or her acts or
omissions (A) were committed in bad faith or were the
result of active and deliberate dishonesty and were
material to the cause of action so deliberated or (B)
arose out of, were based upon or were attributable to
the gaining in fact of any financial profit or other
advantage to which he or she was not legally
entitled.
(b) Any Person wishing to claim indemnification under
Section 8.10(a), upon learning of any such claim,
action, suit, proceeding or investigation, shall
promptly notify the Surviving Company thereof, but
the failure to so notify shall not relieve the
Surviving Company of any liability it may have to
such Person if such failure does not materially
prejudice the Surviving Company. In the event of any
such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time),
(i) the Surviving Company shall have the right to
assume the defense thereof and the Surviving Company
shall not be liable to any Person seeking
indemnification under Section 8.10(a) for any legal
expenses of other counsel or any other expenses
subsequently incurred by such Person in connection
with the defense thereof, except that if the
Surviving Company elects not to assume such defense
or counsel for such Person advises that there are
issues which raise conflicts of interest between the
Surviving Company and such Person, such Person may
retain counsel satisfactory to them, and the
Surviving Company shall pay all reasonable expenses
of such counsel for such Person promptly as
statements therefor are received, (ii) such Persons
will cooperate in the defense of any such matter, and
(iii) the Surviving Company shall not be liable for
any settlement effected without its prior written
consent.
(c) The Surviving Company shall maintain a policy of
officers' and directors' liability insurance for acts
and omissions occurring prior to the Effective Time
with coverage in amount and scope at least as
favorable as the Company's existing directors' and
officers' liability insurance coverage for a period
of five years after the Effective Time.
(d) If Parent, the Surviving Company or any of their
successors or assigns (i) shall consolidate with or
merge into any other corporation or entity and shall
not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties
and assets to any individual, corporation or other
entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of
Parent or the Surviving Company shall assume all of
the obligations set forth in this Section 8.10.
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(e) The provisions of this Section 8.10 are intended for
the benefit of, and shall be enforceable by, the
Persons with rights of indemnification, their heirs
and their representatives.
8.11 Employees.
(a) Except as set forth on the Parent Disclosure
Schedule, for a period of two years following the
Effective Time, Parent agrees to provide employee
benefit plans, programs, arrangements and policies
for the benefit of employees of the Company and its
Subsidiaries not subject to collective bargaining
that in the aggregate as determined by Parent acting
reasonably, are no less favorable than those of the
Company plans, programs, arrangements or policies
prior to the Effective Time. All service credited to
each employee by the Company or its Subsidiaries
through the Effective Time shall be recognized by
Parent for all purposes, including for purposes of
eligibility, vesting and benefit accruals under any
employee benefit plan provided by Parent for the
benefit of the employees except that employees will
not be credited with their years of service with the
Company for purposes of determining benefits accruals
pursuant to the Parent's Partners Plan.
(b) Parent and the Surviving Company hereby agree to
honor (without modification) and assume the retention
program, enhanced severance plan and noncompetition
and severance agreements listed on the Company
Disclosure Schedule, all as in effect at the
Effective Time. The Company agrees not to amend or
modify such programs, plans and agreements prior to
the Effective Time without Parent's written consent.
Anything in this Agreement to the contrary
notwithstanding, the Company may establish an escrow
arrangement and fund such escrow as contemplated
under the Severance and Noncompetition Agreements
listed in the Company Disclosure Schedule and Parent
and the Company hereby agree to honor and assume such
escrow arrangement without modification.
(c) Notwithstanding any other provision set forth in
Section 8.11, with respect to employees who are
subject to a collective bargaining agreement, all
benefits shall be provided only in accordance with
the applicable collective bargaining agreement.
8.12 Registration Statement. Parent and the Company will, as
promptly as practicable, prepare and file with the SEC the Proxy Statement, with
form of proxy in connection with the vote of Company stockholders with respect
to the Merger, this Agreement and the issuance of the Parent Common Stock
pursuant to the Merger, respectively. Parent will, as promptly as practicable,
prepare and file with the SEC the S-4 Registration Statement, containing the
Proxy Statement, in connection with the registration under the Securities Act of
Parent Common Stock issuable upon conversion of the Company Shares. Parent and
the Company will each use all reasonable efforts to have or cause the S-4
Registration Statement declared effective as promptly as practicable, including,
without limitation, causing their accountants to deliver necessary or required
instruments such as opinions and certificates, and will take any other action
required or necessary to be taken under federal or state securities Laws or
otherwise in connection with the
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registration process. The Company will use all reasonable efforts to cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
date. The Company and Parent will cooperate with respect to the Company's
Stockholders Meeting and the Company shall use all reasonable efforts to hold
such meeting as soon as practicable after the date hereof.
8.13 Exchange Listing. Parent shall cause the Parent Common
Stock constituting the Merger Consideration to be listed on the Exchange,
subject to notice of official issuance thereof.
8.14 Affiliates.
(a) Company shall deliver to Parent a letter identifying
all Persons whom the Company believes to be, at the
date of the Company's Stockholders Meeting,
"affiliates" of such party for purposes of applicable
interpretations regarding use of the
pooling-of-interests accounting method and for
purposes of Rule 145 under the Securities Act. The
Company shall use all reasonable best efforts to
cause each Person who is identified as an "affiliate"
in the letter referred to above to deliver to Parent
on or prior to the date of the Company's Stockholders
Meeting a written agreement, in the form attached
hereto as Exhibit 8.14.
(b) The shares of Parent Common Stock issued to
affiliates of the Company in exchange for Company
Shares shall not be transferable until such time as
financial results covering at least 30 days of
combined operations of Parent and the Company shall
have been published within the meaning of Section
201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such
affiliate has provided the written agreement referred
to in this Section, except to the extent permitted
by, and in accordance with SEC Accounting Series
Release 135 and SEC Staff Accounting Bulletins 65 and
76. Any Company Shares held by any such affiliate
shall not be transferable, regardless of whether such
affiliate has provided the applicable written
agreement referred to in this Section, if such
transfer, either alone or in the aggregate with other
transfers by affiliates, would preclude Parent's
ability to account for the business combination to be
effected by the Merger as a pooling of interests.
Parent shall not register the transfer of any
Certificate unless such transfer is made in
compliance with the foregoing.
8.15 Letters of Accountants. Each of the Company and Parent
shall use their reasonable efforts to cause to be delivered to the other the
"comfort" letters of KPMG Peat Marwick LLP and Ernst & Young LLP, independent
accountants to each such party, respectively, dated a date within two business
days before the date on which the S-4 Registration Statement shall become
effective and addressed to the other, in form and substance reasonably
satisfactory to the other and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the S-4 Registration
Statement and Proxy Statement.
8.16 Reorganization. Neither the Company nor Parent and its
Subsidiaries will take any action that would jeopardize the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
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8.17 Stock Options.
(a) All Options outstanding at the Effective Time, shall
remain outstanding following the Effective Time and
will continue in accordance with their current terms
(except to the extent such terms and conditions are
altered in accordance with their terms as a result of
the consummation of the Transactions including the
terms which apply in the event of a "change of
control" of the Company). A listing of outstanding
Options as of the date hereof, showing what portions
of such Options are exercisable as of such date, the
dates upon which such Options expire, the exercise
prices of such Options, and whether such Options are
intended to qualify as "incentive stock options"
within the meaning of Section 422 of the Code, is set
forth on the Company Disclosure Schedule. At the
Effective Time, the Options shall, by virtue of the
Merger and without any further action on the part of
the Company or the holder thereof, be assumed by
Parent in such manner that Parent (i) is a
corporation "assuming a stock option in a transaction
to which Section 424(a) applies" within the meaning
of Section 424 of the Code or (ii) to the extent that
Section 424 of the Code does not apply to any such
Options, would be such a corporation were Section 424
of the Code applicable to such Options. From and
after the Effective Time, all references to the
Company in the Option Plans and the applicable stock
option agreements issued thereunder shall be deemed
to refer to Parent which shall have assumed the
Option Plans as of the Effective Time by virtue of
this Agreement and without any further action. Each
Substitute Option assumed by Parent shall be
exercisable upon the same terms and conditions as
under the applicable Option Plan and/or the
applicable agreement, except that (A) each such
Substitute Option shall be exercisable for, and
represent the right to acquire, that whole number of
shares of Parent Common Stock (rounded up or down to
the nearest whole share) equal to the number of
shares of Company Common Stock subject to such Option
multiplied by the Conversion Number; and (B) the
option price per share of Parent Common Stock shall
be an amount equal to the option price per share of
Company Common Stock subject to such Company Stock
Option in effect immediately prior to the Effective
Time divided by the Conversion Number (the option
price per share, as so determined, being rounded
upward to the nearest full cent). Such Substitute
Option shall otherwise be subject to the same terms
and conditions as such Option, which is in accordance
with the terms thereof.
(b) As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an Option an
appropriate notice setting forth such holder's rights
pursuant thereto and such Option shall continue in
effect on the same terms and conditions (including
any antidilution provisions, and subject to the
adjustments required by this Section 8.17 after
giving effect to the Merger). Parent shall comply
with the terms of all such Options and ensure, to the
extent required by, and subject to the provisions of,
the Option Plans, that Options which qualified as
incentive stock options under Section 422 of the Code
prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
Parent shall take all corporate action necessary to
reserve for issuance, prior to the Effective Time, a
sufficient number of shares of Parent Common Stock
for delivery upon exercise of Substitute Options
pursuant to the terms set forth in this Section 8.17.
As soon as practicable after the Effective Time, the
shares of Parent
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Common Stock subject to Options will be covered by an
effective registration statement on Form S-8 (or any
successor form) or another appropriate form and
Parent shall use its best efforts to maintain the
effectiveness of such registration statement or
registration statements for so long as Substitute
Options remain outstanding. In addition, Parent shall
use all reasonable efforts to cause the shares of
Parent Common Stock subject to Options to be listed
on the Exchange.
8.18 Pooling of Interests. The Company shall cooperate with
Parent in its efforts to cause the transactions contemplated by the Agreement,
including the Merger, to be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by the SEC. Neither
Parent nor Company shall take any action that would cause such accounting
treatment not to be obtained.
8.19 Standstill Agreements; Confidentiality Agreements. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
Subsidiaries is a party. During such period, the Company shall enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including by obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court of the United States of America or of any state having jurisdiction.
8.20 Company Stock Repurchase Plan. The Company agrees, prior
to the Effective Time, to rescind and terminate its stock repurchase plan.
ARTICLE IX
CONDITIONS
9.1 Conditions to Each Party's Obligation to Close. The
obligations of each of the parties to consummate the Transactions are subject to
satisfaction, or, to the extent permitted by Law, mutual waiver, on or prior to
the Effective Time of each of the following conditions:
(a) Injunction. There shall not be in effect any Law or
any Judgment directing that the Transactions not be
consummated; provided, however, that prior to
invoking this condition each party shall use all
reasonable efforts to have any such Judgment vacated;
and there shall have been no Law enacted or
promulgated which would make consummation of the
Transactions illegal or which would have or
reasonably be expected to have a Material Adverse
Effect.
(b) Stockholder Approval. This Agreement and the Merger
shall have been duly approved by the stockholders of
the Company in accordance with applicable Law and the
Certificate of Incorporation, as amended, of the
Company at the Company's Stockholder Meeting. Parent
represents that the issuance of Parent Common Stock
in connection with the Merger does not require
shareholder approval under applicable law.
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(c) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or shall have
been earlier terminated.
(d) S-4 Registration Statement; "Blue Sky" Approvals. The
S-4 Registration Statement shall have become
effective and no stop order suspending its
effectiveness shall have been issued and no
proceedings for such purpose shall have been
initiated and be continuing by the SEC. Parent shall
have received all state securities Law or "blue sky"
permits and authorizations necessary to issue Parent
Common Stock in exchange for the Company Shares in
the Merger.
(e) Listing of Parent Common Stock. The shares of Parent
Common Stock constituting the aggregate stock portion
of the Merger Consideration and the other such shares
required to be reserved for issuance in connection
with the Merger shall have been authorized for
listing on the Exchange, subject to notice of
official issuance.
(f) Pooling. Parent and the Company shall each have
received an opinion of their respective independent
accounting firms to the effect that the Merger will
be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations.
(g) Financial Advisors' Opinions The Company shall have
received letters from its financial advisors, dated
the Closing Date, to the effect that the letters
previously delivered by such advisors which provide
that the Merger consideration is fair to the
stockholders of the Company other than the Parent are
in full force and effect.
9.2 Additional Conditions to the Obligations of Parent and
Merger Sub to Close. The obligations of Parent and Merger Sub to consummate the
Transactions are subject to satisfaction, or, to the extent permitted by Law,
waiver on or prior to the Effective Time of each of the following conditions:
(a) Performance. The Company shall have performed, in all
material respects, all the obligations required to be
performed by it under this Agreement at or prior to
the Effective Time.
(b) Representations and Warranties. The representations
and warranties of the Company shall be true and
correct, in each such case as of the date of this
Agreement and as of the Effective Time as though made
on the Effective Time (except that representations
and warranties that speak as of a specific date shall
be true and correct as of such date), provided that
for purposes of determining the satisfaction of the
foregoing, such representations and warranties shall
be deemed true and correct if the failure or failures
of such representations and warranties to be so true
and correct (excluding the effect of any
qualification set forth therein relating to
"materiality" or a "Material Adverse Effect") have
not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse
Effect.
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(c) Deliveries. Parent shall have received at the
Effective Time:
(i) a certificate dated the Effective Time and
executed by the Chief Executive Officer and
the Chief Financial Officer of the Company
certifying to the fulfillment of the
conditions specified in Sections 9.2(a) and
(b) and, as to the Company, fulfillment of
the conditions specified in Section 9.1(b);
and
(ii) certified or verified copies of the
Company's Certificate of Incorporation, as
amended, its Bylaws, as amended, and
certificates of good standing for the
Company, as Parent may reasonably request.
(d) Consents and Approvals. All consents, approvals and
authorizations legally required to be obtained to
consummate the Merger shall have been obtained from
all Governmental Entities, except for such consents,
approvals and authorizations the failure of which to
obtain would not have a Material Adverse Effect on
Parent (assuming for purposes of this Section 9.2(d)
that the Merger shall have been effected).
(e) Tax Opinion. Parent shall have received an opinion,
based on appropriate representations contained in
certificates of the Company, Parent, Merger Sub,
their respective officers and others, of Keating,
Muething & Klekamp, P.L.L., dated the Effective Time,
to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code;
(ii) each of Parent, Merger Sub and the Company will
be a party to the reorganization within the meaning
of Section 368(b) of the Code; and (iii) no gain or
loss will be recognized by a stockholder of the
Company as a result of the conversion of the Company
Shares into Parent Common Stock pursuant to the terms
of the Merger (except with respect to cash received
in lieu of fractional share interests in Parent).
Such counsel may rely on representations made herein
and customary certifications from officers of Company
and Parent in issuing such opinion.
(f) Legal Opinion. Parent shall have received from
counsel to the Company an opinion in form and
substance substantially as set forth in Exhibit 9.2
attached hereto addressed to Parent and Merger Sub,
and dated as of the date of Closing.
9.3 Additional Conditions to the Company's Obligation to
Close. The obligation of the Company to consummate the Transactions is subject
to satisfaction, or, to the extent permitted by Law, waiver on or prior to the
Effective Time of each of the following conditions:
(a) Performance. Parent and Merger Sub shall have
performed in all material respects, all the
obligations required to be performed by them under
this Agreement at or prior to the Effective Time.
(b) Representations and Warranties. The representations
and warranties of Parent and Merger Sub shall be true
and correct, in each such case as of the date of this
Agreement and as of the Effective Time as though made
on the Effective Time (except that representations
and warranties that speak as of a specific date shall
be true and
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correct as of such date), provided that for purposes
of determining the satisfaction of the foregoing,
such representations and warranties shall be deemed
true and correct if the failure or failures of such
representations and warranties to be so true and
correct (excluding the effect of any qualification
set forth therein relating to "materiality" or a
"Material Adverse Effect") have not had and could not
reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(c) Deliveries. The Company shall have received at the
Effective Time:
(i) a certificate dated the Effective Time and
executed by the Chief Executive Officer or
President of Parent certifying to the
fulfillment of the conditions specified in
Sections 9.3(a) and (b), and as to Parent
and Merger Sub, fulfillment of the
conditions specified in Sections 9.1(b), (d)
and (e);
(ii) certified or verified copies of Parent and
Merger Sub's respective Articles of
Incorporation and Certificate of
Incorporation, as currently amended, and
certificates of good standing for Parent and
Merger Sub, as the Company may reasonably
request; and
(iii) a copy of the Exchange Agent Agreement
pursuant to Section 5.3.
(d) Consents and Approvals. All consents, approvals and
authorizations legally required to be obtained to
consummate the Merger shall have been obtained from
all Governmental Entities, except for such consents,
approvals and authorizations the failure of which to
obtain would not have a Material Adverse Effect
(assuming for purposes of this Section 9.3(d) that
the Merger shall have been effected).
(e) Tax Opinion. The Company shall have received an
opinion, based on appropriate representations
contained in certificates of the Company, Parent,
Merger Sub, their respective officers and others, of
Bryan Cave LLP, dated the Effective Time, to the
effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code;
(ii) each of Parent, Merger Sub and the Company will
be a party to the reorganization within the meaning
of Section 368(b) of the Code; and (iii) no gain or
loss will be recognized by a stockholder of the
Company as a result of the conversion of the Company
Shares into Parent Common Stock pursuant to the terms
of the Merger (except with respect to cash received
in lieu of fractional share interests in Parent).
Such counsel may rely on representations made herein
and customary certifications from officers of Company
and Parent in issuing such opinion.
(f) Legal Opinion. The Company shall have received from
counsel to Parent and Merger Sub an opinion in form
and substance substantially as set forth in Exhibit
9.3 attached hereto, addressed to the Company and
dated as of the date of Closing.
9.4 Frustration of Closing Conditions. Neither Parent nor the
Company may rely on the failure of any condition set forth in Section 9.1, 9.2
or 9.3, as the case may be, to be satisfied
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if such failure was caused by such party's failure to use reasonable best
efforts to consummate the Merger and the other transactions contemplated by this
Agreement.
ARTICLE X
TERMINATION AND REMEDIES
10.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by stockholders of either or both of the Company and Parent,
(a) by the mutual written consent of Parent and the
Company;
(b) by either Parent or the Company, if:
(i) any court of competent jurisdiction in the
United States, or some other Governmental
Authority, shall have issued an order,
decree or ruling or taken any other action
permanently restraining, enjoining or
otherwise prohibiting the Merger and such
order, decree, ruling or other action shall
have become final and nonappealable;
provided, however, that the party seeking to
terminate this Agreement under this Section
10.1(b)(i) shall have used its best efforts
to remove such injunction, order or decree;
or
(ii) the Merger shall not have been consummated
by June 30, 1999; provided, that the right
to terminate this Agreement pursuant to this
Section 10.1(b)(ii) shall not be available
to any party whose failure to fulfill any of
its obligations under this Agreement results
in the failure of the Merger to occur on or
before such date; provided further Parent
shall not have the right to terminate this
Agreement under this Section 10.1(b)(ii)
until July 31, 1999, if the Merger shall not
have been consummated as a result of (A) all
required regulatory approvals or consents
necessary to satisfy the conditions set
forth in Section 9.2(d) shall not have been
received by July 31, 1999; (B) the entering
of an order or any pending action commenced
by any applicable federal governmental
antitrust authority seeking an order which
would have the effect of making the Merger
illegal or otherwise materially and
adversely affecting the value of the Company
or prohibiting consummation of the Merger,
or (C) the failure of the conditions set
forth in Section 9.1(c) to be satisfied;
(iii) to the extent required by applicable Law,
this Agreement and the Merger shall have
been voted on by stockholders of the Company
at the Company's Stockholder Meeting and the
vote shall not have been sufficient to
satisfy the condition set forth in Section
9.1(b); or
(iv) if the aggregate adjustment to the Company
Share Price pursuant to Section 8.3(d)(ii)
is more than $2.00.
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(c) by Parent, if:
(i) there has been a misrepresentation or breach
of warranty or a failure to perform a
covenant on the part of the Company with
respect to its representations, warranties
and covenants set forth in this Agreement
(excluding the effect of any qualification
set forth therein relating to "materiality"
or a "Material Adverse Effect") of which the
Company has been given notice in writing by
Parent and which has not been cured by the
Company within thirty (30) days of such
notice and which misrepresentation, breach
or failure to perform would, in the
aggregate with all other misrepresentations,
breaches or failures to perform, have a
Material Adverse Effect; or
(ii) the Board of Directors of the Company
withdraws or materially modifies or changes
its recommendation of this Agreement or the
Merger in a manner adverse to Parent or
Merger Sub.
(d) by the Company, if:
(i) there has been a misrepresentation or breach
of warranty or failure to perform a covenant
on the part of the Parent or Merger Sub with
respect to its or their representations,
warranties and covenants set forth in this
Agreement (excluding the effect of any
qualification set forth therein relating to
"materiality" or a "Material Adverse
Effect") of which the Parent and/or Merger
Sub, as the case may be, has been given
notice in writing by the Company and which
has not been cured by Parent or Merger Sub,
as the case may be, within thirty (30) days
of such notice and which misrepresentation,
breach or failure to perform would have a
Material Adverse Effect;
(ii) in the exercise of good faith judgment as to
its fiduciary duties to the Company's
stockholders as imposed by applicable Law
and, after consultation with legal counsel,
the Company's Board of Directors determines
that such termination is required by reason
of any Acquisition Proposal being made and
the Company's Board of Directors withdraws
or materially modifies or changes its
recommendation of this Agreement or the
Merger if there exists at such time an
Acquisition Proposal for the Company deemed
to be a Superior Proposal and after written
notice is given to Parent of the intent to
accept a competing Acquisition Proposal and
Parent has not communicated in writing
within five (5) business days after receipt
of such notice an Acquisition Proposal that
matches or is more favorable than the third
party Acquisition Proposal from a financial
point of view; or
(iii) the Parent Share Price is less than $52.00.
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10.2 Effect of Termination.
(a) In the event of the termination and abandonment of
this Agreement pursuant to Section 10.1, this
Agreement shall become void and have no effect,
without any liability on the part of any party hereto
or its affiliates, directors, officers or
stockholders, provided that, notwithstanding the
foregoing, if this Agreement has been terminated, the
provisions of Sections 6.17, 7.13 and 10.2; the last
sentence of Section 8.8; and Article 11, in its
entirety, shall survive such termination and shall
continue to be of binding effect.
(b) In the event of the termination of this Agreement by
(A) the Company pursuant to Section 10.1(d)(ii), or
(B) the Company or Parent pursuant to Section
10.1(b)(iii) due to the failure of the Company's
stockholders to approve and adopt this Agreement, or
(C) Parent pursuant to Section 10.1(c)(ii) and in the
case of (B) or (C) above there exists an Acquisition
Proposal for the Company, then the Company shall pay
Parent $10,960,867. Any payment required to be paid
pursuant to Section 10.2(b)(A) shall be made prior
to, and shall be a pre-condition to the effectiveness
of the termination of this Agreement pursuant to such
Section. Any payment required to be paid pursuant to
Section 10.2(b)(B) or Section 10.2(b)(C) shall be
made to Parent not later than ten (10) days after the
entering of a definitive agreement with respect to an
Acquisition Proposal.
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ARTICLE XI
GENERAL PROVISIONS
11.1. Expenses. Whether or not the Merger is consummated, all
costs and expenses, incurred in connection with this Agreement and the Merger
and the other transactions contemplated by this Agreement shall be paid by the
party incurring such expense, except that expenses incurred in connection with
the filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration Statement and the filing fee
under the HSR Act shall be shared equally by Parent and the Company.
11.2. Nonsurvival. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations, warranties, covenants and other agreements, shall survive
the Effective Time, except for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in whole or in part
after the Effective Time and this Article XI. Nothing in this Section 11.2 shall
relieve any party for any breach of any representation, warranty, covenant or
other agreement in this Agreement occurring prior to termination.
11.3. Modification or Amendment. This Agreement may be amended
by an instrument in writing executed and delivered on behalf of each of the
parties hereto, at any time prior to the Effective Time, subject to the
provisions of the DGCL; provided, however, that after approval of this Agreement
by the stockholders of the Company, no amendment shall be made which by Law
requires further approval by such stockholders without such further approval.
11.4. Waiver. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived, at any time prior to the Effective Time, by such party in whole
or in part to the extent permitted by Law. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in writing
signed on behalf of such party, and shall not be inferred by the failure of any
such party to assert any of its rights hereunder. Waiver of any provision of
this Agreement or of any breach hereof shall be a waiver of only said specific
provision or breach and shall not be deemed a waiver of any other provision or
any future breach hereof.
11.5. Notices. All notices, documents, or other communications
to be given hereunder shall be in writing and shall be deemed validly given if
delivered by messenger, facsimile transmission (with a confirming copy sent by
overnight courier), or express overnight delivery, or sent by certified mail,
return receipt requested, as follows:
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If to the Company, to
Randolph K. Rolf
Chairman of the Board, President
and Chief Executive Officer
Unitog Company
1300 Washington Street
Kansas City, Missouri 64105
Telephone: (816) 474-7000
Telecopier: (816) 474-0699
with a copy to:
Thomas W. Van Dyke, Esq.
Bryan Cave LLP
7500 College Boulevard, Suite 1100
Overland Park, Kansas 66210
Telephone: (913) 338-7700
Telecopier: (913) 338-7777
If to Parent or Merger Sub, to
Robert J. Kohlhepp
Chief Executive Officer
Cintas Corporation
6800 Cintas Blvd.
Mason, Ohio 45040
Telephone: (513) 573-4001
Telecopier: (513) 573-4030
with a copy to:
Robert E. Coletti, Esq.
Keating, Muething & Klekamp, P.L.L.
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Telephone: (513) 579-6560
Telecopier: (513) 579-6956
or such other Persons or addresses as may be designated in writing by the party
to receive such notice. Any notice delivered by messenger shall be deemed
received when such delivery is tendered; notices sent by facsimile transmission
shall be deemed received upon faxed confirmation of receipt; notices mailed in
the manner provided above, shall be deemed received on the third day after such
are postmarked; and notices delivered by other methods shall be deemed received
when actually received by the addressee or its authorized agent.
11.6. Publishing of Financial Results. In the event the
Closing occurs after May 1, 1999 and on or before June 1, 1999, Parent agrees to
publish, within the meaning of Section 2.01.01 of the SEC's Codification of
Financial Reporting Policies, results covering at least 30 days of combined
operations of Parent and the Company, within ten (10) business days of Parent's
public disclosure of results for its fiscal year end of May 31, 1999. In the
event the Closing occurs after June 1, 1999, Parent agrees to publish such 30
days' combined operating results covering the first full calendar month after
Closing as soon as possible and in no event later than the 20th day after the
conclusion of the first such full calendar month.
11.7. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the Laws of the State of Delaware,
without giving effect to the principles of the conflicts of law thereof.
11.8. Entire Agreement. This Agreement, including the
Additional Agreements, constitute the entire agreement and understanding of the
parties with respect to the Transactions and supersedes any and all prior
agreements and understandings relating to the subject matter hereof.
43
<PAGE> 44
11.9. Construction. The section and article headings contained
in this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. The preamble hereof, the
recitals hereto, and all exhibits and schedules attached hereto are hereby
incorporated herein by reference and made a part hereof.
11.10. Binding Effect. This Agreement shall be binding upon
and inure solely to the benefit of the parties, and their respective successors
and assigns, to the extent allowed hereby. Nothing in this Agreement, express or
implied, other than the right to receive the Merger Consideration payable
pursuant to Article V hereof is intended to or shall confer upon any other
Person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement; provided, however, that the provisions of Sections
8.10, 8.11 and 8.18 shall inure to the benefit of and be enforceable by the
indemnified parties or the employees and directors of the Company, respectively.
11.11. Assignment. None of the parties hereto may assign any
rights or delegate any obligations provided for in this Agreement without the
prior written consent of all the other parties. Any assignment in violation of
the preceding sentence shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
11.12. Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed to be an
original, but which together shall constitute one and the same instrument.
11.13. Obligations of Subsidiaries. Whenever this Agreement
requires Merger Sub to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause Merger Sub to take such
action and a guarantee of the performance thereof. Whenever this Agreement
requires a Subsidiary of the Company to take any action, such requirement shall
be deemed to include an undertaking on the part of the Company to cause such
Subsidiary to take such action.
11.14. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable or equitable provision
shall be substituted therefor in order to carry out, so far as may be valid or
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
44
<PAGE> 45
UNITOG COMPANY
By: /s/ Randolph K. Rolf
------------------------------------------
Name: Randolph K. Rolf
Title: Chairman, President and Chief
Executive Officer
CINTAS CORPORATION
By: /s/ Robert J. Kohlhepp
------------------------------------------
Name: Robert J. Kohlhepp
Title: Chief Executive Officer
CINTAS IMAGE ACQUISITION COMPANY
By: /s/ Robert J. Kohlhepp
------------------------------------------
Name: Robert J. Kohlhepp
Title: Chief Executive Officer
45
<PAGE> 1
Exhibit 99.1
PRESS RELEASE
-------------
Unitog Sells to Cintas Corp.
Kansas City, Missouri, January 11, 1999--Unitog Company
(NASDAQ:UTOG) today announced that it has entered into a definitive agreement
with Cintas Corporation to be acquired in a stock merger in which each share of
Unitog would be exchanged tax-free for $38.00 of Cintas stock, subject to
adjustment as described below. The merger has been approved by the Boards of
Directors of both companies and is expected to be completed by April 30, 1999.
The agreement provides for Unitog Common Stock to be exchanged
for Cintas common stock using a conversion formula based on the average market
price of Cintas common stock for a period of 20 trading days prior to closing.
Under the formula, if the average market price of Cintas during the 20-day
trading period is between $52.00 and $66.434 per share, each share of Unitog
stock would be exchanged for $38.00 of Cintas stock. If the market price of
Cintas stock is greater than $66.43 during the 20-day measurement period, then
the value of each share of Unitog stock increases, based upon a graduated scale.
The agreement calls for environmental testing of nine Unitog properties and
certain environmental conditions could impact the price. (An illustration of the
price formula assuming no environmental adjustments is attached.)
Cintas stock closed Friday, January 8, 1999, at $72.00 per
share. Using the formula, if Cintas stock averaged $72.00 during the 20-day
measurement period and there were no environmental adjustments, then Unitog
stock would be exchanged at $39.53 per share.
"This is a people-intensive business, and Cintas has some of
the most professional people in the industry," said Randolph K. Rolf, Chairman,
President and Chief Executive Officer of Unitog Company. "This combination
merges the strengths of both of our companies. As Cintas continues to grow, they
will need more good people, and part of their attraction to us was our
associates."
The merger is subject to approval by regulatory authorities
and Unitog stockholders, registration of Cintas common stock with the Securities
and Exchange Commission and other customary closing conditions.
The merger will be described in detail in proxy materials,
which are expected to be mailed to Unitog stockholders in February or March of
1999.
On Friday, January 8, 1999, the last sale price of Unitog
stock of NASDAQ was $29.75 per share.
Unitog Company is a leading provider of high quality uniform
rental services to a variety of industries and sells custom-designed uniforms
primarily to national companies in connection with their corporate image
programs. The Company manufactures substantially all of the uniforms it rents or
sells.
FORWARD-LOOKING STATEMENTS: The Private Securities Litigation Reform Act of 1995
provides a safe harbor for certain forward-looking statements. This press
release contains forward-looking statements that reflect the Company's current
views with respect to future events involving the proposed merger with Cintas
Corporation. These forward-looking statements are subject to certain risks and
uncertainties
<PAGE> 1
that could cause actual results to differ materially from historical results or
those anticipated. The words, "should," "expect," "anticipate," "intend,"
"estimate," "believe," and other expressions that indicate future events and
trends identify forward-looking statements. Actual future results and trends may
differ materially from those anticipated depending on a variety of factors,
including, but not limited to, the timing of required regulatory approvals,
satisfaction of the various conditions to closing, the trading price of Cintas
stock and the results of the environmental testing.
ILLUSTRATION OF CALCULATION OF CONVERSION NUMBER
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
MERGER CONSIDERATION PER
UNITOG SHARE BASED ON CINTAS
IF CINTAS SHARE PRICE (AS THEN CINTAS SHARE PRICE THE CONVERSION NUMBER SHARE PRICE IN COLUMN (1)
DETERMINED BY 20 DAY AVERAGE) SHALL BE DEEMED TO BE: SHALL BE EQUAL TO: WOULD BE:
IS:
========================================================================================================================
<S> <C> <C> <C>
$50.00 $52.000 .7308 $36.54
- ------------------------------------------------------------------------------------------------------------------------
$52.00 $52.000 .7308 $38.00
- ------------------------------- ---------------------------- ---------------------------- ------------------------------
$60.00 $60.000 .6333 $38.00
- ------------------------------------------------------------------------------------------------------------------------
$66.43 $66.430 .5720 $38.00
- ------------------------------------------------------------------------------------------------------------------------
$70.00 $68.215 .5571 $39.00
- ------------------------------------------------------------------------------------------------------------------------
$75.00 $70.715 .5374 $40.30
- ------------------------------------------------------------------------------------------------------------------------
$80.00 $73.215 .5190 $41.52
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
