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
_________________________
AUGUST 24, 1997
Date of Report (date of earliest event reported)
WAUSAU PAPER MILLS COMPANY
(Exact name of registrant as specified in its charter)
WISCONSIN 0-7475 39-0690900
State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation or Number)
organization)
ONE CLARK'S ISLAND
P.O. BOX 1408
WAUSAU, WI 54402-1408
(Address of principal executive offices, including Zip Code)
(715) 845-5266
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 August 24, 1997, Mosinee Paper Corporation ("Mosinee"), Wausau
Paper Mills Company ("Wausau") and a newly formed wholly owned subsidiary
of Wausau ("Sub") entered into an Agreement and Plan of Merger, dated as
of August 24, 1997 (the "Merger Agreement"), providing, subject to the
terms and conditions thereof, for the merger of Sub into Mosinee (the
"Merger"). In the Merger, each outstanding share of common stock of
Mosinee will be converted into the right to receive 1.4 shares of common
stock of Wausau, with cash paid in lieu of fractional shares. In
connection with the Merger, Mosinee also entered into an amendment to the
Rights Agreement (as defined in the Merger Agreement) (the "Amendment").
Copies of the Merger Agreement and the Amendment are attached hereto as
Exhibit 99.1 and 99.2, respectively, and are incorporated herein by
reference. The foregoing summaries are qualified in their entirety by
reference thereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) EXHIBITS.
99.1 Agreement and Plan of Merger, dated as of August 24, 1997,
by and among Wausau, Merger Sub and Mosinee.
99.2 Amendment No. 1 to Rights Agreement between Mosinee and
Norwest Bank Minnesota, N.A., as Rights Agent.
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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.
WAUSAU PAPER MILLS COMPANY
Date: August 27, 1997 By: STEVEN A. SCHMIDT
Steven A. Schmidt
Vice President Finance,
Secretary and Treasurer
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<PAGE>
EXHIBIT INDEX
TO
FORM 8-K
OF
WAUSAU PAPER MILLS COMPANY
DATED AUGUST 24, 1997
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT DESCRIPTION
99.1 Agreement and Plan of Merger, dated as of August 24, 1997
99.2 Amendment No. 1 to Mosinee Rights Agreement
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER, dated as of August 24, 1997 (this
"Agreement"), among Wausau Paper Mills Company, a Wisconsin corporation
("Parent"), WPM Holdings, Inc., a Wisconsin corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Mosinee Paper Corporation, a
Wisconsin corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the
Company (the "Merger") upon the terms and subject to the conditions of this
Agreement and in accordance with the Wisconsin Business Corporation Law (the
"WBCL");
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization under the provisions of
section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the WBCL, at
the Effective Time (as defined below), Merger Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence
of Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.2. EFFECTIVE TIME. No later than two business days
after the satisfaction or, if permissible, waiver of the conditions set forth
in Article VII, the parties hereto shall cause the Merger to be consummated by
filing articles of merger (together with a plan of merger, which shall consist
of this Agreement) (the "Articles of Merger") with the Department of Financial
Institutions of the State of Wisconsin, in such form as required by, and
executed in accordance with the relevant provisions of, the WBCL (the date and
time of such filing, or if another date and time is specified in such filing,
such specified date and time, being the "Effective Time").
SECTION 1.3. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
WBCL.
SECTION 1.4. ARTICLES OF INCORPORATION; BY-LAWS. At the Effective
Time, the Articles of Incorporation and the By-laws of the Company, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and the By-laws of the
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<PAGE>
Surviving Corporation, respectively, until thereafter changed or amended as
provided therein or in accordance with applicable law.
SECTION 1.5. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall become at the Effective Time the
directors of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and By-laws of the Surviving Corporation. The
officers of the Company immediately prior to the Effective Time shall at the
Effective Time be the officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each share of common stock, no par value, of the Company
("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be canceled
pursuant to Section 2.1(b) and other than shares of Company Common Stock with
respect to which dissenters' rights, if any, under the WBCL are duly exercised
and not withdrawn ("Dissenting Shares")) shall be converted, subject to
Section 2.2(e), into a number of duly authorized, validly issued, fully paid,
nonassessable (subject to Section 180.0622(2)(b) of the WBCL) shares of common
stock, no par value ("Parent Common Stock"), of Parent equal to the Exchange
Ratio (as defined below). All such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent the right to receive a certificate
representing the shares of Parent Common Stock into which such Company Common
Stock was converted in the Merger. Certificates previously representing
shares of Company Common Stock shall be exchanged for certificates
representing whole shares of Parent Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 2.2, without interest. No fractional share of Parent
Common Stock shall be issued, and, in lieu thereof, a cash payment shall be
made pursuant to Section 2.2(e) hereof. For purposes of this Agreement, the
term "Exchange Ratio" shall mean 1.4.
(b) Each share of Company Common Stock held in the treasury of the
Company and each share of Company Common Stock owned by Parent or any direct
or indirect wholly owned subsidiary of Parent or of the Company immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) Each share of common stock, no par value, of Merger Sub
("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be
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converted into and exchanged for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation, subject to
Section 180.0622(2)(b) of the WBCL.
<PAGE> SECTION 2.2. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
As of the Effective Time, Parent shall deposit, or shall cause to be deposited,
with a bank or trust company mutually acceptable to the Company and Parent
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock (other than Dissenting Shares, if any), for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of Parent Common Stock (such certificates for shares
of Parent Common Stock, together with cash in lieu of fractional shares and
any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Parent Common Stock
contemplated to be issued pursuant to Section 2.1 out of the Exchange Fund.
Except as contemplated by Section 2.2(e) hereof, the Exchange Fund shall not
be used for any other purpose.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (other than Dissenting
Shares) (the "Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in customary form) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right
to receive in respect of the shares of Company Common Stock formerly
represented by such Certificate (after taking into account all shares of
Company Common Stock then held by such holder), cash in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and any dividends or other distributions to which such holder
is entitled pursuant to Section 2.2(c), and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any cash
in lieu of fractional shares or on any unpaid dividends and distributions
payable to holders of Certificates. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a transferee if the Certificate
representing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing shares of
Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c).
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(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF PARENT
COMMON STOCK. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after
<PAGE>
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.2(e), until the holder of such Certificate
shall surrender such Certificate. Subject to the effect of escheat, tax or
other applicable Laws (as defined below), following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect to
a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Common Stock and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Parent Common Stock.
(d) NO FURTHER RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon conversion of the shares of Company Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.2(c) or (e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with
respect to Parent Common Stock shall be payable on or with respect to any
fractional share and such fractional share interests will not entitle the
owner thereof to any rights of a shareholder of Parent. In lieu thereof any
holder of shares of Company Common Stock otherwise entitled hereunder to
receive fractional shares of Parent Common Stock but for this Section 2.2(e)
will be entitled hereunder to receive instead a cash payment in lieu thereof,
without interest, in an amount equal to the fraction of a share of Parent
Common Stock to which such holder would otherwise have been entitled times the
average closing price of a share of Parent Common Stock on the Nasdaq National
Market (the "NASDAQ") over the 10 trading days ending two trading days prior
to the Effective Time.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for
one year after the Effective Time shall be delivered to Parent, upon demand,
and any holders of Company Common Stock who have not theretofore complied with
this Article II shall thereafter look only to Parent for the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which they are entitled pursuant to Section 2.2(e) and any dividends or other
distributions with respect to Parent Common Stock to which they are entitled
pursuant to Section 2.2(c), in each case, without any interest thereon.
(g) NO LIABILITY. Neither Parent nor the Company shall be liable
to any holder of shares of Company Common Stock for any such shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
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(h) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
<PAGE>
required by Parent, the posting by such person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.2(c), in each case, without any interest thereon.
(i) WITHHOLDING. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock such amounts as Parent or
the Exchange Agent are required to deduct and withhold under the Code, or any
provision of state, local or foreign tax law, with respect to the making of
such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of Company Common Stock in
respect of whom such deduction and withholding was made by Parent or the
Exchange Agent.
(j) DISSENTERS' RIGHTS. Holders of Company Common Stock shall be
entitled to dissenters' rights only to the extent required by the applicable
provisions of the WBCL. The Company shall give Parent prompt notice of any
demands for appraisal of shares received by the Company.
(k) SCRIP. In the event that at any time after the Effective Time
any holder of scrip in respect of shares of Company Common Stock shall duly
present such scrip to the Surviving Corporation, Parent and the Surviving
Corporation will cooperate to assure that each such holder receives upon
surrender thereof a number of shares of Parent Common Stock equal to the
product of the Exchange Ratio and the number of whole shares of Company Common
Stock which may be issuable in respect of such scrip (with payment in
accordance with Section 2.2(e) in lieu of any fractional interest therein).
SECTION 2.3. STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders
of certificates representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock except as otherwise provided
herein or by Law. On or after the Effective Time, any Certificates presented
to the Exchange Agent or Parent for any reason shall be converted into the
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant to Section
2.2(e) and any dividends or other distributions to which the holders thereof
are entitled pursuant to Section 2.2(c).
SECTION 2.4. STOCK OPTIONS AND OTHER EQUITY AWARDS. (a) The
Company shall use its reasonable best efforts to assure that at the Effective
Time, each then outstanding option to purchase Company Common Stock (a
"Company Option") under the employee and director stock option plans of the
Company (the "Company Stock Option Plans"),
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whether vested or unvested, shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such
Company Option, the same number of shares of Parent Common Stock as the holder
<PAGE>
of such Company Option would have been entitled to receive pursuant to the
Merger had such holder exercised such Company Option in full immediately prior
to the Effective Time (rounded down to the nearest whole number) (a
"Substitute Option"), at an exercise price per share (rounded up to the
nearest whole cent) equal to (y) the aggregate exercise price for the Company
Common Stock otherwise purchasable pursuant to such Company Option divided by
(z) the number of whole shares of Parent Common Stock deemed purchasable
pursuant to such Substitute Option in accordance with the foregoing.
(b) The Company shall use its reasonable best efforts to assure
that at the Effective Time, each then outstanding stock appreciation right
with respect to Company Common Stock (a "Company SAR") under the employee and
director stock appreciation right and other incentive plans of the Company
(the "Company SAR Plans" and, together with the Company Stock Option Plans,
the "Company Stock Plans"), whether vested or unvested, shall be assumed by
and become an obligation of Parent, and shall be deemed to constitute a stock
appreciation right, on the same terms and conditions as were applicable under
such Company SAR, with respect to the same number of shares of Parent Common
Stock as the holder of such Company SAR would have been entitled to receive
pursuant to the Merger had such holder been the owner, as of the Effective
Time, of a number of shares of Company Common Stock equal to the number of
such shares covered by such Company SAR (a "Substitute SAR"), with an exercise
price per share equal to (y) the aggregate exercise price for the Company
Common Stock otherwise covered by such Company SAR divided by (z) the number
of whole shares of Parent Common Stock deemed to be covered by such Substitute
SAR in accordance with the foregoing.
(c) The Company shall use its reasonable best efforts to make all
necessary arrangements with respect to the Company Stock Plans to permit the
assumption of the unexercised Company Options and Company SARs by Parent
pursuant to this Section and Parent shall use its reasonable best efforts,
immediately following the Effective Time, to register under the Securities Act
on Form S-8 or other appropriate form (and use its reasonable best efforts to
maintain the effectiveness thereof) shares of Parent Common Stock issuable
pursuant to all Substitute Options and Substitute SARs. Effective at the
Effective Time, Parent shall assume each Company Option and Company SAR in
accordance with the terms of the Company Stock Plan under which it was issued
and the stock option or stock appreciation right agreement by which it is
evidenced and all other obligations of the Company to issue Company Common
Stock.
(d) At the Effective Time, the number of Stock Equivalent Units
that is credited, as of the Effective Time, to each Deferred Stock Account
under the Mosinee Paper Corporation Deferred Compensation Plan for Directors
(the "Director Deferred Compensation Plan") (as those terms are defined in the
Director Deferred Compensation Plan) shall be adjusted to equal a number of
Stock Equivalent Units equal to the same number of shares of Parent Common
Stock as a holder of a number of shares of Company Common Stock equal to the
number of such Stock Equivalent Units would have been entitled to receive
pursuant to the Merger ("Substitute Stock Equivalent Units"), and from and
after the Effective Time, all obligations of the Company under the Director
Deferred Compensation Plan shall be assumed by and become an obligation of
Parent, and all such
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Stock Equivalent Units, as so adjusted, shall be deemed to be based upon
shares of Parent Common Stock.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the
Company to Parent prior to the execution of this Agreement and making specific
reference to the Section hereof as to which exception is made (the "Company
Disclosure Schedule"), the Company hereby represents and warrants to Parent as
follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each
of the Company and each subsidiary of the Company (collectively, the "Company
Subsidiaries") has been duly organized, is validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined below).
Each of the Company and the Company Subsidiaries is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing or good standing necessary,
except for such failures to be so qualified or licensed and in good standing
that would not, individually or in the aggregate, have a Company Material
Adverse Effect. For purposes of this Agreement, "Company Material Adverse
Effect" means any change or effect that is, or is reasonably likely to be,
materially adverse to the business, properties, assets or financial condition
of the Company and the Company Subsidiaries taken as a whole.
SECTION 3.2. ARTICLES OF INCORPORATION AND BY-LAWS. The copies of
the Company's Restated Articles of Incorporation (the "Company's Articles")
and Restated By-laws (the "Company's By-laws"), in each case, as amended,
delivered to Parent are complete and correct copies thereof. The Company's
Articles and the Company's By-laws are in full force and effect. The Company
is not in violation of any of the provisions of the Company's Articles or the
Company's By-laws.
SECTION 3.3. CAPITALIZATION. The authorized capital stock of the
Company consists of (a) 30 million shares of Company Common Stock and (b) 1
million shares of preferred stock, par value $1.00 per share (the "Company
Preferred Stock"). As of the date hereof, 15,201,715 shares of Company Common
Stock were issued and outstanding, all of which were validly issued and fully
paid, nonassessable (subject to Section 180.0622(2)(b) of the WBCL), and free
of preemptive rights. As of the date hereof, (i) 442,900 shares of Company
Common Stock were reserved for issuance upon exercise of Company Options
granted pursuant to the Company Stock Plans and upon exercise of future grants
of stock options, (ii) 330,000 shares of the Company Preferred Stock were
designated Series A Junior Participating Preferred Stock and reserved for
issuance upon exercise of the Preferred Share Purchase Rights (as defined in
the Rights Agreement (the
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"Rights Agreement"), dated as of July 1, 1996, by and between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agent")), and (iii)
no shares of Company Preferred Stock were issued and outstanding or held in
the treasury of the Company. Except for the foregoing matters in this Section
3.3, the Company Options granted pursuant to the Company Stock Plans, shares
<PAGE>
issuable upon exercise of Preferred Share Purchase Rights and agreements or
arrangements described in Section 3.3 of the Company Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which the Company or any Company Subsidiary is
a party or by which the Company or any Company Subsidiary is bound relating to
the issued or unissued capital stock of the Company or any Company Subsidiary,
or securities convertible into or exchangeable or exercisable for such capital
stock or obligating the Company or any Company Subsidiary to issue or sell any
shares of capital stock, or securities convertible into or exchangeable or
exercisable for such capital stock of, or other equity interests in, the
Company or any Company Subsidiary. Since the date hereof, the Company has not
issued any shares of its capital stock, or securities convertible into or
exchangeable or exercisable for such capital stock, other than those shares of
capital stock reserved for issuance as set forth in this Section 3.3 and
except as set forth in Section 3.3 of the Company Disclosure Schedule or as
permitted pursuant to Section 5.1. All shares of Company Common Stock subject
to issuance as aforesaid, upon issuance prior to the Effective Time on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, nonassessable
(subject to Section 180.0622(2)(b) of the WBCL), and free of preemptive
rights. Except as set forth in Section 3.3 of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company or
any Company Subsidiary (i) restricting the transfer of, (ii) affecting the
voting rights of, (iii) requiring the repurchase, redemption or disposition
of, (iv) requiring the registration for sale of, or (v) granting any
preemptive or antidilutive right with respect to, any shares of Company Common
Stock or any capital stock of any Company Subsidiary. Except as set forth in
Section 3.3 of the Company Disclosure Schedule, each outstanding share of
capital stock of each Company Subsidiary is duly authorized, validly issued,
fully paid, nonassessable (subject to Section 180.0622(2)(b) of the WBCL), and
free of preemptive rights, and, except for preferred stock of the Company
Subsidiaries, is owned by the Company or another Company Subsidiary, free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Company's or such other Company
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except where failure to own such shares free and clear would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated herein to be consummated by the Company. The
execution and delivery of this Agreement by the Company and the consummation
by the Company of such transactions have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part
of the Company and no other shareholder votes are necessary to authorize this
Agreement or to consummate such transactions (other than, with respect to the
Merger, the approval of this Agreement by the requisite vote of the holders of
shares of Company Common Stock). The Board of Directors of the Company has
approved the Merger, approved and adopted this Agreement and directed that
this Agreement be submitted to the Company's shareholders for approval at a
meeting of such shareholders. This Agreement
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has been duly authorized and validly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
<PAGE>
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) (assuming the
shareholder approval set forth in Section 3.4 is obtained) conflict with or
violate any provision of the Company's Articles or the Company's By-laws or
any equivalent organizational documents of any Company Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 3.5(b) have been obtained and all filings and obligations
described in Section 3.5(b) have been made, conflict with or violate any
foreign or domestic law, statute, code, ordinance, rule, regulation, order,
judgment, writ, stipulation, award, injunction or decree ("Law") applicable to
the Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (iii) except as set
forth in Section 3.5 of the Company Disclosure Schedule, result in any breach
of, any loss of any benefit under or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any right of termination or amendment of, acceleration or cancellation
of any obligation or benefit under, or result in the creation of a lien or
other encumbrance on any property or asset of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, Company Permit (as defined in Section 3.6) or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other occurrences which
would neither, individually or in the aggregate, (A) have a Company Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by the Company.
(b) Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any domestic or foreign governmental, administrative, judicial or
regulatory authority ("Governmental Entity"), except (i) for applicable
requirements of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), state securities or "blue sky"
laws ("Blue Sky Laws"), the NASDAQ, state takeover laws, premerger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
filing and recordation of the Articles of Merger as required by the WBCL and
as otherwise set forth in Section 3.5 of the Company Disclosure Schedule and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not (A) prevent or
materially delay consummation of the Merger, or (B) individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 3.6. PERMITS; COMPLIANCE. Each of the Company and the
Company Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances and orders of any Governmental Entity
necessary for the Company or any Company Subsidiary to own, lease and operate
its properties or to carry on their respective businesses substantially in the
manner described in the Company SEC Filings (as defined herein) filed prior to
the date
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<PAGE>
hereof and as it is now being conducted (the "Company Permits"), and all such
Company Permits are valid, and in full force and effect, except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would neither, individually or in the aggregate, (a) have a Company
Material Adverse Effect nor (b) prevent or materially delay the performance of
this Agreement by the Company, and, no suspension or cancellation of any of
the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would neither, individually or in
the aggregate, (x) have a Company Material Adverse Effect nor (y) prevent or
materially delay the performance of this Agreement by the Company. Neither
the Company nor any Company Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or any Company Subsidiary
or by which any property, asset or operation of the Company or any Company
Subsidiary is bound or affected or (ii) any Company Permits, except for any
such conflicts, defaults or violations that would neither, individually or in
the aggregate, (A) have a Company Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by the Company.
SECTION 3.7. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company
has timely filed all registration statements, prospectuses, forms, reports and
documents and related exhibits required to be filed by it under the Securities
Act or the Exchange Act, as the case may be, since January 1, 1995
(collectively, the "Company SEC Filings"). The Company SEC Filings (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No Company Subsidiary is subject to the periodic
reporting requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company SEC Filings was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q under the Exchange
Act) and each presented fairly in all material respects the consolidated
financial position of the Company and the consolidated Company Subsidiaries as
of the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments). The books and
records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Company Subsidiaries as of
June 30, 1997 included in the Company's Form 10-Q for the period ended June
30, 1997, including the notes thereto, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except for
liabilities or obligations incurred in the ordinary course of business that
would neither, individually or in the aggregate, (i) have a Company Material
Adverse Effect nor (ii) prevent or materially delay the performance of this
Agreement by the Company.
<PAGE>
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SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30,
1997, except as contemplated by or as disclosed in this Agreement, as set
forth in Section 3.8 of the Company Disclosure Schedule or as disclosed in any
Company SEC Filing filed prior to the date hereof, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course and
in a manner consistent with past practice and, since such date, there has not
been (a) any Company Material Adverse Effect or an event or development (other
than in connection with the Merger) that would, individually or in the
aggregate, have a Company Material Adverse Effect, or (b) any action taken by
the Company or any of the Company Subsidiaries during the period from July 1,
1997 through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a
breach of Section 5.1.
SECTION 3.9. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) Neither
the Company nor any Company Subsidiary is subject to any dispute or
controversy under federal or state labor laws other than any such controversy
that would not be reasonably likely to have a Company Material Adverse Effect.
The Company has made available to Parent a true and complete copy as of the
date hereof of each material employee benefit plan, program, arrangement and
contract (including, without limitation, any "employee benefit plan", as
defined in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained or contributed to by the Company or
any Company Subsidiary, or with respect to which the Company or any Company
Subsidiary could incur material liability under section 4069, 4212(c) or 4204
of ERISA (the "Company Benefit Plans").
(b) With respect to each Company Benefit Plan which is subject to
Title IV of ERISA, (A) the accrued benefit obligations under such Company
Benefit Plan, calculated in accordance with FAS 87 based upon the actuarial
assumptions used in the most recent actuarial report prepared by such Company
Benefit Plan's actuary with respect to such Company Benefit Plan, did not, as
of its latest valuation date, exceed the then current value of the assets of
such Company Benefit Plan allocable to such accrued benefits, (B) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Company Benefit Plan for which the 30-day notice
requirement has not been waived, except where such reportable event would not
have a Company Material Adverse Effect, and (C) no condition exists which
would subject the Company or any Company Subsidiary to any fine under Section
4071 of ERISA, except where such condition would not have a Company Material
Adverse Effect. No Company Benefit Plan is a "multiemployer pension plan" (as
such term is defined in section 3(37) of ERISA).
(c) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or
set of circumstances in connection with which the Company or any Company
Subsidiary could be subject to any liability under the terms of such Company
Benefit Plans, ERISA, the Code or any other applicable Law which, individually
or in the aggregate, would have a Company Material Adverse Effect. Each of
the Company Benefit Plans has been operated and administered in all material
respects in accordance with applicable laws and administrative or governmental
rules and regulations, including, but not limited to, ERISA and the Code,
except where a violation of any such law, rule or regulation would not have a
Company Material Adverse Effect. Each of the Company Benefit Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter as to such qualification from the
IRS, and no event has occurred, either by reason of any action or failure
<PAGE>
-11-
to act, which would cause the loss of any such qualification, except where
such loss of qualification would not have a Company Material Adverse Effect.
Except as set forth in Section 3.9 of the Company Disclosure Schedule or in
Company SEC Filings filed prior to the date hereof, no Company Benefit Plan
provides material benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former employees
of the Company or any Company Subsidiary beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law,
(ii) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (iii) deferred
compensation benefits accrued as liabilities on the books of the Company or
any Company Subsidiary or (iv) benefits the full cost of which is borne by the
current or former employee (or his beneficiary). All contributions or other
amounts payable by the Company or any Company Subsidiary as of the Effective
Time with respect to each Company Benefit Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and Section 412
of the Code. Except as set forth in Section 3.9 of the Company Disclosure
Schedule or in any Company SEC Filing made prior to the date hereof, as of the
date hereof, no Company Benefit Plan nor any agreement between the Company or
any Company Subsidiary and any employee provides for the payment of any
additional compensation or benefits on account of termination of employment in
contemplation of or after, or otherwise in connection with, the transactions
contemplated by this Agreement.
SECTION 3.10. ACCOUNTING AND TAX MATTERS. Neither the Company
nor, to the knowledge of the Company, any of its affiliates has taken or
agreed to take any action that would prevent the Merger from qualifying for
"pooling of interests" accounting treatment under applicable U.S. accounting
rules, including, without limitation, GAAP and applicable SEC accounting
standards, or would prevent the Merger from constituting a transaction
qualifying as a reorganization under section 368(a) of the Code. The Company
is not aware of any agreement, plan or other circumstance that would prevent
the Merger from so qualifying under the accounting rules and section 368(a) of
the Code and, as of the date of this Agreement, the Company has no reason to
believe that the Merger will not qualify as a "pooling of interests" for
accounting purposes.
SECTION 3.11. LITIGATION. Except as disclosed in the Company SEC
Filings filed prior to the date hereof or in Section 3.11 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened in
writing against the Company or any Company Subsidiary by or before any
Governmental Entity that individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect. Except as disclosed in the
Company SEC Filings filed prior to the date hereof or in Section 3.11 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary is
subject to any outstanding order, writ, injunction or decree that,
individually or in the aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.12. TAXES. (a) Except for such matters as would not
have a Company Material Adverse Effect, (i) the Company and the Company
Subsidiaries have timely filed or will timely file all Tax Returns (as defined
below) with respect to Taxes (as defined below) for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of the Company and the Company Subsidiaries,
(ii) all Tax Returns filed, or to be filed, by the Company and the Company
<PAGE>
Subsidiaries are, or will be, complete and accurate in all material respects,
(iii)
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all Taxes that are shown due on a Tax Return or are otherwise due prior to the
Effective Time have been paid or will be paid (other than Taxes which (1) are
not yet delinquent or (2) are being contested in good faith and have not been
finally determined), (iv) as of the date hereof, no deficiency for any Tax has
been asserted or assessed by a taxing authority against the Company or any of
the Company Subsidiaries which deficiency has not been paid other than any
deficiency being contested in good faith, (v) the Company and the Company
Subsidiaries have provided adequate reserves (in accordance with GAAP) in
their financial statements for any Taxes that have not been paid, whether or
not shown as being due on any returns, and whether or not being contested, and
(vi) all material Taxes which the Company or any Company Subsidiary are
required by law to withhold or collect for payment have been duly withheld.
As used in this Agreement, "Taxes" shall mean any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other charges
in the nature of excise, withholding, ad valorem, stamp, transfer, value-added
or gains taxes; license, registration and documentation fees; and customers'
duties, tariffs and similar charges, and (ii) "Tax Return" shall mean any
return, report or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
(b) To the Company's knowledge, there are no material disputes
pending, or claims asserted in writing for, Taxes or assessments upon the
Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries been given or requested in writing to give any currently
effective waivers extending the statutory period of limitation applicable to
any federal or state income tax return for any period which disputes, claims,
assessments or waivers are reasonably likely to have a Company Material
Adverse Effect.
(c) There are no Tax liens upon any property or assets of the
Company or any of the Company Subsidiaries except liens for current Taxes not
yet due and except for liens which have not had and are not reasonably likely
to have a Company Material Adverse Effect.
SECTION 3.13. ENVIRONMENTAL MATTERS. Except as set forth in
Company SEC Filings filed prior to the date hereof, neither the Company nor
any Company Subsidiary is the subject of any governmental investigation, or
since January 1, 1995 has received any notice or claim, or has entered into
any negotiations or agreements with any other persons relating to any
noncompliance, liability or remedial action, under any environmental Laws
except for any of the foregoing that would not reasonably be expected
individually or in the aggregate to have a Company Material Adverse Effect.
Except as set forth in Company SEC Filings filed prior to the date hereof,
there are no pending, or, to the knowledge of the Company, threatened actions,
suits or proceedings against the Company, any Company Subsidiary or any of
<PAGE>
their respective properties, assets or operations asserting any such
noncompliance or liability, or seeking any remedial action, in connection with
any environmental Laws, except for any of the foregoing that would not
-13-
reasonably be expected individually or in the aggregate to have a Company
Material Adverse Effect.
SECTION 3.14. RIGHTS AGREEMENT. The Board of Directors of the
Company has approved an amendment to the Rights Agreement to provide that a
Distribution Date (as defined in the Rights Agreement) shall not occur or be
deemed to occur and no person shall be deemed to be an Acquiring Person (as
defined in the Rights Agreement) as a result of the execution, delivery or
performance of, or the consummation of any of the transactions contemplated
by, this Agreement. At the Effective Time, such amendment will be in full
force and effect.
SECTION 3.14. OPINION OF FINANCIAL ADVISOR. William Blair &
Company, L.L.C. ("Blair") has delivered to the Special Committee of the Board
of Directors of the Company and to the Board of Directors of the Company its
written opinion dated the date hereof, a copy of which opinion has been
delivered to Parent, that, as of such date, the Exchange Ratio is fair from a
financial point of view to the shareholders of the Company.
SECTION 3.15. BROKERS. No broker, finder or investment banker
(other than Blair and Goldman, Sachs & Co.) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company or any Company Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the Disclosure Schedule delivered by Parent
and Merger Sub to the Company prior to the execution of this Agreement and
making specific reference to the Section hereof as to which exception is made
(the "Parent Disclosure Schedule"), Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each
of Parent, Merger Sub and each other subsidiary of Parent (collectively, the
"Parent Subsidiaries") has been duly organized, is validly existing and in
good standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Parent Material Adverse Effect (as defined below). Each
of Parent, Merger Sub and the other Parent Subsidiaries is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing or good standing
necessary, except for such failures to be so qualified or licensed and in good
<PAGE>
standing that would not, individually or in the aggregate, have a Parent
Material Adverse Effect. For purposes
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of this Agreement, "Parent Material Adverse Effect" means any change or effect
that is, or is reasonably likely to be, materially adverse to the business,
properties, assets or financial condition of Parent and the Parent
Subsidiaries taken as a whole.
SECTION 4.2. ARTICLES OF INCORPORATION AND BY-LAWS. The copies of
Parent's and Merger Sub's Articles of Incorporation and By-laws, in each case
as amended, delivered to the Company are complete and correct copies thereof.
Such Articles of Incorporation and By-laws are in full force and effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Articles or By-laws.
SECTION 4.3. CAPITALIZATION. The authorized capital stock of
Parent consists of (a) 100 million shares of Parent Common Stock and (b)
500,000 shares of preferred stock, no par value (the "Parent Preferred
Stock"). As of the date hereof, (i) 36,514,972 shares of Parent Common Stock
were issued and outstanding, all of which were validly issued and fully paid,
nonassessable (subject to Section 180.0622(2)(b) of the WBCL), and free of
preemptive rights, (ii) 463,586 shares of Parent Common Stock were reserved
for issuance upon exercise of options under Parent's employee and director
stock option plans ("Parent Options") and upon exercise of future grants of
stock options under such plans, and (iii) no shares of Parent Preferred Stock
were issued or outstanding. Except for the foregoing and except as set forth
in Section 4.3 of the Parent Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Parent or any Parent Subsidiary is a party or by which
Parent or any Parent Subsidiary is bound relating to the issued or unissued
capital stock of Parent or any Parent Subsidiary, or securities convertible
into or exchangeable or exercisable for such capital stock, or obligating
Parent or any Parent Subsidiary to issue or sell any shares of capital stock,
or securities convertible into or exchangeable or exercisable for such capital
stock, of, or other equity interests in, Parent or any Parent Subsidiary.
Since the date hereof, Parent has not issued any shares of its capital stock,
or securities convertible into or exchangeable or exercisable for such capital
stock, other than those shares of capital stock reserved for issuance as set
forth in this Section 4.3, as set forth in Section 4.3 of the Parent
Disclosure Schedule or as permitted pursuant to Section 5.2. All shares of
Parent Common Stock subject to issuance as aforesaid, upon issuance prior to
the Effective Time on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid, nonassessable (subject to Section 180.0622(2)(b) of the WBCL), and
free of preemptive rights. Except as set forth in this Section 4.3 or in
Section 4.3 of the Parent Disclosure Schedule, there are no outstanding
contractual obligations of Parent or any Parent Subsidiary (i) restricting the
transfer of, (ii) affecting the voting rights of, (iii) requiring the
repurchase, redemption or disposition of, (iv) requiring the registration for
sale of, or (v) granting any preemptive or antidilutive right with respect to,
any shares of Parent Common Stock or any capital stock of any Parent
Subsidiary. Except as set forth in Section 4.3 of the Parent Disclosure
Schedule, each outstanding share of capital stock of each Parent Subsidiary is
duly authorized, validly issued, fully paid, nonassessable (subject to Section
180.0622(2)(b) of the WBCL), and free of preemptive rights, is owned by Parent
or another Parent Subsidiary, and is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
<PAGE>
limitations on Parent's or such other Parent Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever, except where failure
to own such shares free and clear would not, individually or in the aggregate,
have a Parent Material Adverse Effect. The shares of Parent Common Stock to
be issued in connection with the Merger, when issued as contemplated herein,
will be duly authorized, validly issued, fully paid and
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nonassessable (subject to Section 180.0622(2)(b) of the WBCL), and will not
be issued in violation of any preemptive rights.
SECTION 4.4. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated herein to be consummated by Parent. Each of (i)
the execution and delivery of this Agreement by each of Parent and Merger Sub
and the consummation by Parent and Merger Sub of such transactions, (ii) and
the issuance (the "Share Issuance") of shares of Parent Common Stock pursuant
to the Merger or the Substitute Options, have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the
part of Parent and Merger Sub and no other shareholder votes are necessary to
authorize this Agreement or to consummate such transactions other than the
requisite vote of the holders of shares of Parent Common Stock. The Board of
Directors of Parent has directed that this Agreement and the transactions
contemplated hereby be submitted to Parent's shareholders for approval at a
meeting of such shareholders. This Agreement has been duly authorized and
validly executed and delivered by Parent and Merger Sub and constitutes a
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms.
SECTION 4.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, (i)
(assuming the shareholder approval set forth in Section 4.4 is obtained)
conflict with or violate any provision of the Articles of Incorporation or By-
laws of Parent or Merger Sub or any equivalent organizational documents of any
Parent Subsidiary, (ii) assuming that all consents, approvals, authorizations
and other actions described in Section 4.5(b) have been obtained and all
filings and obligations described in Section 4.5(b) have been made, conflict
with or violate any foreign or domestic Law applicable to Parent, Merger Sub
or any Parent Subsidiary or by which any property or asset of Parent, Merger
Sub or any Parent Subsidiary is bound or affected or (iii) except as set forth
in Section 4.5 of the Parent Disclosure Schedule, result in any breach of, any
loss of any benefit under or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any right of termination or amendment of, acceleration or cancellation
of any obligation or benefit under, or result in the creation of a lien or
other encumbrance on any property or asset of Parent, Merger Sub or any Parent
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, Parent Permit (as defined in Section 4.6), other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other occurrences which
would neither, individually or in the aggregate, (A) have a Parent Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by Parent and Merger Sub.
(b) Except as set forth in Section 4.5 of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger
<PAGE>
Sub do not, and the performance of this Agreement by Parent and Merger Sub
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any domestic or foreign Governmental Entity, except
(i) for applicable requirements of the Exchange Act, the Securities Act, Blue
Sky Laws, the NASDAQ, state takeover laws, premerger notification requirements
of the HSR Act, filing and recordation of the Articles of Merger as required
by the WBCL and as otherwise set forth in Section 4.5 of the Parent Disclosure
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Schedule and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
(A) prevent or materially delay consummation of the Merger, or (B)
individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.6. PERMITS; COMPLIANCE. Each of Parent and the Parent
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals, clearances and orders of any Governmental Entity necessary for
Parent or any Parent Subsidiary to own, lease and operate its properties or to
carry on their respective businesses substantially in the manner described in
the Parent SEC Filings (as defined herein) filed prior to the date hereof and
as it is now being conducted (the "Parent Permits"), and all such Parent
Permits are valid, and in full force and effect, except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits would
neither, individually or in the aggregate, (a) have a Parent Material Adverse
Effect nor (b) prevent or materially delay the performance of this Agreement
by Parent, and, no suspension or cancellation of any of the Parent Permits is
pending or, to the knowledge of Parent, threatened, except where the failure
to have, or the suspension or cancellation of, any of the Parent Permits would
neither, individually or in the aggregate, (x) have a Parent Material Adverse
Effect nor (y) prevent or materially delay the performance of this Agreement
by Parent. Neither Parent nor any Parent Subsidiary is in conflict with, or
in default or violation of, (i) any Law applicable to Parent or any Parent
Subsidiary or by which any property, asset or operation of Parent or any
Parent Subsidiary is bound or affected or (ii) any Parent Permits, except for
any such conflicts, defaults or violations that would neither, individually or
in the aggregate, (A) have a Parent Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by Parent.
SECTION 4.7. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has
timely filed all registration statements, prospectuses, forms, reports and
documents and related exhibits required to be filed by it under the Securities
Act or the Exchange Act, as the case may be, since January 1, 1995
(collectively, the "Parent SEC Filings"). The Parent SEC Filings (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No Parent Subsidiary is subject to the periodic
reporting requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Parent SEC Filings was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q under the Exchange
Act) and each presented fairly in all material respects the consolidated
<PAGE>
financial position of Parent and the consolidated Parent Subsidiaries as at
the respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments). The books and
records of Parent and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting
requirements.
-17-
(c) Except as and to the extent set forth on the consolidated
balance sheet of Parent and the consolidated Parent Subsidiaries as of May 31,
1997 included in Parent's Form 10-Q for the period ended May 31, 1997
including the notes thereto, neither Parent nor any Parent Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with GAAP, except for
liabilities or obligations incurred in the ordinary course of business that
would neither, individually or in the aggregate, (i) have a Parent Material
Adverse Effect nor (ii) prevent or materially delay the performance of this
other than Agreement by Parent.
SECTION 4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since May 31,
1997, except as contemplated by or as disclosed in this Agreement, as set
forth in Section 4.8 of the Parent Disclosure Schedule or as disclosed in any
Parent SEC Filing filed prior to the date hereof, Parent and the Parent
Subsidiaries have conducted their businesses only in the ordinary course and
in a manner consistent with past practice and, since such date, there has not
been (a) any Parent Material Adverse Effect or an event or development (other
than in connection with the Merger) that would, individually or in the
aggregate, have a Parent Material Adverse Effect, or (b) any action taken by
Parent or any of the Parent Subsidiaries during the period from June 1, 1997
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach
of Section 5.2.
SECTION 4.9. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) Neither
Parent nor any Parent Subsidiary is subject to any dispute or controversy
under federal or state labor laws other than any such controversy that would
not be reasonably likely to have a Company Material Adverse Effect. Parent
has made available to the Company a true and complete copy as of the date
hereof of each material employee benefit plan, program, arrangement and
contract (including, without limitation, any "employee benefit plan", as
defined in section 3(3) of ERISA, maintained or contributed to by Parent or
any Parent Subsidiary, or with respect to which Parent or any Parent
Subsidiary could incur material liability under section 4069, 4212(c) or 4204
of ERISA (the "Parent Benefit Plans").
(b) Except as set forth in Section 4.9 of the Parent Disclosure
Schedule, with respect to each Parent Benefit Plan which is subject to Title
IV of ERISA, (A) the accrued benefit obligations under such Parent Benefit
Plan, calculated in accordance with FAS 87 based upon the actuarial
assumptions used in the most recent actuarial report prepared by such Parent
Benefit Plan's actuary with respect to such Parent Benefit Plan, did not, as
of its latest valuation date, exceed the then current value of the assets of
such Parent Benefit Plan allocable to such accrued benefits, (B) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Parent Benefit Plan for which the 30-day notice
requirement has not been waived, except where such reportable event would not
<PAGE>
have a Parent Material Adverse Effect, and (C) no condition exists which would
subject Parent or any ERISA Affiliate to any fine under Section 4071 of ERISA,
except where such condition would not have a Parent Material Adverse Effect.
Except as set forth in Section 4.9 of the Parent Disclosure Schedule, no
Parent Benefit Plan is a "multiemployer pension plan" (as such term is defined
in section 3(37) of ERISA).
(c) With respect to the Parent Benefit Plans, no event has
occurred and, to the knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any Parent Subsidiary could
be subject to any liability under the terms
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of such Parent Benefit Plans, ERISA, the Code or any other applicable Law
which, individually or in the aggregate, would have a Parent Material Adverse
Effect. Each of the Parent Benefit Plans has been operated and administered
in all material respects in accordance with applicable laws and administrative
or governmental rules and regulations, including, but not limited to, ERISA
and the Code, except where a violation of any such law, rule or regulation
would not have a Parent Material Adverse Effect. Each of the Parent Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code has received a favorable determination letter as to such qualification
from the IRS, and no event has occurred, either by reason of any action or
failure to act, which would cause the loss of any such qualification, except
where such loss of qualification would not have a Parent Material Adverse
Effect. Except as set forth on Section 4.9 of the Parent Disclosure Schedule
or in Parent SEC Filings filed prior to the date hereof, no Parent Benefit
Plan provides material benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees of Parent or any Parent Subsidiary beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law,
(ii) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (iii) deferred
compensation benefits accrued as liabilities on the books of Parent or any
Parent Subsidiary, or (iv) benefits the full cost of which is borne by the
current or former employee (or his beneficiary). All contributions or other
amounts payable by Parent or any Parent Subsidiary as of the Effective Time
with respect to each Parent Benefit Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code. Except as set forth in Section 4.9 of the Parent Disclosure Schedule or
in any Parent SEC Filing filed prior to the date hereof, as of the date
hereof, no Parent Benefit Plan nor any agreement between Parent or any Parent
Subsidiary and any employee provides for the payment of any additional
compensation or benefits on account of termination of employment in
contemplation of or after, or otherwise in connection with, the transactions
contemplated by this Agreement.
SECTION 4.10. ACCOUNTING AND TAX MATTERS. Neither Parent nor, to
the knowledge of Parent, any of its affiliates has taken or agreed to take any
action that would prevent the Merger from qualifying for "pooling of
interests" accounting treatment under applicable U.S. accounting rules,
including, without limitation, GAAP and applicable SEC accounting standards,
or would prevent the Merger from constituting a transaction qualifying as a
reorganization under section 368(a) of the Code. Parent is not aware of any
agreement, plan or other circumstance that would prevent the Merger from so
qualifying under the accounting rules and section 368(a) of the Code and, as
of the date of this Agreement, Parent has no reason to believe that the Merger
will not qualify as a "pooling of interests" for accounting purposes.
<PAGE>
SECTION 4.11. LITIGATION. Except as disclosed in Parent SEC
Filings filed prior to the date hereof or in Section 4.11 of the Parent
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened in writing
against Parent or any Parent Subsidiary by or before any Governmental Entity
that individually or in the aggregate, is reasonably likely to have a Parent
Material Adverse Effect. Except as disclosed in the Parent SEC Filings filed
prior to the date hereof or in Section 4.11 of the Parent Disclosure Schedule,
neither Parent nor any Parent Subsidiary is subject to any outstanding order,
writ, injunction or decree that, individually or in the aggregate, has had or
is reasonably likely to have a Parent Material Adverse Effect.
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SECTION 4.12. TAXES. (a) Except for such matters as would not
have a Parent Material Adverse Effect, (i) Parent and the Parent Subsidiaries
have timely filed or will timely file all Tax Returns with respect to Taxes
for any period ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of Parent and the
Parent Subsidiaries, (ii) all Tax Returns filed, or to be filed, by Parent and
the Parent Subsidiaries are, or will be, complete and accurate in all material
respects, (iii) all Taxes that are shown due on a Tax Return or are otherwise
due prior to the Effective Time have been paid or will be paid (other than
Taxes which (1) are not yet delinquent or (2) are being contested in good
faith and have not been finally determined), (iv) as of the date hereof, no
deficiency for any Tax has been asserted or assessed by a taxing authority
against Parent or any of the Parent Subsidiaries which deficiency has not been
paid other than any deficiency being contested in good faith, (v) Parent and
the Parent Subsidiaries have provided adequate reserves (in accordance with
GAAP) in their financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns, and whether or not being
contested, and (vi) all material Taxes which Parent or any Parent Subsidiary
are required by law to withhold or collect for payment have been duly
withheld.
(b) To Parent's knowledge, there are no material disputes pending,
or claims asserted in writing for, Taxes or assessments upon Parent, or any of
the Parent Subsidiaries, nor has Parent or any of the Parent Subsidiaries been
given or requested in writing to give any currently effective waivers
extending the statutory period of limitation applicable to any federal or
state income tax return for any period which disputes, claims, assessments or
waivers are reasonably likely to have a Parent Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of Parent
or any of the Parent Subsidiaries except liens for current Taxes not yet due
and except for liens which have not had and are not reasonably likely to have
a Parent Material Adverse Effect.
SECTION 4.13. OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. (a)
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
(b) As of the Effective Time, all of the outstanding capital stock
of Merger Sub will be owned directly by Parent. As of the Effective Time,
there will be no options, warrants or other rights (including registration
rights), agreements, arrangements or commitments to which Merger Sub is a
party of any character relating to the issued or unissued capital stock of, or
other equity interests in, Merger Sub or obligating Merger Sub to grant, issue
<PAGE>
or sell any shares of the capital stock of, or other equity interests in,
Merger Sub, by sale, lease, license or otherwise. There are no obligations,
contingent or otherwise, of Merger Sub to repurchase, redeem or otherwise
acquire any shares of the capital stock of Merger Sub.
(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger Sub
has not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
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SECTION 4.14. ENVIRONMENTAL MATTERS. Except as set forth in
Parent SEC Filings filed prior to the date hereof, neither Parent nor any
Parent Subsidiary is the subject of any governmental investigation, or since
January 1, 1995 has received any notice or claim, or has entered into any
negotiations or agreements with any other persons relating to any
noncompliance, liability or remedial action, under any environmental Laws
except for any of the foregoing that would not reasonably be expected
individually or in the aggregate to have a Parent Material Adverse Effect.
Except as set forth in Parent SEC Filings filed prior to the date hereof,
there are no pending, or, to the knowledge of Parent, threatened actions,
suits or proceedings against Parent, any Parent Subsidiary or any of their
respective properties, assets or operations asserting any such noncompliance
or liability, or seeking any remedial action, in connection with any
environmental Laws, except for any of the foregoing that would not reasonably
be expected individually or in the aggregate to have a Parent Material Adverse
Effect.
SECTION 4.15. OPINION OF FINANCIAL ADVISOR. A. G. Edwards & Sons,
Inc. ("Edwards") has delivered to the Special Committee of the Board of
Directors of Parent and to the Board of Directors of Parent its written
opinion dated the date hereof that, as of such date, the Exchange Ratio is
fair from a financial point of view to the shareholders of Parent.
SECTION 4.16. BROKERS. No broker, finder or investment banker
(other than Edwards and Goldman, Sachs & Co.) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of Parent or any Parent Subsidiary.
ARTICLE V
COVENANTS
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
CLOSING. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as contemplated by any other provision of this Agreement, unless
Parent shall otherwise agree in writing, which agreement shall not be
unreasonably withheld or delayed, the business of the Company and the Company
Subsidiaries shall be conducted only in, and the Company and the Company
Subsidiaries shall not take any action except in, the ordinary course of
business. By way of amplification and not limitation, except as set forth in
<PAGE>
Section 5.1 of the Company Disclosure Schedule or as contemplated by any other
provision of this Agreement, the Company shall not (unless required by
applicable Laws or NASDAQ regulations) cause or permit the Company or any
Company Subsidiary, or any of their officers, directors, employees and agents,
to, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following without the prior written
consent of Parent, which consent shall not be unreasonably withheld or
delayed:
(a) amend or otherwise change its Articles of Incorporation or By-
laws or equivalent organizational documents;
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(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee, encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i)
any shares of capital stock of the Company or any Company Subsidiary of any
class, or securities convertible or exchangeable or exercisable for any shares
of such capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock or such convertible or exchangeable
or exercisable securities, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Company Subsidiary or
(ii) other than in the ordinary course of business and in a manner consistent
with past practice, any property or assets of the Company or any Company
Subsidiary, except (A) the issuance of Company Common Stock upon the exercise
of Company Options, the grant of options to purchase up to an additional
50,000 shares of Company Common Stock under the Company Stock Plans and the
issuance of shares upon exercise thereof, (B) pursuant to contracts or
agreements in force at the date of this Agreement, or (C) that the Company may
amend the Rights Agreement; provided that no such amendment shall result in
Parent or any of its affiliates or associates becoming an "Acquiring Person"
thereunder as a result of the transactions contemplated hereby or otherwise
exempt any third person from the definition of "Acquiring Person";
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock (other than regular quarterly cash dividends at a
rate not in excess of $.07 per share of Company Common Stock declared and paid
in accordance with past practice and dividends paid by Company Subsidiaries to
the Company or to other Company Subsidiaries in the ordinary course or
dividends in respect of preferred stock of a Company Subsidiary) or enter into
any agreement with respect to the voting of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock (other
than any preferred stock of a Company Subsidiary);
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any division
thereof (other than a wholly owned Company Subsidiary or any preferred stock
of a Company Subsidiary) or any assets, other than acquisitions of assets in
the ordinary course of business; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
person for borrowed money, except for (A) indebtedness for borrowed money
incurred in the ordinary course of business or in connection with transactions
otherwise permitted under this Section 5.1, (B) indebtedness incurred to
<PAGE>
refinance any existing indebtedness or (C) other indebtedness for borrowed
money under existing credit facilities; or (iii) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed, would
not be permitted under this Section 5.1(e);
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice or except as required by changes in GAAP;
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(g) take any action that would prevent or impede the Merger from
qualifying (A) for "pooling-of-interests" accounting treatment or (B) as a
reorganization within the meaning of Section 368 of the Code;
(h) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time prior
to the Effective Time, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable Law;
(i) amend any existing plan or program to provide, or adopt a new
plan or program providing, for the payment to any class of employees of any
additional compensation or benefits in connection with the transactions
contemplated by this Agreement; or
(j) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 5.2. CONDUCT OF BUSINESS BY PARENT PENDING THE CLOSING.
Parent agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 5.2 of the Parent Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless the Company
shall otherwise agree in writing, which agreement shall not be unreasonably
withheld or delayed, the businesses of Parent and the Parent Subsidiaries
shall be conducted only in, and Parent and the Parent Subsidiaries shall not
take any action except in, the ordinary course of business. By way of
amplification and not limitation, except as set forth in Section 5.2 of the
Parent Disclosure Schedule or as contemplated by any other provision of this
Agreement, Parent shall not (unless required by applicable Laws or NASDAQ
regulations) cause or permit Parent or any Parent Subsidiary, or any of their
officers, directors, employees and agents, to, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or agree to do,
any of the following, without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Articles of Incorporation or By-
laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee, encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i)
any shares of capital stock of Parent or any Parent Subsidiary of any class,
or securities convertible or exchangeable or exercisable for any shares of
such capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock or such convertible or exchangeable
or exercisable securities, or any other ownership interest (including, without
limitation, any phantom interest) of Parent or any Parent Subsidiary or (ii)
<PAGE>
other than in the ordinary course of business and in a manner consistent with
past practice, any property or assets of Parent or any Parent Subsidiary,
except (A) the issuance of Parent Common Stock upon the exercise of Parent
Options, the grant of options to purchase up to an additional 50,000 shares of
Parent Common Stock under the existing Parent stock option plans and the
issuance of shares upon exercise thereof, (B) pursuant to contracts or
agreements in force at the date of this Agreement and (C) that Parent may
adopt and amend a share purchase rights plan of the type created by the
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Rights Agreement, with such terms and provisions as Parent may determine
(except that any such plan and amendment shall exempt the transactions
contemplated by this Agreement);
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock (except (i) for regular quarterly cash dividends at a
rate not in excess of $.0625 per share of Parent Common Stock declared and
paid in accordance with past practice, and (ii) for dividends paid by any
Parent Subsidiary to Parent or a Parent Subsidiary in the ordinary course) or
enter into any agreement with respect to the voting of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any division
thereof (other than a wholly owned Parent Subsidiary) or any assets, other
than acquisitions of assets in the ordinary course of business; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person for borrowed money, except for (A) indebtedness
for borrowed money incurred in the ordinary course of business or in
connection with transactions otherwise permitted under this Section 5.2, (B)
indebtedness incurred to refinance any existing indebtedness or (C) other
indebtedness for borrowed money under existing credit facilities; or (iii)
enter into or amend any contract, agreement, commitment or arrangement that,
if fully performed, would not be permitted under this Section 5.2(e);
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice or except as required by changes in GAAP;
(g) take any action that would prevent or impede the Merger from
qualifying (A) for "pooling-of-interests" accounting treatment or (B) as a
reorganization within the meaning of Section 368 of the Code;
(h) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time prior
to the Effective Time, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable Law;
(i) amend any existing plan or program to provide, or adopt a new
plan or program providing, for the payment to any class of employees of any
<PAGE>
additional compensation or benefits in connection with the transactions
contemplated by this Agreement; or
(j) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
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SECTION 5.3. COOPERATION. The Company and Parent shall coordinate
and cooperate in connection with (i) the preparation of the Registration
Statement and the Proxy Statement (as such terms are defined below), (ii)
determining whether any action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts or
agreements of Parent, the Company or any of their respective subsidiaries, in
connection with the consummation of the Merger and (iii) seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Registration
Statement and the Proxy Statement and timely seeking to obtain any such
actions, consents, approvals or waivers.
SECTION 5.4. NOTICES OF CERTAIN EVENTS. Each of the Company and
Parent shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or
may be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger;
(iii) any actions, suits, claims, investigations or proceedings commenced or
threatened in writing against, relating to or involving or otherwise affecting
the Company, any Company Subsidiary, Parent or any Parent Subsidiary that
relate to the consummation of the Merger; (iv) the occurrence of a default or
event that, with notice or lapse of time or both, will become a material
default under any material contracts or agreements of Parent, the Company or
any of their respective subsidiaries; and (v) any change that is reasonably
likely to result in any Parent Material Adverse Effect or a Company Material
Adverse Effect or is likely to delay or impede the ability of either Parent or
the Company to consummate the transactions contemplated by this Agreement or
to fulfill its obligations set forth herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. REGISTRATION STATEMENT; PROXY STATEMENT. (a) As
promptly as practicable after the execution of this Agreement, (i) Parent and
the Company shall prepare and file with the SEC a joint proxy statement
relating to the meetings of the Company's shareholders and Parent's
shareholders to be held in connection with the Merger and the related
transactions (together with any amendments thereof or supplements thereto, the
"Proxy Statement") and (ii) Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with the registration under the Securities Act of
the shares of Parent Common Stock to be issued to the shareholders of the
Company pursuant to the Merger. Each of Parent and the Company will use its
reasonable best efforts to cause the Registration Statement to become
effective as promptly as practicable, and, prior to the effective date of the
Registration Statement, Parent shall take all or any action required under any
applicable federal or state securities laws in connection with the Share
<PAGE>
Issuance. Each of Parent and the Company shall furnish all information
concerning it and the holders of its capital stock as the other may reasonably
request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement.
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(b) As promptly as practicable after the Registration Statement
shall have become effective, each of Parent and the Company shall mail the
Proxy Statement to its respective shareholders. The Proxy Statement shall
include the recommendation of the Board of Directors of each of Parent and the
Company in favor of the Share Issuance and this Agreement, respectively,
unless otherwise required by the applicable fiduciary duties of the respective
directors of Parent and the Company, as determined by such directors in good
faith after consultation with legal counsel. No modification or withdrawal of
such recommendation shall relieve the Company of its obligation to submit this
Agreement to the Company's shareholders for their approval or Parent of its
obligation to submit the Share Issuance to Parent's shareholders for their
approval.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of the other party (which approval shall not be unreasonably withheld
or delayed). Parent and the Company each will advise the other, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(d) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the shareholders of Parent and the Company, (iii) the time of each of the
Shareholders' Meetings (as defined below), and (iv) 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 not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Parent or any Parent Subsidiary, or
their respective officers or directors, should be discovered by Parent which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Parent shall promptly inform the Company. All
documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form
and substance in all material aspects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
(e) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the shareholders of the Company and Parent, (iii) the time of each of the
Shareholders' Meetings, and (iv) 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 not
<PAGE>
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any Company Subsidiary, or their
respective officers or directors, should be discovered by the Company which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, the Company shall promptly inform Parent. All
documents that Parent is responsible for filing with the SEC in connection
with the transactions contemplated herein
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will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
SECTION 6.2. SHAREHOLDERS' MEETINGS. The Company shall call and
hold a meeting of its shareholders (the "Company Meeting") and Parent shall
call and hold a meeting of its shareholders (the "Parent Meeting" and,
together with the Company Meeting, the "Shareholders' Meetings") as promptly
as practicable for the purpose of voting upon the approval of this Agreement
and the Share Issuance, respectively. Parent may elect to combine such
meeting with its next Annual Meeting of Shareholders.
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which the Company or Parent or any of their respective
subsidiaries is a party or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules the parties are required to comply, from the date of this Agreement to
the Effective Time, the Company and Parent shall (and shall cause their
respective subsidiaries to): (a) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and
other representatives, collectively, "Representatives") access at reasonable
times upon prior notice to the officers, employees, agents, properties,
offices and other facilities of the other and its subsidiaries and to the
books and records thereof and (b) furnish promptly such information concerning
the business, properties, contracts, assets, liabilities, personnel and other
aspects of the other party and its subsidiaries as the other party or its
Representatives may reasonably request. No investigation conducted pursuant
to this Section 6.3 shall affect or be deemed to modify any representation or
warranty made in this Agreement. Subject to applicable law, the parties shall
maintain the confidentiality of such information.
SECTION 6.4. NO SOLICITATION OF TRANSACTIONS. (a) Each of the
Company and Parent will not, directly or indirectly, and will cause its
officers, directors, employees, subsidiaries, affiliates, agents or advisors
or other representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any Committee of its Board of
Directors) not to, directly or indirectly, take any action to (i) solicit,
initiate or encourage (including by way of furnishing nonpublic information),
or take any other action designed to facilitate, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to its shareholders) that constitutes, or
may reasonably be expected to lead to, any Competing Transaction (as defined
below), (ii) enter into or maintain or participate in any way in discussions
or negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or (iii) agree to or approve, recommend or
endorse any Competing Transaction, or authorize or permit any of the officers,
directors, employees or affiliates of such party or any of its subsidiaries,
or any investment banker, financial advisor, attorney, accountant or other
<PAGE>
representative retained by such party or any of such party's subsidiaries or
any Committee of the Board of Directors of such party, to take any such
action. The Company shall notify Parent and Parent shall notify the Company
promptly if any proposal or offer, or any inquiry or contact with any person
with respect thereto, regarding a Competing Transaction is made and each shall
provide the other with the identity of the party making such proposal and with
a summary of the terms thereof and each shall keep the other reasonably
apprised of the status thereof. Each of the Company and Parent agrees not to
release any third party
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from, or waive any provision of, any confidentiality or standstill agreement
to which it is a party.
(b) Notwithstanding anything to the contrary in Section 6.4(a),
the Board of Directors of each of the Company and Parent may cause Parent or
the Company to furnish, pursuant to a customary confidentiality agreement,
information to, and may participate in discussions or negotiations with, any
person that, unsolicited by it after the day of the signing of this Agreement,
has submitted a written proposal to it relating to a Competing Transaction
which was not solicited by it or which did not otherwise result from a breach
of Section 6.4(a), to the extent that the Board of the Company or Parent (as
applicable) determines in good faith after consultation with legal counsel
that it is necessary to do so to avoid a breach of its fiduciary duties to the
Company or its shareholders or Parent or its shareholders under applicable
Laws. Such furnishing of information and participation in discussions or
negotiations in accordance with this Section 6.4(b) shall not constitute a
breach of this Agreement by such party; provided that neither the Company nor
Parent shall have any right to terminate this Agreement or otherwise cease
performance of its obligations hereunder except pursuant to Article VIII
hereof.
(c) Subject to Section 6.1(b) and Section 6.2, nothing contained
in this Section 6.4 shall prohibit either party hereto from taking and
disclosing to its shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to its
shareholders if, in the good faith judgment of its Board of Directors, failure
so to disclose would result in a violation of applicable Law.
(d) A "Competing Transaction" with respect to the Company or
Parent, respectively, means any of the following involving the Company or
Parent, respectively, other than the Merger: any proposed (i) merger,
consolidation, share exchange, business combination or other similar
transaction involving such party, (ii) sale, lease, exchange, transfer or
other disposition directly or indirectly of 50% or more of the consolidated
assets of such party and its subsidiaries, taken as a whole, or (iii)
transaction in which any person would acquire beneficial ownership (as such
term is defined in Rule 13d-3 under the Exchange Act) of, or the right to
acquire beneficial ownership, of (whether itself, as a member of any "group"
(as such term is defined under the Exchange Act) or otherwise), 50% or more of
the outstanding voting capital stock of the Company or Parent, respectively.
SECTION 6.5. APPROPRIATE ACTION; CONSENTS; FILINGS. (a) The
Company and Parent shall use their reasonable best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this Agreement
as promptly as practicable, including, without limitation, obtaining
<PAGE>
shareholder approvals contemplated hereby, (ii) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Parent or the Company or any of
their subsidiaries, or to avoid any action or proceeding by any Governmental
Entity (including, without limitation, those in connection with the HSR Act),
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated herein, including,
without limitation, the Merger, and (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (x) the Securities Act and the Exchange Act, and
any other applicable federal or state securities Laws, (y) the HSR Act and (z)
any other applicable
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Law; provided that Parent and the Company shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing
and, if requested, to accept all reasonable additions, deletions or changes
suggested in connection therewith. Notwithstanding anything in this Agreement
to the contrary, neither Parent nor the Company shall be required to (and
neither shall without the consent of the other) propose, negotiate, commit to
or effect, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of, or otherwise take any action that limits its
freedom of action with respect to or its ability to retain, businesses,
product lines, assets or properties, which are material in the aggregate to
Parent and the Company taken together as a whole. The Company and Parent
shall furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any
applicable Law (including all information required to be included in the Proxy
Statement and the Registration Statement) in connection with the transactions
contemplated by this Agreement.
(b) Each of the parties hereto agrees, and shall cause each of its
respective subsidiaries to cooperate and to use their respective reasonable
best efforts to obtain any government clearances required for completion of
the transactions (including through compliance with the HSR Act and any
applicable foreign governmental reporting requirements), to respond to any
government requests for information, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement.
SECTION 6.6. POOLING. From and after the date hereof and until
the Effective Time, none of Parent, Merger Sub, the Company, or any of their
respective subsidiaries or other affiliates over which they exercise control,
shall knowingly take any action, or knowingly fail to take any action, that is
reasonably likely to jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes. Between the date of this Agreement and
the Effective Time, each of Parent, Merger Sub and the Company shall take all
reasonable actions necessary to cause the Merger to be characterized as a
pooling of interests for accounting purposes if such a characterization shall
be jeopardized by action taken by Parent, Merger Sub or the Company prior to
the Effective Time.
SECTION 6.7. UPDATE DISCLOSURE; BREACHES. From and after the date
of this Agreement until the Effective Time, each party hereto shall promptly
<PAGE>
notify the other party hereto by written update to its Disclosure Schedule of
(i) the occurrence, or non-occurrence, of any event that would be likely to
cause any condition to the obligations of any party to effect the Merger and
the other transactions contemplated by this Agreement not to be satisfied, or
(ii) the failure of the Company or Parent, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it pursuant to this Agreement which would be likely to result in
any condition to the obligations of any party to effect the Merger and the
other transactions contemplated by this Agreement not to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section
6.7 shall not cure any breach of any representation or warranty requiring
disclosure of such matter prior to the date of this Agreement or otherwise
limit or affect the remedies available hereunder to the party receiving such
notice.
-29-
SECTION 6.8. POOLING AFFILIATES. (a) The Company shall use its
reasonable best efforts to deliver or cause to be delivered to Parent, prior
to the Effective Time, an affiliate letter, in customary form, executed by
each person who, in the Company's reasonable judgment, is an affiliate within
the meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act or otherwise applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment (each such person, a "Pooling
Affiliate") of the Company.
(b) Parent shall use its reasonable best efforts to deliver or
cause to be delivered to the Company, prior to the Effective Time, an
affiliate letter, in customary form, executed by each person who, in Parent's
reasonable judgment, is a Pooling Affiliate of Parent.
SECTION 6.9. PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by Law or any listing agreement with the NASDAQ or
the National Association of Securities Dealers, Inc.
SECTION 6.10. NASDAQ LISTING. Parent shall promptly prepare and
submit to the NASDAQ a listing application covering the shares of Parent
Common Stock to be issued in the Share Issuance, and shall use its reasonable
best efforts to cause such shares to be approved for listing on the NASDAQ,
subject to official notice of issuance, prior to the Effective Time.
SECTION 6.11. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a)
Parent and the Surviving Corporation agree that the indemnification
obligations set forth in the Company's Articles and the Company's By-laws, in
each case as of the date of this Agreement, shall survive the Merger and shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of the individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company or its subsidiaries.
Parent shall assume, be jointly and severally liable for, and honor, and shall
cause the Surviving Corporation to honor, in accordance with their respective
terms each indemnification agreement to which any officer or director of the
Company or Parent is a party as of immediately prior to the Effective Time
without limit as to time.
<PAGE>
(b) Without limiting Section 6.11(a), after the Effective Time,
each of Parent and the Surviving Corporation shall, to the fullest extent
permitted under applicable Law, indemnify and hold harmless, each present and
former director, officer, employee or agent of Parent, each Parent Subsidiary,
the Company and each Company Subsidiary and each such person who served at the
request of Parent, each Parent Subsidiary, the Company or each Company
Subsidiary as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the "Indemnified
Parties") against all costs and expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, administrative or investigative, arising out of or pertaining to any
action or omission in their
-30-
capacity as an officer or director, in each case occurring before the
Effective Time (including the transactions contemplated by this Agreement).
Without limiting the foregoing, in the event of any such claim, action, suit,
proceeding or investigation, (i) Parent and the Surviving Corporation shall
pay the fees and expenses of counsel selected by any Indemnified Party
promptly after statements therefor are received and (ii) Parent and the
Surviving Corporation shall cooperate in the defense of any such matter.
(c) For six years from the Effective Time, the Surviving
Corporation shall provide to Parent's and the Company's current directors and
officers liability insurance protection of the same kind and scope as that
currently provided by Parent's and the Company's directors' and officers'
liability insurance policies.
(d) In the event Parent or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into
any other person or shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or substantially
all its properties and assets to any person, then, and in each case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, honor the indemnification
obligations set forth in this Section 6.11.
(e) The obligations of the Surviving Corporation and Parent under
this Section 6.11 shall not be terminated or modified in such a manner as to
adversely affect any director, officer, employee, agent or other person to
whom this Section 6.11 applies without the consent of such affected director,
officer, employees, agents or other persons (it being expressly agreed that
each such director, officer, employee, agent or other person to whom this
Section 6.11 applies shall be third-party beneficiaries of this Section 6.11).
SECTION 6.12. PLAN OF REORGANIZATION. The Agreement is intended
to constitute a "plan of reorganization" within the meaning of section 1.368-
2(g) of the income tax regulations promulgated under the Code. From and after
the date hereof and until the Effective Time, each party hereto shall use its
reasonable best efforts to cause the Merger to qualify, and will not knowingly
take any actions or cause any actions to be taken which could prevent the
Merger from qualifying, as a reorganization under the provisions of section
368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their affiliates shall knowingly take any
action or knowingly cause any action to be taken which would cause the Merger
<PAGE>
to fail to qualify as a reorganization under section 368(a) of the Code.
SECTION 6.13. OBLIGATIONS OF MERGER SUB. Parent shall take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth
in this Agreement.
SECTION 6.14. PARENT'S BOARD OF DIRECTORS AND CHIEF EXECUTIVE
OFFICER. (a) Parent's Board of Directors will take action to cause the
number of directors comprising the full Board of Directors of Parent at the
Effective Time to be comprised of all persons currently members of the Board
of Directors of either the Company or Parent (unless any such individual shall
as a result of death, disability or otherwise be unable or unwilling to
serve), each to hold office in accordance with the Articles of Incorporation
and By-laws of Parent, and Parent shall cause the size of its Board of
Directors to be increased accordingly.
-31-
(b) The parties hereto intend that at the Effective Time Mr. San
W. Orr, Jr. shall continue to serve as the Chairman of the Board of Directors
of Parent, Mr. Daniel R. Olvey shall become Chief Executive Officer and
President of Parent, and Mr. Daniel D. King and Mr. Richard L. Radt shall each
serve as Vice Chairman of the Board of Directors of Parent (in each case, in
accordance with the Articles of Incorporation and By-laws of Parent).
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Merger and
the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived, in whole or in part, to the extent
permitted by applicable Law:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated or, to the knowledge of Parent or the Company, threatened
by the SEC.
(b) SHAREHOLDER APPROVAL. This Agreement shall have been approved
by the requisite vote of the shareholders of the Company and the Share
Issuance shall have been approved by the requisite vote of the shareholders of
Parent.
(c) NO ORDER. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (and
none of the foregoing shall otherwise be in effect), in any case which
prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement; provided, however, that the parties shall use
<PAGE>
their reasonable best efforts to cause any such decree, judgment, injunction
or other order to be vacated or lifted.
(d) HSR ACT. The applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been terminated.
(e) NASDAQ. The shares of Parent Common Stock issuable to the
Company's shareholders in the Merger shall have been approved for listing on
the NASDAQ, subject to official notice of issuance.
SECTION 7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger and
the other transactions contemplated herein are also subject to the following
conditions:
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(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Company contained in this Agreement, without giving
effect to any update to the Company Disclosure Schedule under Section 6.7,
shall be true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects giving
effect to such standard) as of the Effective Time as though made on and as of
the Effective Time, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of such
date.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) TAX OPINION. Parent shall have received the opinion of Sidley
& Austin, special counsel to Parent, in form and substance reasonably
satisfactory to Parent, based upon facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing at
the Effective Time, to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code, and Parent, Merger Sub and the
Company will each be a party to the reorganization, (ii) no gain or loss will
be recognized by Parent, Merger Sub or the Company as a result of the Merger,
and (iii) no gain or loss will be recognized by the shareholders of the
Company who exchange their Company Common Stock solely for Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest), dated the date of the Effective Time, which
opinion shall be reasonably satisfactory in form and substance to the Parent.
In rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of Parent, the Company and certain
shareholders of Parent and the Company.
(d) POOLING OPINION. Parent shall have received the opinion of
Wipfli, Ullrich Bertelson LLP, dated as of the Effective Time, to the effect
that the Merger qualifies for pooling-of-interests accounting treatment if
consummated in accordance with this Agreement.
<PAGE>
SECTION 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Parent contained in this Agreement, without giving effect to
any update to the Parent Disclosure Schedule under Section 6.7, shall be true
and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) as of the Effective Time as though made on and as of the Effective
Time, except that those representations and warranties which address matters
only as of a particular date shall remain true and correct in all material
respects (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such
-33-
statement shall be true and correct in all respects giving effect to such
standard) as of such date.
(b) AGREEMENTS AND COVENANTS. Parent shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) TAX OPINION. The Company shall have received the opinion of
Foley & Lardner, in form and substance reasonably satisfactory to the Company
based upon facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time,
to the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of section 368(a)
of the Code, and Parent, Merger Sub and the Company will each be a party to
the reorganization, (ii) no gain or loss will be recognized by Parent, Merger
Sub or the Company as a result of the Merger, and (iii) no gain or loss will
be recognized by the shareholders of the Company who exchange their Company
Common Stock solely for Parent Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest), dated
the date of the Effective Time. In rendering such opinion, counsel may
require and rely upon representations contained in certificates of officers of
Parent, the Company and certain shareholders of Parent and the Company.
(d) POOLING OPINION. The Company shall have received the opinion
of Wipfli, Ullrich Bertelson LLP, dated as of the Effective Time, to the
effect that the Merger qualifies for pooling-of-interests accounting treatment
if consummated in accordance with this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement by the shareholders of the Company or approval of the Share Issuance
by the shareholders of Parent:
(a) by mutual consent of Parent and the Company;
<PAGE>
(b) (i) by Parent (provided that Parent is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), if there has been a breach by the Company of any of its
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become untrue,
in any such case such that Section 7.2(a) or Section 7.2(b) will not be
satisfied and such breach or condition has not been promptly cured within 30
days following receipt by the Company of written notice of such breach;
(ii) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), if there has been a breach by Parent of any of its
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall
-34-
have become untrue, in any such case such that Section 7.3(a) or Section
7.3(b) will not be satisfied and such breach or condition has not been
promptly cured within 30 days following receipt by Parent of written notice of
such breach;
(c) by either Parent or the Company if after the date hereof any
decree, permanent injunction, judgment, order or other action by any court of
competent jurisdiction or any Governmental Entity preventing or prohibiting
consummation of the Merger shall have become final and nonappealable;
(d) by either Parent or the Company if the Merger shall not have
been consummated before June 30, 1998, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in all material respects the
covenants and agreements of such party set forth herein; or
(e) after March 31, 1998, by either Parent or the Company if at
the time of termination either (i) this Agreement shall not have been approved
by the requisite vote of the shareholders of the Company or (ii) the Share
Issuance shall not have been approved by the requisite vote of the
shareholders of Parent.
SECTION 8.2. EFFECT OF TERMINATION. (a) In the event of the
termination of this Agreement by either the Company or Parent pursuant to
Section 8.1, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of Parent or the Company, other
than in respect of the provisions of Section 6.3, this Section 8.2 and Section
8.5, and except to the extent that such termination results from the willful
and material breach by a party of any of its covenants or agreements set forth
in this Agreement.
(b) If this Agreement is terminated by either party pursuant to
clause (i) of Section 8.1(e) or at a time when Parent was entitled to
terminate this Agreement pursuant to clause (i) of Section 8.1(e) and if
a Company Trigger Event (as defined herein) shall occur, the Company shall
make payment to Parent (without any requirement of demand and simultaneously
with the occurrence of the Company Trigger Event) by wire transfer of
immediately available funds of a breakup fee in the amount of $15 million (the
"Company Breakup Fee"). A "Company Trigger Event" shall be deemed to have
occurred if, (i) prior to termination of this Agreement a proposal relating to
a Competing Transaction with respect to the Company shall have been made or a
person's interest in effecting a Competing Transaction shall have otherwise
<PAGE>
been made known and (ii) not later than the first anniversary of termination
of this Agreement, (A) the Company shall have entered into a definitive
agreement with a third party (whether or not a person referred to in clause
(i) above) providing for the acquisition of the Company or a majority of the
Company's assets or voting securities by such third party or the consolidation
or merger of the Company or (B) any person (other than Parent) shall have
acquired beneficial ownership of more than 50% of the outstanding voting
securities of the Company.
(c) If this Agreement is terminated by either party pursuant to
clause (ii) of Section 8.1(e) or at a time when the Company was entitled to
terminate this Agreement pursuant to clause (ii) of Section 8.1(e) and
if a Parent Trigger Event (as defined herein) shall occur, Parent shall
make payment to the Company (without any requirement of demand and
simultaneously with the occurrence of the Parent Trigger Event) by wire
-35-
transfer of immediately available funds of a breakup fee in the amount of $15
million (the "Parent Breakup Fee"). A "Parent Trigger Event" shall be deemed
to have occurred if, (i) prior to the termination of this Agreement a proposal
relating to a Competing Transaction with respect to Parent shall have been
made or a person's interest in effecting a Competing Transaction shall have
otherwise been made known and (ii) not later than the first anniversary of
termination of this Agreement (A) Parent shall have entered into a definitive
agreement with a third party (whether or not a person referred to in clause
(i) above) providing for the acquisition of Parent or a majority of Parent's
assets or voting securities by such third party or the consolidation or merger
of Parent or (B) any person (other than the Company) shall have acquired
beneficial ownership of more than 50% of the outstanding voting securities of
Parent.
SECTION 8.3. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of this Agreement by the shareholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall be converted
pursuant to this Agreement upon consummation of the Merger. This Agreement may
not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.4. WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound
thereby, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
SECTION 8.5. FEES AND EXPENSES. Subject to Section 8.2, all
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred the same; provided, however, that each of Parent
and the Company shall pay one-half of the expenses related to printing, filing
<PAGE>
and mailing the Registration Statement and the Proxy Statement and all SEC and
other regulatory filing fees incurred in connection with the Registration
Statement and the Proxy Statement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
-36-
SECTION 9.2. NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall
be effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to
the telecopier number specified below:
(a) If to Parent or Merger Sub, addressed to it at:
One Clark's Island
Wausau, WI 54402
with a copy to:
Chairman of the Special Committee
c/o Wausau Paper Mills Company
One Clark's Island
Wausau, WI 54402
(b) If to the Company, addressed to it at:
1244 Kronenwetter Drive
Mosinee, WI 54455
with a copy to:
Chairman of the Special Committee
c/o Mosinee Paper Corporation
1244 Kronenwetter Driv
Mosinee, WI 54455
SECTION 9.3. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
(a) "good standing" shall only be deemed to apply to the extent
applicable under governing corporate law.
(b) "knowledge" will be deemed to be present when any executive
officer of Parent or the Company, as the case may be, is actually aware of the
matter in question;
<PAGE> (c) "person" means an individual, corporation, limited lia-
bility company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d) of the Exchange Act);
(d) "subsidiary" or "subsidiaries" of Parent, the Company, the
Surviving Corporation or any other person means any corporation, partnership,
joint venture or other legal entity of which Parent, the Company, the
Surviving Corporation or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns,
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directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the Board
of Directors or other governing body of such corporation or other legal
entity;
SECTION 9.4. HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.5. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 9.6. ENTIRE AGREEMENT. This Agreement (together with the
Parent and Company Disclosure Schedules and the other documents delivered
pursuant hereto) constitute the entire agreement of the parties and supersede
all prior agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter hereof and, except
as otherwise expressly provided herein, are not intended to confer upon any
other person any rights or remedies hereunder.
SECTION 9.7. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.8. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied,
other than pursuant to Section 2.4 or 6.11 or the right to receive the
consideration payable in the Merger pursuant to Article II, (which are
intended to and shall create third party beneficiary rights) is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of Wisconsin, without
giving effect to the conflict of law rules thereof.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed in one
<PAGE>
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
WAUSAU PAPER MILLS COMPANY
By: /S/ DANIEL D. KING
Name: Daniel D. King
Title: President and
Chief Executive Officer
WPM HOLDINGS, INC.
By: /S/ DANIEL D. KING
Name: Daniel D. King
Title: President
MOSINEE PAPER CORPORATION
By /S/ DANIEL R. OLVEY
Name: Daniel R. Olvey
Title: President and
Chief Executive Officer
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EXHIBIT 99.2
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT, dated as of August 24, 1997, to the Rights Agreement
between Mosinee Paper Corporation, a Wisconsin corporation (the "Company"),
and Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agent"), dated
as of July 1, 1996 (the "Rights Agreement").
Pursuant to Section 27 of the Rights Agreement, the Company and the
Rights Agent may from time to time supplement or amend the Rights Agreement in
accordance with the provisions of said Section 27 subject to the terms and
conditions thereof. All acts and things necessary to make this Amendment a
valid agreement, enforceable according to its terms have been done and
performed, and the execution and delivery of this Amendment by the Company and
the Rights Agent have been in all respects duly authorized by the Company and
the Rights Agent.
In consideration of the foregoing and the mutual agreements set
forth herein, the parties hereto agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by
inserting the following at the end of such section:
Notwithstanding anything in this Agreement to the contrary, no Person
shall become or be deemed to be an "Acquiring Person" as a result of the
execution, delivery or performance of, or the consummation of any of the
transactions contemplated by, the Agreement and Plan of Merger dated as of the
date hereof, by and among Wausau Paper Mills Company ("Wausau"), a wholly
owned subsidiary of Wausau and the Company (the "Merger Agreement") including
without limitation the Merger (as such term is defined in the Merger
Agreement).
2. Section 1(c) of the Rights Agreement is hereby amended by
inserting the following at the end of such section:
Notwithstanding anything in this Agreement to the contrary, no Person shall be
deemed to "beneficially own" or to be the "Beneficial Owner" of any securities
as a result of the execution, delivery or performance of, or the consummation
of any of the transactions contemplated by, the Merger Agreement, including
without limitation the Merger.
3. Section 3(a) of the Rights Agreement is hereby amended by
inserting the following sentence at the end of such Section:
Notwithstanding anything in this Agreement to the contrary, no
Distribution Date shall occur as a result of the execution, delivery or
performance of, or the consummation of any of the transactions contemplated
by, the Merger Agreement, including without limitation the Merger.
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4. Section 13 of the Rights Agreement is hereby amended by
inserting the following sentence at the end of such Section:
Notwithstanding anything in this Agreement to the contrary, this Section
13 shall not apply to (and no adjustments to any of the Rights shall result
from and the Rights will not become exercisable or unredeemable or
<PAGE>
unexchangeable as a result of) the execution, delivery or performance of, or
the consummation of any of the transactions contemplated by, the Merger
Agreement, including without limitation the Merger.
5. This Amendment to the Rights Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within
such State.
6. This Amendment to the Rights Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument. Terms not
defined herein shall, unless the context otherwise requires, have the meanings
assigned to such terms in the Rights Agreement, as previously amended.
7. In all respects not inconsistent with the terms and
provisions of this Amendment to the Rights Agreement, the Rights Agreement is
hereby ratified, adopted, approved and confirmed. In executing and delivering
this Amendment, the Rights Agent shall be entitled to all the privileges and
immunities afforded to the Rights Agent under the terms and conditions of the
Rights Agreement.
8. If any term, provision, covenant or restriction of this
Amendment to the Rights Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment to the Rights
Agreement, and of the Rights Agreement, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested, all as of the date and year first above
written.
Attest: MOSINEE PAPER CORPORATION
By: GARY P. PETERSON By: DANIEL R. OLVEY
Name: Name: Daniel R. Olvey
Title: Title: President and
Chief Executive Officer
Attest: NORWEST BANK MINNESOTA, N.A.,
as Rights Agent
By:______________________ By:_______________________
Name: Name:
Title: Title:
