<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 4, 1996
ZAPATA CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 1-4219 C-74-1339132
(State or other jurisdiction (Commission File No.) (I.R.S. Employee
of incorporation) Identification No.)
</TABLE>
1717 ST. JAMES PLACE
SUITE 550
HOUSTON, TEXAS 77056
(Address of principal executive offices)
(713) 940-6100
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
The information set forth in the attached Press Release issued by
Zapata Corporation and Houlihan's Restaurant Group, Inc. and filed as
an Exhibit hereto is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed with this report:
2 Agreement and Plan of Merger dated as of June 4, 1996 by
and among Zapata Corporation, Zapata Acquisition Corp. and
Houlihan's Restaurant Group, Inc. (the "Agreement")
99 Press Release dated June 5, 1996, issued jointly by Zapata
Corporation and Houlihan's Restaurant Group, Inc.
The exhibits and disclosure schedules to the Agreement are omitted.
Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish
copies of the exhibits and disclosure schedules to the Securities and Exchange
Commission upon request.
<PAGE> 3
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.
ZAPATA CORPORATION
By: /s/ JOSEPH L. von ROSENBERG III
-------------------------------------
Joseph L. von Rosenberg III
Executive Vice President, General Counsel
and Corporate Secretary
Date: June 17, 1996
3
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
2 Agreement and Plan of Merger dated as of June 4, 1996 by and among
Zapata Corporation, Zapata Acquisition Corp. and Houlihan's
Restaurant Group, Inc.
99 Press Release dated June 5, 1996, issued jointly by Zapata
Corporation and Houlihan's Restaurant Group, Inc.
4
<PAGE> 1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 4, 1996
BY AND AMONG
ZAPATA CORPORATION,
ZAPATA ACQUISITION CORP.
AND
HOULIHAN'S RESTAURANT GROUP, INC.
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 1.1 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 1.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 1.5 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DISSENTING SHARES. . . . . . . . . . . . . . -3-
Section 2.1 Conversion of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
Section 2.2 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 2.3 Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 2.4 Certain Adjustments and Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 2.5 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 2.6 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 2.7 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE III REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY . . . . . . . . . . . . . . -13-
Section 3.1 Due Incorporation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 3.2 Qualification as Foreign Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 3.4 Material Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.5 Ownership of Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.6 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.7 No Conflicts or Consents; Environmental Law; and Litigation . . . . . . . . . . . . . . -16-
Section 3.8 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 3.9 Information in Joint Proxy Statement and Registration Statement . . . . . . . . . . . . -18-
Section 3.10 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
Section 3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
Section 3.12 DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
Section 3.13 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
Section 3.14 Opinion of Company Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
Section 3.15 No Undisclosed Employee Benefit Plan Liabilities . . . . . . . . . . . . . . . . . . . . -20-
Section 3.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
Section 3.17 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
Section 3.18 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
ARTICLE IV REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PARENT AND THE SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 4.1 Due Incorporation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
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Section 4.2 Qualification as Foreign Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 4.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 4.4 Material Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 4.5 Ownership of Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 4.6 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 4.7 No Conflicts or Consents; Environmental Law; and Litigation . . . . . . . . . . . . . . -23-
Section 4.8 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
Section 4.9 Information in Joint Proxy Statement and Registration Statement . . . . . . . . . . . . -25-
Section 4.10 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
Section 4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
Section 4.12 Reservation of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
Section 4.13 DGCL Section 203. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 4.14 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 4.15 Interim Operations of the Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 4.16 Opinion of Parent Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 4.17 No Undisclosed Employee Benefit Plan Liabilities . . . . . . . . . . . . . . . . . . . . -27-
Section 4.18 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.2 Conduct of Business of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
Section 5.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
Section 5.4 Letter of the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
Section 5.5 Letter of the Parent's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
Section 5.6 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
Section 5.7 Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 5.8 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 5.9 Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
Section 5.10 Other Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
Section 5.11 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
Section 5.12 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 5.13 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 5.14 Rule 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 5.15 Board Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 5.16 Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger . . . . . . . . . . . . . . . -40-
Section 6.2 Conditions of Obligations of the Parent and the Sub . . . . . . . . . . . . . . . . . . -41-
Section 6.3 Conditions of Obligations of the Company. . . . . . . . . . . . . . . . . . . . . . . . -41-
ARTICLE VII TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
Section 7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
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ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 8.1 Survival of Representations and Warranties; Enforcement of Certain
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 8.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 8.3 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 8.5 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -45-
Section 8.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -45-
Section 8.7 Entire Agreement; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . -45-
Section 8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -45-
Section 8.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.12 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.13 Conveyance Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
</TABLE>
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SCHEDULE OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Location
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<S> <C>
Acquisition Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.11
Adjusted Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Aggregate Cash Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Aggregate Stock Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Beneficially Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Cash Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(c)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.5(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
Company Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
Company Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.7
Compensable Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.11
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.6
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7(b)
Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.10(d)(ii)
Current Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.10(a)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
DGCL Interested Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.7
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Election Deadline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(c)
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.10(a)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7(c)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.15
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7(a)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.5(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.5(a)
Form of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(a)
Glazer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Glazer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Glazer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
</TABLE>
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<TABLE>
<S> <C>
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7(a)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7(a)
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.10(d)(ii)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11(a)
Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Material Advance Effect (Company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.18
Material Adverse Effect (Parent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.18
Material Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.4(a)
Material Parent Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Maximum Glazer Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(e)
Maximum Ownership Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(e)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Merger Filing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(a)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Outstanding Share Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Outstanding Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Parent Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
Parent Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Parent Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Parent SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
Parent Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.11
Preference Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(a)
Residual Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(d)
S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9
SAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
Stock Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(b)
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(g)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11(b)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11(b)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
</TABLE>
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 4, 1996 (this
"Agreement"), by and among Zapata Corporation, a Delaware corporation (the
"Parent"), Zapata Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Parent (the "Sub"), and Houlihan's Restaurant Group, Inc., a
Delaware corporation (the "Company").
WHEREAS, duly constituted and authorized special committees of the
respective Boards of Directors of the Parent and the Company comprised of
persons who are not members of the Glazer Group (as defined in Section 2.2)
have, after consulting with legal counsel and investment bankers engaged for
that purpose, approved the merger provided for herein ("Merger") as being in
the best interests of the Parent and its stockholders and the Company and its
stockholders, respectively, and have recommended that the respective
stockholders of each company approve the Merger;
WHEREAS, each of the respective Boards of Directors of the Sub and
the Company has determined that it is the best interests of each corporation
and its respective stockholders to effect the Merger upon the terms and subject
to the conditions set forth herein;
WHEREAS, in furtherance thereof, each of the respective Boards of
Directors of the Sub and the Company has approved the merger of the Company
into the Sub, with the Sub as the surviving corporation, all of the outstanding
stock of which will be owned by the Parent in accordance with the provisions of
the General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, the aforesaid special committee of the Board of Directors of
the Parent, being thereunto duly authorized by the Board of Directors of the
Parent, has approved the issuance of common stock of the Parent pursuant to the
Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder ("Code");
WHEREAS, pursuant to the Merger, the stockholders of the Company shall
have the right to receive common stock of the Parent and cash, on and subject
to the terms and conditions set forth herein; and
WHEREAS, the Company, the Parent and the Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
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<PAGE> 9
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Effective Time of the Merger. Upon the terms and
subject to the conditions set forth in this Agreement at the Effective Time (as
defined in this Section 1.1), the Company shall be merged with and into the Sub
in accordance with the DGCL and the separate corporate existence of the Company
shall thereupon cease. On the "Merger Filing Date" (as defined in this Section
1.1), the Parent, the Sub and the Company shall cause to be filed with the
Secretary of State of the State of Delaware a properly executed certificate of
merger consistent with the terms of this Agreement and the DGCL. Such
certificate of merger shall state that the effective time of the Merger (the
"Effective Time") shall be the close of business on the date such certificate
of merger is filed (the "Merger Filing Date"), and the Merger shall be
effective at that time. The Merger Filing Date shall be the same day as the
Closing Date unless the parties shall otherwise agree.
Section 1.2 Closing. Unless this Agreement is terminated and the
transactions contemplated herein abandoned pursuant to Section 7.1 and assuming
the satisfaction or waiver of the conditions set forth in Article VI, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
to be specified by the parties (the "Closing Date"), which will be no later
than the second business day following the satisfaction or waiver of the
conditions set forth in Article VI, at the offices of Baker & Botts, L.L.P.,
Houston, Texas, unless another date or place is agreed to in writing by the
parties hereto.
Section 1.3 Effects of the Merger. The Sub shall be the
surviving corporation of the Merger (the "Surviving Corporation") and shall
continue its existence under the laws of the State of Delaware. The Certificate
of Incorporation of the Sub in effect at the Effective Time will be amended in
its entirety to read as set forth in Annex I and, as such, will be the Restated
Certificate of Incorporation of the Sub, until amended in accordance with the
terms thereof and the DGCL. The Bylaws of the Sub in effect at the Effective
Time will be the Bylaws of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL. The Merger will have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and the Sub will vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Directors. The initial directors of the Surviving
Corporation shall be Frederick R. Hipp and such other person or persons as
shall be designated by the Parent, each to hold office from the Effective Time
in accordance with the Certificate of Incorporation and Bylaws
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<PAGE> 10
of the Surviving Corporation and until his or her successor is duly elected or
appointed and qualified.
Section 1.5 Officers. The officers of the Company at the
Effective Time will be the initial officers of the Surviving Corporation, each
to hold office from the Effective Time in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES;
DISSENTING SHARES
Section 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the Sub, the Company
or the holders of any capital stock of the Sub or the Company:
(a) Each share of common stock, par value $.01 per share,
of the Company ("Company Common Stock") issued and outstanding immediately
prior to the Effective Time (excluding any treasury shares, shares held by the
Parent and Dissenting Shares) as to which no Cash Election, Stock Election or
Residual Election has been made shall be converted into the right to receive
(x) $4.00 in cash, without interest, plus (y) a number of shares of common
stock, par value $.25 per share ("Parent Common Stock"), of the Parent equal to
$4.00 divided by the Market Value.
(b) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time as to which the holder of
record thereof so elects as provided in Section 2.3 (a "Stock Election") shall
be converted into the right to receive a number of shares of Parent Common
Stock equal to $8.00 divided by the Market Value.
(c) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time as to which the holder of
record thereof so elects as provided in Section 2.3 (a "Cash Election") shall,
unless Section 2.1(e) applies, be converted into the right to receive $8.00 in
cash, without interest.
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<PAGE> 11
(d) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Date as to which the holder of
record thereof so elects as provided in Section 2.3 (a "Residual Election")
shall, unless Section 2.1(e) applies, be converted into the right to receive:
(x) a number of shares of Parent Common Stock
equal to
ASA - (NES x $4.00) - (SES x $8.00)
-----------------------------------
RES x MV
where
ASA = Aggregate Stock Amount (as defined in Section 2.2)
NES = number of shares of Company Common Stock as to which no Cash
Election, Stock Election or Residual Election has been exercised, but excluding
any Dissenting Shares
SES = number of shares of Company Common Stock as to which Stock
Elections have been exercised
RES = number of shares of Company Common Stock as to which Residual
Elections have been exercised
MV = Market Value
plus
(y) cash, without interest, in an amount equal to
(i) $8.00 less (ii) the product of the number of shares of
Parent Common Stock determined pursuant to the immediately
preceding clause (x) and the Market Value.
(e) If immediately after the Effective Time the Glazer
Group would hold in the aggregate either more than (i) 49.9% of the Voting
Power of all Voting Securities of the Parent or (ii) 49.9% of the Adjusted
Voting Power of all Outstanding Voting Securities of the Parent (such limits
being referred to as the "Maximum Ownership Limits"), then the consideration to
be received in the Merger with respect to shares of Company Common Stock
covered by Cash Elections and Residual Elections shall be adjusted as follows:
The maximum number of whole shares of Parent Common Stock
which can be issued to the Glazer Group in the Merger (the "Maximum Glazer
Number") without the Glazer Group
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<PAGE> 12
holding in the aggregate more than either Maximum Ownership Limit shall be
calculated assuming that a number of shares equal to the Aggregate Stock Amount
divided by the Market Value is issued in the Merger.
Each share covered by a Cash Election will be converted into the right
to receive:
(x) a number of shares of Parent Common Stock equal to
ASA - (NES x $4.00) - (SES x $8.00) - MGN x RES x MV
---
GS
___________________________________________________
CES x MV
where
ASA = Aggregate Stock Amount
NES = number of shares of Company Common Stock as to which no Cash
Election, Stock Election or Residual Election has been exercised, but excluding
any Dissenting Shares
SES = number of shares of Company Common Stock as to which Stock
Elections have been exercised
MGN = Maximum Glazer Number
RES = number of shares of Company Common Stock as to which a Residual
Election has been exercised
GS = number of Glazer Shares
CES = number of shares of Company Common Stock as to which a Cash
Election has been exercised
MV = Market Value
plus
(y) an amount of cash, without interest, equal to
(i) $8.00 less (ii) the product of the number of shares
of Parent Common Stock determined pursuant to the
immediately preceding clause (x) and the Market Value.
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<PAGE> 13
Each share of Company Common Stock as to which a Residual Election has
been exercised shall be converted into the right to receive:
(1) a number of shares of Parent Common Stock
equal to
MGN
---
GS
where
MGN = Maximum Glazer Number
GS = number of Glazer Shares
plus
(2) an amount of cash, without interest, equal to
(i) $8.00 less (ii) the product of the number of
shares of Parent Common Stock determined pursuant to
the immediately preceding clause (1) and the Market
Value.
(f) At the Effective Time, 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
evidencing any such shares shall thereafter represent the right to receive the
Merger Consideration. The holders of such certificates previously evidencing
such 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.
(g) Each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock owned by the
Parent or any Subsidiary of the 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. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect
to such corporation or other organization is directly or indirectly owned or
controlled by such party, by any one or more of its Subsidiaries, or by such
-6-
<PAGE> 14
party and one or more of its Subsidiaries. References to a wholly owned
Subsidiary of an entity include a Subsidiary all of the securities having
ordinary voting power to elect the Board of Directors or others performing
similar functions of which is owned directly or through "wholly owned"
Subsidiaries by such entity.
(h) Each issued and outstanding share of common stock,
par value $1.00 per share, of the Sub will continue to be one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
Section 2.2 Certain Definitions.
"Adjusted Voting Power" means, with respect to Outstanding
Voting Securities, the highest number of votes that the holders of all such
Outstanding Voting Securities would be entitled to cast for the election of
directors or on any other matter (except to the extent such voting rights are
dependent upon arrearages in the payment of dividends, events of default or
bankruptcy), assuming for purposes of this computation, the conversion into or
exchange for Voting Securities of Convertible Securities and the exercise of
Options for the purchase of Voting Securities or Convertible Securities, in
each case to the extent that any such action would increase the number of such
votes.
"Aggregate Cash Amount" means (a) the Outstanding Share Number
multiplied by $4.00 less (b) the number of Dissenting Shares multiplied by $8.
"Aggregate Stock Amount" means the Outstanding Share Number
multiplied by $4.00.
Securities are "Beneficially Owned" by a person if such person
possesses the ability, whether through contract, arrangement, understanding,
relationship or otherwise, to exercise, directly or indirectly, the voting
power (including the power to vote or to direct the voting) and/or the
investment power (including the power to dispose or to direct the disposition)
of such security.
"Cash Election" means an election made pursuant to Section
2.1(c).
"Convertible Securities" means securities of a corporation
which are convertible into or exchangeable for Voting Securities.
"Glazer" means Malcolm I. Glazer, individually and as trustee
of the Malcolm Glazer Trust U/A dated March 23, 1990, as amended ("Trust").
-7-
<PAGE> 15
"Glazer Group" means Glazer and any corporation, person,
partnership, trust or other entity controlled, directly or indirectly, by
Glazer.
"Glazer Shares" means shares of Company Common Stock which are
owned of record or Beneficially Owned by any member of the Glazer Group.
"Market Value" means the average closing price of a share of
Parent Common Stock as reported on the Composite Tape for the New York Stock
Exchange, Inc. ("NYSE") for the 20 trading days immediately preceding the 2nd
trading day prior to the date of the Company Stockholder Meeting (the "Meeting
Date").
"Merger Consideration" means the consideration to be issued in
the Merger in respect of the Company Common Stock as provided in Section 2.1.
"Options" means options and rights of a corporation (whether
presently exercisable or not) to purchase Voting Securities or Convertible
Securities (except options issued under employee stock option plans).
"Outstanding Share Number" means the number of shares of
Company Common Stock outstanding immediately prior to the Effective Time
(excluding any treasury shares and shares held by the Parent).
"Outstanding Voting Securities" at any time means the then
issued and outstanding Voting Securities, Convertible Securities (which shall
be counted at the highest conversion or exchange rate at which they can be
converted or exchanged) and Options (which shall be counted at the highest rate
at which they can be exercised) of a corporation.
"Residual Election" means an election made pursuant to Section
2.1(d).
"Stock Election" means an election made pursuant to Section
2.1(b).
"Voting Power" means, with respect to Voting Securities, the
highest number of votes that the holders of all Voting Securities, issued and
outstanding on the date such determination is made, would be entitled to cast
for the election of directors or on any other matter (except to the extent such
voting rights are dependent upon arrearages in the payment of dividends, events
of default or bankruptcy).
"Voting Securities" means the common stock and any other
securities of a corporation of any kind or class having power to vote for the
election of directors.
-8-
<PAGE> 16
Section 2.3 Elections.
(a) Cash Elections, Stock Elections and Residual
Elections shall be made by holders of record of Company Common Stock by
mailing to the Exchange Agent a form designated for that purpose (a "Form of
Election"). The Form of Election with respect to Cash Elections and Stock
Elections shall contain a certification that no shares of Company Common Stock
covered by such Form of Election are owned of record or Beneficially Owned by
any member of the Glazer Group. To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent and accompanied
by the certificates representing the shares of Company Common Stock as to which
the election is being made (or by the guaranty of the delivery of such
certificates by an appropriate trust company in the United States or a member
of a registered national securities exchange or the National Association of
Securities Dealers, Inc. (the "NASD")). Holders of record of shares of
Company Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple Forms of
Election, provided that such Representative certifies that each such Form of
Election covers all the shares of Company Common Stock held by such
Representative for a particular beneficial owner or owners. The Parent will
have the discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly completed,
signed and submitted or revoked and to disregard immaterial defects in Forms of
Election. The decision of the Parent (or the Exchange Agent) in such matters
shall be conclusive and binding. Neither the Parent nor the Exchange Agent
will be under any obligation to notify any person of any defect in a Form of
Election submitted to the Exchange Agent. The Parent shall make all
computations contemplated by this Section 2.3 and all such computations shall
be conclusive and binding on the holders of Company Common Stock. Glazer has
agreed with the Parent pursuant to the Supplemental Agreement of even date
herewith to make or cause to be made the Residual Election with respect to all
shares of Company Common Stock owned of record or Beneficially Owned by him
and, to the extent within his actual control, any other member of the Glazer
Group.
(b) For the purposes hereof, a holder of Company Common
Stock who does not submit a Form of Election which is received by the Exchange
Agent prior to the Election Deadline or who holds Dissenting Shares shall not
have made a Cash Election, a Stock Election or a Residual Election. If the
Parent or the Exchange Agent shall determine that any purported Cash Election,
Stock Election or Residual Election was not properly made, such purported Cash
Election, Stock Election or Residual Election shall be deemed to be of no force
and effect and the stockholder making such purported Cash Election, Stock
Election or Residual Election shall for purposes hereof be deemed not to have
made a Cash Election, Stock Election or Residual Election, as applicable.
(c) The Parent and the Company shall each use its best
efforts to mail the Form of Election to all persons who become holders of
Company Common Stock during the period between the record date for the
Company's Stockholder Meeting and 5:00 p.m. Houston time, on
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<PAGE> 17
the date four calendar days prior to the Meeting Date. A Form of Election must
be received by the Exchange Agent by 5:00 p.m. Houston time, on the date one
calendar day prior to the Meeting Date (the "Election Deadline") in order to be
effective. All elections other than that made or caused to be made by Glazer
with respect to the Glazer Shares may be revoked until the Election Deadline.
Section 2.4 Certain Adjustments and Limitations.
(a) If between the date of this Agreement and the
Effective Time the outstanding shares of capital stock of the Parent or the
Company shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) In the event that (i) the Market Value is at such a
level that the holders of the shares of Company Common Stock that exercise Cash
Elections are entitled to receive on a per share basis no cash in excess of $4
and (ii) the Parent Company Stock issuable in respect of the Glazer Shares
still would cause the number of shares held by the Glazer Group to exceed one
of the Maximum Ownership Limits, this Agreement shall be terminated and the
Merger shall not be consummated.
Section 2.5 Exchange of Certificates.
(a) Promptly after completion of the allocation and
election procedures set forth in Sections 2.1 and 2.3, the Parent shall
deposit, or shall cause to be deposited, with American Stock Transfer & Trust
Company or another bank or trust company designated by the Parent (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II through the Exchange
Agent, (i) certificates evidencing a number of shares of Parent Common Stock
equal to the Aggregate Stock Amount and (ii) cash in an amount equal to the
Aggregate Cash Amount (such certificates for shares of Parent Common Stock,
together with any dividends or distributions with respect thereto, and cash,
being hereinafter referred to as the "Exchange Fund"). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Parent Common Stock
and cash contemplated to be issued pursuant to Section 2.1 out of the Exchange
Fund. Except as contemplated by Section 2.5(e), the Exchange Fund shall not be
used for any other purpose. The Parent, the Sub and the Company will pay their
respective expenses, if any, incurred in connection with the Merger, and none
of the Parent, the Sub or the Company will pay any of the expenses of any
stockholder of the Company incurred in connection with the Merger.
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<PAGE> 18
(b) As soon as reasonably practicable after the Effective
Time, the Parent will instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time evidenced 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, shall be in such form and have such other provisions as the
Parent may reasonably specify and shall provide a mechanism for the surrender
of shares evidenced by lost or misplaced stock certificates) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing shares of Parent Common Stock or cash. The letter
of transmittal need not be accompanied by Certificates previously delivered to
the Exchange Agent pursuant to a Form of Election and not withdrawn. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) certificates evidencing
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
evidenced by such Certificate in accordance with Section 2.1, (B) cash to which
such holder is entitled to receive in accordance with Section 2.1, (C) cash in
lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.5(e) and (D) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.5(c), and
the Certificate so surrendered shall forthwith be canceled. 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 evidencing the proper
number of shares of Parent Common Stock and/or cash may be issued and/or paid
in accordance with this Article II to a transferee if the Certificate
evidencing 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 2.5, each Certificate
shall be deemed at any time after the Effective Time to evidence only the right
to receive upon such surrender the Merger Consideration. The shares of Parent
Common Stock constituting the Merger Consideration shall be deemed to have been
issued at the Effective Time.
(c) No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock evidenced
thereby, and no other part of the Merger Consideration shall be paid to any
such holder, until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
evidencing 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 2.5(e) and the amount of
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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. No interest shall be paid on the
Merger Consideration.
(d) All shares of Parent Common Stock issued and cash
paid upon conversion of the shares of Company Common Stock in accordance with
the terms hereof shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock.
(e) (i) No certificates or scrip evidencing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In lieu
of any such fractional shares, each holder of Company Common Stock upon
surrender of a Certificate for exchange pursuant to this Section 2.5 shall be
paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (a) the Market Value by (b) the fractional interest
to which such holder would otherwise be entitled (after taking into account all
shares of Company Common Stock then held of record by such holder).
(ii) As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall promptly pay such amounts to such holders of the Company Common Stock
subject to and in accordance with the terms of Section 2.5(c).
(f) Any portion of the Exchange Fund which remains
undistributed to the holders of Company Common Stock on the first anniversary
date of the Effective Time shall be delivered to the Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to the Parent for the Merger
Consideration to which they are entitled.
(g) Neither the Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any such
shares of Parent Common Stock, cash (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) The Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as the Parent is required
to deduct and withhold with respect to the making of such payment under the
Code, or any provision of state, local or foreign tax law. To the extent that
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amounts are so withheld by the Parent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by the Parent.
Section 2.6 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. On or after the Effective Time, any
Certificates presented to the Exchange Agent or the Parent for any reason shall
be converted into the Merger Consideration.
Section 2.7 Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Company Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal
for such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to
receive payment of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such Section 262, except that
all Dissenting Shares held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 shall thereupon be deemed
to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration, as if such shares of Company Common Stock were covered by
Cash Elections, upon surrender, in the manner provided in Section 2.5, of the
Certificate or Certificates that formerly evidenced such shares of Company
Common Stock.
ARTICLE III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE COMPANY
The Company represents and warrants to, and covenants and agrees with,
the Parent and the Sub as follows:
Section 3.1 Due Incorporation, Etc. Each of the Company and
each Material Company Subsidiary (as defined in Section 3.4) is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with
all requisite power and authority to own, operate and lease 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 and
authority, individually or in the aggregate, has not had, and is not reasonably
likely to have, a material adverse effect on the Company and its Subsidiaries.
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The Company has delivered to the Parent true and accurate copies of the
certificate of incorporation, bylaws or other organizational documents of each
of the Company and each Material Company Subsidiary.
Section 3.2 Qualification as Foreign Entities. Each of the
Company and each Material Company Subsidiary is duly licensed or qualified to
do business and, if applicable, is in good standing, in each state or other
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it requires it to be so licensed or
qualified, except where the failure to be so licensed, qualified or in good
standing has not had, and is not reasonably likely to have, a material adverse
effect on the Company and its Subsidiaries.
Section 3.3 Capital Stock. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock, of which as of
April 30, 1996, 9,998,012 shares of Company Common Stock were issued and
outstanding and no shares were held in the Company's treasury. Also, as of
April 30, 1996, the Company had reserved for issuance (a) 1,195,600 shares of
Company Common Stock for issuance upon the exercise of then-outstanding options
("Company Options") under the Company's 1994 Stock Option Plan for Outside
Directors and its 1994 Executive Stock Option Plan (collectively, the "Company
Plans") and (b) 1,290,000 shares of Company Common Stock in respect of future
grants of Company Options under the Company Plans. Since December 28, 1992,
the Company has not issued any shares of its capital stock, except for
issuances of Company Common Stock upon the exercise of Company Options granted
under the Company Plans, and has not repurchased, redeemed or otherwise retired
any shares of its capital stock. All the outstanding shares of capital stock
of the Company and each of its Subsidiaries are, and all shares of Company
Common Stock that may be issued pursuant to the Company Plans will be, when
issued and paid for in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to any preemptive
rights of third parties in respect thereto. No bonds, debentures, notes or
other indebtedness having the right to vote under ordinary circumstances (or
convertible into securities having such right to vote) ("Voting Debt") of the
Company or any of its Subsidiaries are issued or outstanding. Except as
disclosed above, as disclosed in the Company SEC Documents (as defined in
Section 3.8) filed prior to May 16, 1996 or as disclosed in Section 3.3 of the
Company Disclosure Schedule delivered by the Company to the Parent pursuant to
this Agreement ("Company Disclosure Schedule"), (x) there are no existing
options, warrants, calls, subscriptions, rights, commitments or other
agreements of any character obligating the Company or any of its Subsidiaries
to issue, transfer, vote, or sell or cause to be issued, transferred, voted, or
sold any shares of its capital stock, Voting Debt or other interests of the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or other securities or interests or obligating the
Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription, right, agreement or commitment; (y) there
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any shares of capital
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<PAGE> 22
stock or other interests of any of the Company's Subsidiaries and any
partnership interests are not subject to current or future capital calls; and
(z) each of the outstanding shares of capital stock or other interests of the
Company's Subsidiaries are owned by the Company or by a Subsidiary of the
Company free and clear of any liens, security interests, pledges, charges,
claims, encumbrances, restrictions or legends of any kind (collectively,
"Liens"), except those which, individually or in the aggregate, have not had,
and are not reasonably likely to have, a material adverse effect on the Company
and its Subsidiaries.
Section 3.4 Material Company Subsidiaries.
(a) Each Material Company Subsidiary is listed in Section
3.4(a) of the Company Disclosure Schedule.
(b) The Company has provided to the Parent full access to
the minute books and stock records of each of the Company and each Material
Company Subsidiary.
Section 3.5 Ownership of Equity Interests. Except as disclosed
in Section 3.5 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries owns or holds, directly or indirectly, any capital stock
of, or other equity or other ownership interest in (or any securities, rights
or other interests exchangeable for, convertible into or which otherwise relate
to the acquisition of any capital stock of), any Person or is a partner or
joint venturer in any partnership or joint venture.
Section 3.6 Corporate Power and Authority. The Company has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to the approval and
adoption of this Agreement (insofar as it relates to the Merger) and the Merger
by the affirmative vote of the holders of Company Common Stock entitled to cast
at least a majority of the total number of votes entitled to be cast by holders
of Company Common Stock and the filings referred to in Section 3.7(a). The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated, other than with respect to the Merger, the
required stockholder approval and adoption noted above, and the filing of a
certificate of merger with the Secretary of State of the State of Delaware.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes a valid an binding obligation of the
Parent and the Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
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<PAGE> 23
Section 3.7 No Conflicts or Consents; Environmental Law; and
Litigation.
(a) Other than the filings provided for in Section 1.1
and as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"), and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and filings with regulatory authorities with
respect to liquor licenses, no notices, reports or other filings are required
to be made by the Company with, nor any consents, registrations, approvals,
permits or authorizations required to be obtained from, any domestic
governmental or regulatory authority, agency, commission or other entity
("Governmental Entity"), in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, the failure to make or obtain any or all of
which (i) is reasonably likely to have a material adverse effect on the Company
and its Subsidiaries or (ii) would prevent, materially delay or materially
burden the transactions contemplated in this Agreement.
(b) The execution and delivery of this Agreement by the
Company do not, and the consummation by the Company of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, the certificate of incorporation, as amended, or bylaws
of the Company or the comparable governing instruments of any Material Company
Subsidiary, (ii) except as disclosed in Section 3.7(b) of the Company
Disclosure Schedule, a breach or violation of, a default under, or the
acceleration of or the creation of any Lien (with or without the giving of
notice or the lapse of time) pursuant to, any provision of any agreement,
lease, contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") of the Company or any of its Subsidiaries or any law, rule,
ordinance or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which the Company or any of its
Subsidiaries is subject or (iii) any change in the rights or obligations of any
party under any such Contract, except, in the case of clauses (ii) and (iii)
above, for such breaches, violations, defaults, accelerations or changes that,
individually or in the aggregate, (x) have not had, and are not reasonably
likely to have, a material adverse effect on the Company and its Subsidiaries
or (y) would not prevent, materially delay or materially burden the
transactions contemplated by this Agreement.
(c) Except as disclosed in the Company SEC Documents
filed prior to May 16, 1996 or as disclosed in Section 3.7(c) of the Company
Disclosure Schedule, (i) the Company and its Subsidiaries are in compliance
with all applicable statutes, ordinances, rules and regulations of any
Governmental Entity relating to protection of the environment and human health
including, without limitation, with respect to air, surface water, ground
water, land and subsurface strata (collectively, "Environmental Law") except
for non-compliance which, individually or in the aggregate, has not had, and is
not reasonably likely to have, a material adverse effect on the Company and its
Subsidiaries and (ii) neither the Company nor any of its Subsidiaries has
received
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<PAGE> 24
written notice of, or is the subject of, any action, cause of action, claim,
investigation, demand or notice by any Person alleging liability under or
non-compliance by the Company or any of its Subsidiaries with any Environmental
Law which, individually or in the aggregate, has had, or is reasonably likely
to have, a material adverse effect on the Company and its Subsidiaries.
(d) Except as disclosed in the Company SEC Documents
filed prior to May 16, 1996 or in Section 3.7(d)(i) of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the best knowledge of the Company, threatened, against the Company or
any of its Subsidiaries which, individually or in the aggregate, has had, or is
reasonably likely to have, a material adverse effect on the Company and its
Subsidiaries or affect adversely in any material respect the ability of the
Company to consummate the transactions contemplated by this Agreement. Except
as disclosed in the Company SEC Documents filed prior to May 16, 1996 or in
Section 3.7(d)(ii) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries is subject to any outstanding order, writ, injunction
or decree which, individually or in the aggregate, has had, or is reasonably
likely to have, a material adverse effect on the Company and its Subsidiaries
or affect adversely in any material respect the ability of the Company to
consummate the transactions contemplated hereby.
Section 3.8 SEC Reports and Financial Statements. Since January
1, 1993, the Company has filed with the Securities and Exchange Commission (the
"SEC") all forms, reports and documents required to be filed by it under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act") or the Exchange Act, and has heretofore made available
to the Parent true and complete copies of all such forms, reports and documents
(as they have been amended since the time of their filing, collectively, the
"Company SEC Documents"). The Company SEC Documents, including without
limitation any financial statements or schedules included therein, at the time
filed, and any forms, reports or other documents filed by the Company with the
SEC after the date of this Agreement, (a) did not at the time they were filed,
or will not at the time they are 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 therein, in light of the
circumstances under which they were made, not misleading and (b) complied or
will be prepared in compliance in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be.
The financial statements of the Company included in the Company SEC Documents
("Company Financial Statements") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, to normal audit
adjustments) and fairly present (subject, in the case of the unaudited
statements, to normal audit adjustments) the consolidated financial position of
the Company and its Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
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Except as reflected, reserved against or otherwise disclosed in the Company
Financial Statements or as otherwise disclosed in the Company SEC Documents, in
each case filed prior May 16, 1996 or as disclosed in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has any liabilities or obligations (absolute, accrued, fixed, contingent or
otherwise) other than (i) liabilities incurred in the ordinary course of
business consistent with past practice, and (ii) liabilities and obligations
that, alone or in the aggregate, have not had, and are not reasonably likely to
have, a material adverse effect on the Company and its Subsidiaries.
Section 3.9 Information in Joint Proxy Statement and Registration
Statement.
(a) None of the information with respect to the Company
or its Subsidiaries to be included in the joint proxy statement/prospectus to
be used by the Boards of Directors of the Company and the Parent in connection
with the solicitation of proxies for use at the meetings referred to in Section
5.7 ("Joint Proxy Statement") or in the registration statement on Form S-4 to
be filed with the SEC by the Parent in connection with the issuance of shares
of Parent Common Stock in the Merger to holders of Company Common Stock (the
"S-4") will, in the case of the Joint Proxy Statement or any amendment thereof
or supplement thereto, at the time of the mailing of the Joint Proxy Statement
or any amendment thereof or supplement thereto, and at the time of the Company
Stockholder Meeting (as defined in Section 5.7) or, in the case of the S-4, at
the time it becomes effective under the Securities Act and at the time of the
Closing, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Joint Proxy Statement, when filed, will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
(b) Notwithstanding Section 3.9(a), the Company makes no
representation with respect to statements made in the Joint Proxy Statement
(and any amendment thereto or supplement thereto) and in the S-4 based on
information regarding and supplied by the Parent or the Sub specifically for
inclusion therein.
Section 3.10 No Material Adverse Change. Except as disclosed in
the Company SEC Documents filed prior to May 16, 1996 or as disclosed in
Section 3.10 of the Company Disclosure Schedule, since December 29, 1995, the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary and usual course and there has not been any change in the assets,
business, results of operations or financial condition of the Company and its
Subsidiaries that has had, or is reasonably likely to have, a material adverse
effect on the Company and its Subsidiaries.
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Section 3.11 Taxes.
(a) Each of the Company and its Subsidiaries has duly
filed all material federal, state, local and foreign income and other Tax
Returns (as defined in Section 3.11(b)) required to be filed by it, except as
disclosed in Section 3.11(a)(i) of the Company Disclosure Schedule. Except as
disclosed in Section 3.11(a)(ii) of the Company Disclosure Schedule, each of
the Company and its Subsidiaries has duly paid or caused to be paid all Taxes
shown to be due on such Tax Returns in respect of the periods covered by such
returns and has made adequate provision in the Company Financial Statements for
payment of all Taxes anticipated to be payable in respect of all taxable
periods or portions thereof ending on or before the date hereof. Section
3.11(a)(iii) of the Company Disclosure Schedule discloses the periods through
which the Tax Returns required to be filed by the Company and its Subsidiaries
have been examined by the Internal Revenue Service (the "IRS") or other
appropriate taxing authority, or the period during which any assessments may be
made by the IRS or other appropriate taxing authority has expired. Except as
disclosed in Section 3.11(a)(iv) of the Company Disclosure Schedule, as of the
date hereof, all material deficiencies and assessments asserted as a result of
such examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
Company Financial Statements, and no issue or claim has been asserted in
writing for Taxes by any taxing authority for any prior period, the adverse
determination of which would result in a deficiency which is reasonably likely
to have a material adverse effect on the Company and its Subsidiaries, other
than those heretofore paid or provided for in the Company's Financial
Statements. Except as disclosed in Section 3.11(a)(v) of the Company
Disclosure Schedule, as of the date hereof, there are no material outstanding
agreements or waivers extending the statutory period of limitation applicable
to any material Tax Return of the Company or its Subsidiaries. Except as
disclosed in Section 3.11(a)(vi) of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries (x) has been a member of a group filing
consolidated returns for federal income tax purposes, or (y) is a party to any
material tax sharing or tax indemnity agreement or any other material agreement
of a similar nature that remains in effect.
(b) For purposes of this Agreement, the term "Taxes"
means all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes
of this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
Section 3.12 DGCL Section 203. To the best knowledge of the
Company, the Trust either is not an interested stockholder of the Company, as
defined in Section 203(c)(5) of the DGCL ("DGCL Interested Stockholder"), or,
if a DGCL Interested Stockholder, became such more than
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three years prior to the date of this Agreement. Accordingly, the terms of
Section 203 of the DGCL are not applicable to the Company's participation in
the Merger.
Section 3.13 Vote Required. The affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger and the
transactions contemplated hereby.
Section 3.14 Opinion of Company Financial Advisor. The Special
Committee of the Board of Directors of the Company has received the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, its financial advisor, to
the effect that, as of the date of such opinion, the Merger Consideration to be
received pursuant to the Merger by the holders of the Company Common Stock
(other than by Glazer and other holders affiliated with Glazer) is fair to such
holders from a financial point of view.
Section 3.15 No Undisclosed Employee Benefit Plan Liabilities.
All "employee benefit plans," 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 its Subsidiaries are in compliance with all
applicable provisions of ERISA and the Code, and the Company and its
Subsidiaries do not have any liabilities or obligations with respect to any
such employee benefit plans, whether or not accrued, contingent or otherwise,
except (a) as described in any of the Company SEC Documents, (b) as set forth
in Section 5.10(a) of the Company Disclosure Schedule with respect to
employment arrangements and indemnification agreements and (c) for instances of
non-compliance or liabilities or obligations that have not had, or are not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Company and the Subsidiaries.
Section 3.16 Tax Matters. Neither the Company nor, to the
knowledge of the Company, any of its affiliates referred to in Section 3.17 has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization under the provisions of Section 368(a) of the
Code.
Section 3.17 Affiliates. Section 3.17 of the Company Disclosure
Schedule identifies all persons who, to the knowledge of the Company, may be
deemed to be affiliates of the Company under Rule 145 of the Securities Act,
including, without limitation, all directors and officers of the Company.
Concurrently with the execution and delivery of this Agreement, the Company has
delivered to the Parent duplicate copies of letter agreements, each
substantially in the form of Annex II, executed by each person so identified as
an affiliate of the Company in Section 3.17 of the Company Disclosure Schedule.
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Section 3.18 General. As used in this Agreement with respect to
the Company and/or its Subsidiaries, related partnerships or equity
investments, the term "material adverse effect" means an effect which is both
material and adverse with respect to the assets, business, results of
operations or financial condition of the Company taken as a whole with its
Subsidiaries, which effect shall be measured net of, and only after giving the
Company and its Subsidiaries the benefit of, any insurance, indemnity,
reimbursement, contribution, compensation or other similar right which would
operate to reduce, offset, compensate, mitigate or otherwise limit the impact
thereof on the Company and/or any of its Subsidiaries; provided, however that
any adverse change or changes in the assets, business, results of operations or
financial condition of the Company taken as a whole with its Subsidiaries
attributable to changes in general economic conditions shall not be deemed to
constitute a material adverse effect.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PARENT AND THE SUB
The Parent and the Sub, jointly and severally, represent and warrant to, and
covenant and agree with, the Company as follows:
Section 4.1 Due Incorporation, Etc. Each of the Parent and each
Material Parent Subsidiary (as defined in Section 4.4) is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, with all
requisite power and authority to own, operate and lease 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 and
authority, individually or in the aggregate has not had, and is not reasonably
likely to have, a material adverse effect on the Parent and its Subsidiaries.
The Parent has made available to the Company true and accurate copies of the
certificate of incorporation, bylaws or other organizational documents of each
of the Parent and each Material Parent Subsidiary.
Section 4.2 Qualification as Foreign Entities. Each of the
Parent and each Material Parent Subsidiary is duly licensed or qualified to do
business and, if applicable, is in good standing, in each state or other
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it requires it to be so licensed or
qualified, except where the failure to be so licensed, qualified or in good
standing has not had, and is not reasonably likely to have, a material adverse
effect on the Parent and its Subsidiaries.
Section 4.3 Capital Stock. The authorized capital stock of the
Parent consists of (a) 165,000,000 shares of Parent Common Stock, of which as
of April 30, 1996, 29,548,507 shares were issued and outstanding and no shares
were held in the Parent's treasury, (b) 2,000,000 shares
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of preferred stock, no par value per share ("Preferred Stock"), of which, as of
April 30, 1996, no shares were issued and outstanding or held in the Parent's
treasury, and (c) 18,000,000 million shares of preference stock, par value
$1.00 per share ("Preference Stock"), of which, as of April 30, 1996, 242,419
shares had been designated as $2.00 Per Cumulative Convertible Preference
Stock, 3,627 shares of such series were issued and outstanding as of that date
and no shares of such series were held in the Parent's treasury as of that
date. Also, as of April 30, 1996, the Company had reserved for issuance (i)
165,900 shares of Parent Common Stock upon exercise of then-outstanding stock
options ("Parent Options") under the Parent's 1981 Stock Incentive Plan, the
Special Incentive Plan and the 1990 Stock Option Plan (collectively, the
"Parent Plans), (ii) 256,333 shares of Parent Common Stock in respect of future
grants of Parent Options pursuant to the Parent Plans and (iii) 5,527 shares of
Parent Common Stock upon conversion of the $2.00 Noncumulative Convertible
Preference Stock. Except as disclosed in the Parent SEC Documents (as defined
in Section 4.8) filed prior to May 16, 1996 or as disclosed in Section 4.3(a)
of the Parent Disclosure Schedule delivered by the Parent to the Company
pursuant to this Agreement ("Parent Disclosure Schedule"), since December 31,
1995, the Parent has not issued any shares of its capital stock, except for
issuances of Parent Common Stock upon the exercise of Parent Options granted
under the Parent Plans and upon conversion of its $2.00 Noncumulative
Convertible Preference Stock, and has not repurchased, redeemed or otherwise
retired any shares of its capital stock. All the outstanding shares of capital
stock of the Parent and each of its Subsidiaries are, and all shares of Parent
Common Stock that may be issued pursuant to the Parent Plans or upon conversion
of the $2.00 Noncumulative Convertible Preference Stock will be, when issued
and paid for in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to any preemptive
rights of third parties in respect thereto. No Voting Debt of the Parent or
any of its Subsidiaries is issued or outstanding. Except as disclosed in the
Parent SEC Documents filed prior to May 16, 1996 or as disclosed in Section
4.3(b) of the Parent Disclosure Schedule, (x) there are no existing options,
warrants, calls, subscriptions, rights, commitments or other agreements of any
character obligating the Parent or any of its Subsidiaries to issue, transfer,
vote or sell or cause to be issued, transferred, voted or sold any shares of
its capital stock, Voting Debt or any other interests of the Parent or any of
its Subsidiaries or securities convertible into or exchangeable for such shares
or other interests or obligating the Parent to grant, extend or enter into any
such option, warrant, call, subscription, right, agreement or commitment; (y)
there are no outstanding contractual obligations of the Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Parent or any shares of capital stock or other interests of any of
the Parent's Subsidiaries and any partnership interests are not subject to
current or future capital calls; and (z) each of the outstanding shares of
capital stock or other interests of the Parent's Subsidiaries are owned by the
Parent or by a Subsidiary of the Parent free and clear of any Liens, except
those which individually or in the aggregate have not had, and are not
reasonably likely to have, a material adverse effect on the Parent and its
Subsidiaries.
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Section 4.4 Material Parent Subsidiaries. (a) Each Material
Parent Subsidiary is listed in Section 4.4(a) of the Parent Disclosure
Schedule.
(b) The Parent has provided to the Company full access to
the minute books, stock records and comparable documents of each of the Parent
and each Material Parent Subsidiary.
Section 4.5 Ownership of Equity Interests. Except as disclosed
in Section 4.5 of the Parent Disclosure Schedule, neither the Parent nor any of
its Subsidiaries owns or holds, directly or indirectly, any capital stock of,
or other equity or other ownership interest in (or any securities, rights or
other interests exchangeable for, convertible into or which otherwise relate to
the acquisition of any capital stock of), any Person or is a partner or joint
venturer in any partnership or joint venture.
Section 4.6 Corporate Power and Authority. The Parent and the
Sub each has the requisite corporate power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
the approval of the issuance of the shares of Parent Common Stock in the Merger
by the affirmative vote of the holders, voting as a class, of the Parent Common
Stock and the Preference Stock entitled to cast at least a majority of the
total number of votes voting on such matter as required by the NYSE and the
filings referred to in Section 4.7(a). The execution, delivery and performance
of this Agreement by the Parent and the Sub and the consummation by the Parent
and the Sub of the Merger and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Parent and the Sub and no other corporate proceedings are necessary to
authorize this Agreement or to consummate the transactions so contemplated,
other than the required stockholder approval by the Parent noted above, and the
filing of a certificate of merger with the Secretary of State of the State of
Delaware. The Parent, as the sole stockholders of the Sub, has approved and
adopted this Agreement (insofar as it relates to the Merger) and the Merger.
This Agreement has been duly and validly executed and delivered by the Parent
and the Sub and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation of the
Parent and the Sub, enforceable against the Parent and the Sub in accordance
with its terms.
Section 4.7 No Conflicts or Consents; Environmental Law; and
Litigation. (a) Other than the filing provided for in Section 1.1 and as
required under the HSR Act, the Securities Act and the Exchange Act, no
notices, reports or other filings are required to be made by the Parent or the
Sub with, nor any consents, registrations, approvals, permits or authorizations
required to be obtained from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by the Parent and the Sub and the
consummation by the Parent and the Sub of the transactions contemplated hereby,
the failure to make or obtain any or all of which (i) is reasonably likely to
have a material adverse effect on the Parent and its Subsidiaries or (ii) would
prevent, materially delay or materially burden the transactions contemplated in
this Agreement.
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(b) The execution and delivery of this Agreement by the
Parent and the Sub do not, and the consummation by the Parent and the Sub of
the transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of or a default under, the certificate of incorporation or
bylaws of the Parent or the Sub or the comparable governing instruments of any
Material Parent Subsidiary, (ii) a breach or violation of, a default under, or
the acceleration of or the creation of any Lien (with or without the giving of
notice or the lapse of time) pursuant to, any provision of any Contract of the
Parent or any of its Subsidiaries or any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit or
license to which Parent or any of its Subsidiaries is subject or (iii) any
change in the rights or obligations of any party under any such Contract,
except, in the case of clause (ii) and (iii) above, for such breaches,
violations, defaults, accelerations or changes that, alone or in the aggregate,
(x) have not had, and are not reasonably likely to have, a material adverse
effect on the Parent and its Subsidiaries or (y) would not prevent, materially
delay or materially burden the transactions contemplated by this Agreement.
(c) Except as disclosed in the Parent SEC Documents filed
prior to May 16, 1996 or as disclosed in Section 4.7(c) of the Parent
Disclosure Schedule, (i) the Parent and its Subsidiaries are in compliance with
all applicable statutes, ordinances, rules and regulations of any Governmental
Entity relating to Environmental Law except for non-compliance which,
individually or in the aggregate, has not had, and is not reasonably likely to
have, a material adverse effect on the Parent and its Subsidiaries and (ii)
neither the Parent nor any of its Subsidiaries has received written notice of,
or is the subject of, any action, cause of action, claim, investigation, demand
or notice by any Person alleging liability under or non-compliance by the
Parent or any of its Subsidiaries with any Environmental Law which,
individually or in the aggregate, has had, or is reasonably expected to have, a
material adverse effect on the Parent and its Subsidiaries.
(d) Except as disclosed in the Parent SEC Documents filed
prior to May 16, 1996 or in Section 4.7(d)(i) of the Parent Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the best knowledge of the Parent, threatened, against the Parent or any
of its Subsidiaries which, individually or in the aggregate, has had, or is
reasonably likely to have, a material adverse effect on the Parent and its
Subsidiaries or affect adversely in any material respect the ability of the
Parent to consummate the transactions contemplated by this Agreement. Except
as disclosed in the Parent SEC Documents filed prior to May 16, 1996 or in
Section 4.7(d)(ii) of the Parent Disclosure Schedule, neither the Parent nor
any of its Subsidiaries is subject to any outstanding order, writ, injunction
or decree which, individually or in the aggregate has had, or is reasonably
likely to have, a material adverse effect on the Parent and its Subsidiaries or
affect adversely in any material respect the ability of the Parent to
consummate the transactions contemplated hereby.
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Section 4.8 SEC Reports and Financial Statements. Since January
1, 1993, the Parent has filed with the SEC all forms, reports and documents
required to be filed by it under the Securities Act or the Exchange Act, and
has heretofore made available to the Company true and complete copies of all
such forms, reports and documents (as they have been amended since the time of
their filing, collectively, the "Parent SEC Documents"). The Parent SEC
Documents, including without limitation any financial statements or schedules
included therein, at the time filed, and any forms, reports or other documents
filed by the Parent with the SEC after the date of this Agreement, (a) did not
at the time they were filed, or will not at the time they are 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
therein, in light of the circumstances under which they were made, not
misleading and (b) complied or will be prepared in compliance in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act, as the case may be. The financial statements of the Parent included in
the Parent SEC Documents ("Parent Financial Statements") comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, to normal audit adjustments) and fairly present (subject, in the
case of the unaudited statements, to normal audit adjustments) the consolidated
financial position of the Parent and its Subsidiaries as at the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended. Except as reflected, reserved against or otherwise disclosed in
the Parent Financial Statements or as otherwise disclosed in the Parent SEC
Documents, in each case filed prior to May 16, 1996 or as disclosed in Section
4.8 of the Parent Disclosure Schedule, as of the date of this Agreement,
neither the Parent nor any of its Subsidiaries had any liabilities or
obligations (absolute, accrued, fixed, contingent or otherwise) other than (i)
liabilities incurred in the ordinary course of business consistent with past
practice and (ii) liabilities and obligations that, alone or in the aggregate,
have not had, and are not reasonably likely to have, a material adverse effect
on the Parent and its Subsidiaries.
Section 4.9 Information in Joint Proxy Statement and Registration
Statement. (a) None of the information with respect to the Parent or its
Subsidiaries to be included in the Joint Proxy Statement or the S-4 will, in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the mailing of the Joint Proxy Statement or any
amendment thereof or supplement thereto, and at the time of the Parent's
Stockholder Meeting (as defined in Section 5.7), or, in the case of the S-4, at
the time it becomes effective under the Securities Act and at the time of the
Closing, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The S-4 will, when filed with the SEC by the Parent, comply as to
form in all material respects with the provisions of the Securities Act and the
rules and regulations thereunder.
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(b) Notwithstanding Section 4.9(a), neither the Parent
nor the Sub makes any representation with respect to statements made in the
Joint Proxy Statement (and any amendment thereof or supplement thereto) and in
the S-4 based on information regarding the Company supplied specifically for
inclusion therein.
Section 4.10 No Material Adverse Change. Except as disclosed in
the Parent SEC Documents filed prior to May 16, 1996 or as disclosed in Section
4.10 of the Parent Disclosure Schedule, since September 30, 1995, the Parent
and its Subsidiaries have conducted their respective businesses in the ordinary
and usual course and there has not been any change in the assets, business,
results of operations or financial condition of the Parent and its Subsidiaries
that has had, or is reasonably likely to have, a material adverse effect on
Parent and its Subsidiaries.
Section 4.11 Taxes. Each of the Parent and its Subsidiaries has
duly filed all material federal, state, local and foreign income and other Tax
Returns required to be filed by it, except as disclosed in Section 4.11(a) of
the Parent Disclosure Schedule. Except as disclosed in Section 4.11(b) of the
Parent Disclosure Schedule, each of the Parent and its Subsidiaries has duly
paid or caused to be paid all Taxes shown to be due on such Tax Returns in
respect of the periods covered by such returns and has made adequate provision
in the Parent Financial Statements for payment of all Taxes anticipated to be
payable in respect of all taxable periods or portions thereof ending on or
before the date hereof. Section 4.11(c) of the Parent Disclosure Schedule
lists the periods through which the Tax Returns required to be filed by the
Parent and its Subsidiaries have been examined by the IRS or other appropriate
taxing authority, or the period during which any assessments may be made by the
IRS or other appropriate taxing authority has expired. Except as disclosed in
Section 4.11(d) of the Parent Disclosure Schedule, as of the date hereof all
material deficiencies and assessments asserted as a result of such examinations
or other audits by federal, state, local or foreign taxing authorities have
been paid, fully settled or adequately provided for in the Parent Financial
Statements, and no issue or claim has been asserted in writing for Taxes by any
taxing authority for any prior period, the adverse determination of which would
result in a deficiency which is reasonably likely to have a material adverse
effect on the Parent and its Subsidiaries, other than those heretofore paid or
provided for in the Parent Financial Statements. Except as disclosed in
Section 4.11(e) of the Parent Disclosure Schedule, as of the date hereof, there
are no material outstanding agreements or waivers extending the statutory
period of limitation applicable to any material Tax Return of the Parent or its
Subsidiaries. Except as disclosed in Section 4.11(f) of the Parent Disclosure
Schedule, neither the Parent nor any of its Subsidiaries (i) has been a member
of a group filing consolidated tax returns for federal income tax purposes or
(ii) is a party to any material tax sharing or tax indemnity agreement or any
other material agreement of a similar nature that remains in effect.
Section 4.12 Reservation of Shares. The Parent has reserved and
will keep available for issuance a number of authorized but unissued shares of
Parent Common Stock equal to the
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maximum number of shares of Parent Common Stock that may become issuable
pursuant to the Merger.
Section 4.13 DGCL Section 203. To the best knowledge of the
Parent, the Trust became a DGCL Interested Stockholder of the Parent more than
three years prior to the date of this Agreement. Accordingly, the terms of
Section 203 of the DGCL are not applicable to the participation by the Parent
or the Sub in the Merger.
Section 4.14 Vote Required. The affirmative vote of the holders
of a majority of the outstanding shares of Parent Common Stock and Preference
Stock, voting together as a class, on the issuance of the shares of Parent
Common Stock in the Merger, as required by the NYSE, is the only vote of the
holders of any class or series of the Parent's capital stock necessary to
approve the transactions contemplated hereby.
Section 4.15 Interim Operations of the Sub. The Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities, has conducted its operations only as
contemplated hereby and will not have a negative net worth as of the Effective
Time.
Section 4.16 Opinion of Parent Financial Advisor. The Special
Committee of the Board of Directors of Parent has received the opinion of CS
First Boston Corporation, its financial advisor, to the effect that, as of the
date of such opinion, the Merger Consideration is fair to the Parent from a
financial point of view.
Section 4.17 No Undisclosed Employee Benefit Plan Liabilities. All
"employee benefit plans," as defined in Section 3(3) of ERISA maintained or
contributed to by the Parent or its Subsidiaries are in compliance with all
applicable provisions of ERISA and the Code, and the Parent and its
Subsidiaries do not have any liabilities or obligations with respect to any
such employee benefit plans, whether or no accrued, contingent or otherwise,
except (a) as described in any of the Parent SEC Documents and (b) for
instances of non-compliance or liabilities or obligations that have not had, or
are not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Parent and its Subsidiaries.
Section 4.18 General. As used in this Agreement with respect to
Parent and/or its Subsidiaries, related partnerships or equity investments, the
term "material adverse effect" means an effect which is both material and
adverse with respect to the assets, business, results of operations or
financial condition of the Parent taken as a whole with its Subsidiaries, which
effect shall be measured net of, and only after giving the Parent and its
Subsidiaries the benefit of, any insurance, indemnity, reimbursement,
contribution, compensation or other similar right which would operate to
reduce, offset, compensate, mitigate or otherwise limit the impact thereof on
the Parent and/or
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any of its Subsidiaries; provided, however that any adverse change or changes
in the assets, business, results of operations or financial condition of the
Parent taken as a whole with its Subsidiaries attributable to changes in
general economic conditions shall not be deemed to constitute a material
adverse effect.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or with the prior written consent of the Parent,
which consent shall not be unreasonably withheld and is hereby given with
respect to actions disclosed in the Company Disclosure Schedule, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and,
consistent therewith, will use all reasonable efforts, and will cause each of
its Subsidiaries to use all reasonable efforts, to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with licensors, licensees, customers,
suppliers, employees and any others having business dealings with it, in each
case in all material respects. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, the
Company will not, and will not permit any of the Subsidiaries to, prior to the
Effective Time, without the prior written consent of Parent, not to be
unreasonably withheld:
(a) adopt any amendment to its certificate of
incorporation or by-laws or comparable organizational documents;
(b) except for issuances of capital stock of the
Company's Subsidiaries to the Company or a wholly owned Subsidiary of the
Company, issue, reissue, sell or pledge or authorize or propose the issuance,
reissuance, sale or pledge of additional shares of capital stock of any class,
or securities convertible into capital stock of any class, or any rights,
warrants or options to acquire any convertible securities or capital stock,
other than the issuance of shares of Company Common Stock upon the exercise of
Company Options outstanding on the date of this Agreement in accordance with
their present terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except that
any wholly owned Subsidiary of the Company may pay dividends and make
distributions to the Company or any of the Company's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or
redeem, purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock;
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(e) (i) incur, assume or pre-pay any long-term debt or
incur or assume any short-term debt, except that the Company and its
Subsidiaries may incur, assume or pre-pay debt in the ordinary course of
business consistent with past practice or as disclosed in Section 5.1(e) of the
Company Disclosure Schedule, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person except in the ordinary course of business
consistent with past practice, or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person except in the ordinary
course of business consistent with past practice and except for loans,
advances, capital contributions or investments between any wholly owned
Subsidiary of the Company and the Company or another wholly owned Subsidiary of
the Company;
(f) settle or compromise any suit or claim or threatened
suit or claim (i) relating to the transactions contemplated hereby or (ii)
involving the payment of money or the surrender of property or other rights in
an amount or having a fair market value, in each case, in excess of $500,000;
(g) except for (i) increases in salary, wages and
benefits of employees of the Company or its Subsidiaries (other than executive
or corporate officers of the Company) in accordance with past practice, (ii)
increases in salary, wages and benefits granted to employees of the Company or
its Subsidiaries (other than executive or corporate officers of the Company) in
conjunction with promotions or other changes in job status consistent with past
practice or required under existing agreements, (iii) increases in salary,
wages and benefits to employees of the Company pursuant to collective
bargaining agreements entered into in the ordinary course of business
consistent with past practice, and (iv) matters disclosed in Section 5.1(g) of
the Company Disclosure Schedule, increase the compensation or fringe benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any of its Subsidiaries), or pay any benefit not required
by any existing plan or arrangement (including, the granting of, or waiver of
performance or other vesting criteria under, stock options, stock appreciation
rights, shares of restricted stock or deferred stock or performance units) or
grant any severance or termination pay to (except pursuant to existing
agreements or policies), or enter into any employment or severance agreement
with, any director, officer or other key employee of the Company or any of its
Subsidiaries or establish, adopt, enter into, terminate or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termination
or amendment is required by applicable law; provided, however, that nothing
herein will be deemed to prohibit the payment of benefits as they become
payable;
(h) except as disclosed in Section 5.1(h) of the Company
Disclosure Schedule, acquire, sell, lease or dispose of any assets or
securities which are material to the Company and its
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Subsidiaries, taken as a whole, or enter into any commitment to do any of the
foregoing or enter into any material commitment or transaction outside the
ordinary course of business consistent with past practice other than
transactions between a wholly owned Subsidiary of the Company and the Company
or another wholly owned Subsidiary of the Company;
(i) (i) modify, amend or terminate any material Contract,
(ii) waive, release, relinquish or assign any material Contract (including any
material insurance policy) or other material right or claim, or (iii) cancel or
forgive any material indebtedness owed to the Company or any of its
Subsidiaries, other than in each case in a manner in the ordinary course of
business consistent with past practice or which is not material to the business
of the Company and its Subsidiaries taken as a whole;
(j) make any tax election not required by law or settle
or compromise any tax liability, in either case that is material to the Company
and its Subsidiaries taken as a whole; or
(k) change any of the material accounting principles or
practices used by it except as required by the SEC and the Financial Accounting
Standards Board.
Section 5.2 Conduct of Business of the Parent. Except as
contemplated by this Agreement or with the prior written consent of the
Company, which consent shall not be unreasonably withheld and is hereby given
with respect to actions disclosed in the Parent Disclosure Schedule, during the
period from the date of this Agreement to the Effective Time, the Parent will,
and will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and,
consistent therewith, will use all reasonable efforts, and will cause each of
its Subsidiaries to use all reasonable efforts, to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with licensors, licensees, customers,
suppliers, employees and any others having business dealings with it, in each
case in all material respects. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, the
Parent will not, and will not permit any of the Subsidiaries to, prior to the
Effective Time, without the prior written consent of the Company, not to be
unreasonably withheld:
(a) adopt any amendment to its certificate of
incorporation or by-laws or comparable organizational documents;
(b) except for issuances of capital stock of the Parent's
Subsidiaries to the Parent or a wholly owned Subsidiary of the Parent, issue,
reissue, sell or pledge or authorize or propose the issuance, reissuance, sale
or pledge of additional shares of capital stock of any class, or securities
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible securities or capital stock, other than the issuance
of shares of Parent Common Stock
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upon the exercise of Parent Options and the conversion of shares of $2.00
Noncumulative Convertible Preference Stock outstanding on the date of this
Agreement, in each case in accordance with their present terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except that
any wholly owned Subsidiary of the Parent may pay dividends and make
distributions to the Parent or any of the Parent's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or
redeem, purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock;
(e) (i) incur, assume or pre-pay any long-term debt or
incur or assume any short-term debt, except that the Parent and its
Subsidiaries may incur, assume or pre-pay debt in the ordinary course of
business consistent with past practice or as disclosed in Section 5.2(e) of the
Parent Disclosure Schedule, (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except in the ordinary course of business
consistent with past practice, or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person except in the ordinary
course of business consistent with past practice and except for loans,
advances, capital contributions or investments between any wholly owned
Subsidiary of the Parent and the Parent or another wholly owned Subsidiary of
the Parent;
(f) settle or compromise any suit or claim or threatened
suit or claim (i) relating to the transactions contemplated hereby or (ii)
involving the payment of money or the surrender of property or other rights in
an amount or having a fair market value, in each case, in excess of $500,000;
(g) except for (i) increases in salary, wages and
benefits of employees of the Parent or its Subsidiaries (other than executive
or corporate officers of the Parent) in accordance with past practice, (ii)
increases in salary, wages and benefits granted to employees of the Parent or
its Subsidiaries (other than executive or corporate officers of the Parent) in
conjunction with promotions or other changes in job status consistent with past
practice or required under existing agreements, (iii) increases in salary,
wages and benefits to employees of the Parent pursuant to collective bargaining
agreements entered into in the ordinary course of business consistent with past
practice, and (iv) matters disclosed in Section 5.2(g) of the Parent Disclosure
Schedule, increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees (whether from the Parent or any
of its Subsidiaries), or pay any benefit not required by any existing plan or
arrangement (including, the granting of, or waiver of performance or other
vesting criteria under, stock options, stock appreciation rights, shares of
restricted stock or deferred stock or
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performance units) or grant any severance or termination pay to (except
pursuant to existing agreements or policies), or enter into any employment or
severance agreement with, any director, officer or other key employee of the
Parent or any of its Subsidiaries or establish, adopt, enter into, terminate or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, welfare, deferred
compensation, employment, termination, severance or other employee benefit
plan, agreement, trust, fund, policy or arrangement for the benefit or welfare
of any directors, officers or current or former employees, except to the extent
such termination or amendment is required by applicable law; provided, however,
that nothing herein will be deemed to prohibit the payment of benefits as they
become payable;
(h) except as disclosed in Section 5.2(h) of the Parent
Disclosure Schedule, acquire, sell, lease or dispose of any assets or
securities which are material to the Parent and its Subsidiaries or enter into
any commitment to do any of the foregoing or enter into any material commitment
or transaction outside the ordinary course of business consistent with past
practice other than transactions between a wholly owned Subsidiary of the
Parent and the Parent or another wholly owned Subsidiary of the Parent;
(i) (i) modify, amend or terminate any material Contract,
(ii) waive, release, relinquish or assign any material Contract (including any
material insurance policy) or other material right or claim, or (iii) cancel or
forgive any material indebtedness owed to the Parent or any of its
Subsidiaries, other than in each case in a manner in the ordinary course of
business consistent with past practice or which is not material to the business
of the Parent and its Subsidiaries;
(j) make any tax election not required by law or settle
or compromise any tax liability, in either case that is material to the Parent
and its Subsidiaries except that Parent and Sub may elect in Parent's
consolidated Federal income tax return for the year ended September 30, 1995 to
waive the carryback period for net operating losses and carry the losses
forward; or
(k) change any of the material accounting principles or
practices used by it except as required by the SEC and the Financial Accounting
Standards Board.
Section 5.3 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of the Parent, the Sub and the Company will
use its reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including (a) the prompt
preparation and filing with the SEC of the S-4 and the Joint Proxy Statement,
(b) such actions as may be required to have the S-4 declared effective under
the Securities Act and the Joint Proxy Statement cleared by the SEC, in each
case as promptly as practicable, including by consulting with each other as to,
and responding promptly to, any SEC comments with respect thereto, (c) such
actions as may be required to be taken under
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applicable state securities or blue sky laws in connection with the issuance of
shares of Parent Common Stock contemplated hereby and (d) the making of any
necessary filings, and thereafter the making of any required submissions, with
respect to this Agreement and the Merger under the HSR Act or any other
applicable law. Each party will promptly consult with the other with respect
to, provide any necessary information with respect to and provide the other (or
its counsel) copies of, all filings made by such party with any Governmental
Agency in connection with this Agreement and the Merger. In addition, if at
any time prior to the Effective Time any event or circumstance relating to
either the Company or the Parent or any of their respective Subsidiaries, or
any of their respective officers or directors, is discovered by the Company or
the Parent, as the case may be, which should be set forth in an amendment or
supplement to the S-4 or the Joint Proxy Statement, the discovering party will
promptly inform the other party of such event or circumstance.
Section 5.4 Letter of the Company's Accountants. Following
receipt by Deloitte & Touche LLP, the Company's independent auditors, of an
appropriate request from the Parent pursuant to Statement on Auditing Standards
("SAS") No. 72, the Company will use its reasonable best efforts to cause to
be delivered to the Parent a letter of Deloitte & Touche LLP, dated a date
within two business days before the date on which the S-4 will become effective
and addressed to the Parent, in form and substance reasonably satisfactory to
the Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4, which letter will be brought down to the Closing.
Section 5.5 Letter of the Parent's Accountants. Following
receipt by Coopers & Lybrand, LLP, the Parent's independent auditors, of an
appropriate request from the Parent or the Company pursuant to SAS No. 72, the
Parent will use its reasonable best efforts to cause to be delivered to the
Parent and Company a letter of Coopers & Lybrand LLP, dated a date within two
business days before the date on which the S-4 will become effective and
addressed to the Parent and Company, in form and substance reasonably
satisfactory to the Parent and Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4, which letter will be brought down
to the Closing.
Section 5.6 Access to Information. Upon reasonable notice, the
Company and the Parent will each (and will cause each of their respective
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, access, during normal business hours during
the period prior to the Effective Time, to all its properties, facilities,
books, contracts, commitments and records and other information as reasonably
requested by such party and, during such period, each of the Company and the
Parent will (and will cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of United States federal securities laws or
regulations, and (b) all other information concerning its business, properties
and personnel as such other party may reasonably request. The parties will
hold
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any such information which is nonpublic in confidence in accordance with the
terms of the Confidentiality Agreement, dated December 1, 1995, between the
Parent and the Company (the "Confidentiality Agreement"), and in the event of
termination of this Agreement for any reason each party will promptly comply
with the terms of the Confidentiality Agreement.
Section 5.7 Stockholders Meetings. Each of the Parent and the
Company, consistent with applicable law and its certificate of incorporation,
as amended, and by-laws, will call a meeting of its stockholders (respectively,
the "Parent Stockholder Meeting" and the Company Stockholder Meeting") for the
purpose of voting upon this Agreement (insofar as it relates to the Merger) and
the Merger, in the case of the Company, and the issuance of the shares of
Parent Common Stock in the Merger, in the case of the Parent, and use its
reasonable best efforts to hold such meeting as promptly as practicable. Each
of the Parent and the Company will, through a special committee of its Board of
Directors, recommend to its stockholders approval of such matters; provided,
however, that nothing contained in this Section 5.7 will require the Board of
Directors or the special committee thereof of either the Parent or the Company
to take any action or refrain from taking any action which either Board
determines in good faith with advice of counsel could reasonably be expected to
result in a breach of its fiduciary duties under applicable law.
Section 5.8 Stock Exchange Listing. The Parent will use its
reasonable best efforts to cause the Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE not later than the Effective
Time, subject to official notice of issuance, and to cause such Parent Common
Stock to be duly registered or qualified under all applicable state securities
or blue sky laws.
Section 5.9 Company Plans. (a) On or prior to the Effective
Time, the Company and its Board of Directors (or a committee thereof) and the
Parent will take all action necessary to implement the provisions contained in
Section 5.9(b).
(b) At the Effective Time, the Company's obligations with
respect to each outstanding Company Option under the Company Plans, as amended
pursuant to the following sentence, shall be assumed by the Parent. The
Company Options so assumed by the Parent shall continue to have, and be subject
to, the same terms and conditions set forth in the Company Plans and agreements
pursuant to which such Company Options were issued as in effect immediately
prior to the Effective Time, except that (i) each Company Option shall be
exercisable for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock covered by the Company
Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded up to the nearest whole number of shares of Parent Common Stock,
and (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon the exercise of such assumed Company Option shall be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock specified for such Company Option under the
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applicable Company Plan or agreement immediately prior to the Effective Time by
the Exchange Ratio, rounding the resulting exercise price down to the nearest
whole cent. For purposes hereof "Exchange Ratio" shall mean the ratio of $8.00
to the Market Value. The date of grant shall be the date on which each Company
Option was originally granted. The Parent shall (i) reserve for issuance the
number of shares of Parent Common Stock that will become issuable upon the
exercise of such Company Options pursuant to this Section 5.9(b), (ii) at the
Effective Time, execute a document evidencing the assumption by the Parent of
the Company's obligations with respect thereto under this Section 5.9(b) and
(iii) deliver to optionees under such Company Options appropriate notices
setting forth such optionees' rights pursuant to the Company Options. As soon
as practicable after the Effective Time, the Parent shall file a registration
statement on Form S-8 (or any successor form), or another appropriate form with
respect to the shares of Parent Common Stock subject to such Company Options
and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Company Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, the Parent, to the extent
legally permissible, shall administer the Company Plans assumed pursuant to
this Section 5.9(b) in a manner that complies with Rule 16b-3 promulgated by
the SEC under the Exchange Act. It is the intention of the parties that,
subject to applicable law, the Company Options assumed by the Parent qualify
following the Effective Time as "incentive stock options" (as defined in
Section 422 of the Code) to the extent that the Company Options qualified as
incentive stock options prior to the Effective Time and any conversion of
incentive stock options shall be undertaken so as to preserve such status.
(c) Except as disclosed in Section 5.9(c) of the Company
Disclosure Schedule, (i) there are no provisions in any plan, program or
arrangement other than the Company Plans, providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any of
its Subsidiaries and (ii) the Company will ensure that following the Effective
Time no holder of Company Options or any participant in the Company Plans or
any other plans, programs or arrangements will have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
Section 5.10 Other Employee Benefit Plans. (a) Except as
otherwise contemplated by this Agreement, the employee benefit plans (as
defined in Section 3(3) of ERISA) and other employee or director plans,
programs and policies other than salary (collectively, the "Employee Benefit
Plans") of the Company and its Subsidiaries in effect at the date of this
Agreement will remain in effect until otherwise determined after the Effective
Time and, to the extent such Employee Benefit Plans are not continued, the
Parent will maintain, for a period of at least two years after the Effective
Time, Employee Benefit Plans with respect to employees of the Company and its
Subsidiaries which are no less favorable, in the aggregate, than the most
favorable of: (i) those
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Employee Benefit Plans covering employees of the Parent from time to time; (ii)
those Employee Benefit Plans of the Company and its Subsidiaries that are in
effect on the date of this Agreement (as they may be amended, supplemented or
modified and as new Employee Benefit Plans may be adopted, to the extent
disclosed in Section 5.10(a) of the Company Disclosure Schedule); or (iii)
Employee Benefit Plans that are reasonably competitive with respect to the
industry in which the employer of the affected employees competes; provided,
that in any event, until the second anniversary of the Effective Time, the
Surviving Corporation will provide individuals who are employees of the Company
and its Subsidiaries as of the Effective Time ("Current Employees") with
Employee Benefit Plans that are no less favorable in the aggregate than those
provided to Current Employees by the Company and for its Subsidiaries
immediately before the Merger Filing Date.
(b) Without limiting the generality of Section 5.10(a),
the Parent will cause the Surviving Corporation to (i) honor (x) in accordance
with their terms all individual employment, severance, termination and
indemnification agreements and (y) at least until the second anniversary of the
Effective Date, all other employee severance plans and policies, of the Company
or any of its Subsidiaries with respect to their respective past and present
officers, directors, employees and agents as of the Effective Time, (ii) waive
any limitations regarding pre-existing conditions of Current Employees and
their eligible dependents under any welfare or other employee benefit plans of
the Parent and its affiliates in which they participate after the Effective
Time (except to the extent that such limitations would have applied under the
analogous plan of the Company and its Subsidiaries immediately before the
Effective Time), (iii) for all purposes under the post-retirement welfare
benefit plans and policies of the Parent and its affiliates, treat Current
Employees in the same manner as similarly situated employees of the Parent who
were hired by the Parent in accordance with the terms of such plans and
policies as then in effect, as any such plans and policies are modified by the
Parent or such affiliates from time to time, and (iv) for all other purposes
under all Employee Benefit Plans applicable to employees of the Company and its
Subsidiaries, treat all service with the Company or any of its Subsidiaries by
Current Employees (or retired employees eligible for retiree medical benefits)
before the Closing as service with the Parent and its Subsidiaries, except to
the extent such treatment would result in duplication of benefits or would
violate applicable law.
(c) Except as otherwise agreed with individual restricted
stockholders, at the Effective Time, each share of Company Common Stock which
immediately prior to the Effective Time was subject to restrictions on
transfer, whether vested or unvested, will become fully vested and freely
transferable and will be exchanged for unrestricted shares of Parent Common
Stock in the Merger. It is understood and agreed that under certain of the
Company Plans and the Employee Benefit Plans, and any agreements relating
thereto, the Merger shall constitute a "Change of Control" or "Change in
Control" as defined therein.
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(d) (i) The Parent will cause the Surviving Corporation
and its successors to continue in full force and effect for a period of not
less than six years from the Effective Time the indemnification provisions
contained in Article Ninth of the Certificate of Incorporation of the Company
as in effect on the date of this Agreement with respect to matters existing or
occurring at or prior to the Effective Time by directors and officers of the
Company serving as such as of the Effective Time; provided that, in the event
any claim is asserted or made within such six year period, all rights to
indemnification in respect of any such claim will continue until disposition of
any and all such claims. For a period of six years after the Effective Time,
the Parent will, or will cause the Surviving Corporation and its successors to,
provide directors and officers liability insurance having substantially the
same terms and conditions and providing at least the same coverage and amounts
(with respect to occurrences prior to the Effective Time) as the directors and
officers liability insurance maintained by the Company at the date of this
Agreement for all present and former directors and officers of the Company and
its Subsidiaries who served as such at any time since January 1, 1993 and their
respective heirs, legal representatives, successors and assigns.
(ii) From and after the Effective Time, the Parent
agrees that it or the Surviving Corporation will indemnify and hold harmless
each director or officer of the Company serving as such as of the Effective
Time (an "Indemnified Party") against any and all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time by reason of the fact
that such Indemnified Party was then serving as a director or officer of the
Company or one of its Subsidiaries, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent allowed by law (and the Parent
or the Surviving Corporation shall also advance expenses as incurred to the
fullest extent permitted under applicable law provided the Person to whom
expenses are advanced provides, if required by law, an undertaking to repay
such advances if it is ultimately determined that such Person is not entitled
to indemnification).
(iii) Any Indemnified Party wishing to claim
indemnification under clause (ii) above, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Parent and
the Surviving Corporation thereof, but the failure to so notify shall not
relieve the Parent or the Surviving Corporation of any liability it may have to
such Indemnified Party except to the extent that such failure materially
prejudices the indemnifying party. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before, at or after the
Effective Time), (x) the Parent or the Surviving Corporation shall have the
right to assume the defense thereof (which it shall, in cooperation with the
Indemnified Party, vigorously defend) and neither the Parent nor the Surviving
Corporation shall be liable to such Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof, except that if neither the Parent
nor the Surviving
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Corporation elects to assume such defense or there is a conflict of interest
between the Parent or the Surviving Corporation, on the one hand, and the
Indemnified Party, including situations in which there are one or more legal
defenses available to the Indemnified Party that are different from or
additional to those available to the Parent or the Surviving Corporation, the
Indemnified Party may retain counsel satisfactory to it, and the Parent or the
Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Party promptly as statements therefor are received;
provided, however, that neither the Parent nor the Surviving Corporation shall,
in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all Indemnified Parties except to the extent that
local counsel, in addition to such parties' regular counsel, is required in
order to effectively defend against such action or proceeding, (y) the
Indemnified Party will cooperate in the defense of any such matter and (z)
neither the Parent nor the Surviving Corporation shall be liable for any
settlement effected without its prior consent, and provided, further, that
neither the Parent nor the Surviving Corporation shall have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(e) If the Surviving Corporation or any of its successors
or assigns (x) consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (y) shall transfer all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations of the Surviving Corporation
set forth in this Section 5.10.
(f) The provisions of paragraphs (d) and (e) of this
Section 5.10 are intended to be for the benefit of, and shall be enforceable
by, each of the directors, officers and employees of the Company who are the
beneficiaries of the indemnification arrangements specified herein and their
respective heirs, legal representatives, successors and assigns.
Section 5.11 Exclusivity. Except as provided in this Section
5.11, after the date of this Agreement and until the termination of this
Agreement pursuant to Section 7.1, the Company will not, nor will it permit its
officers, directors, Subsidiaries, representatives or agents, directly or
indirectly, to, do any of the following: (i) solicit or initiate the submission
of a proposal or offer in respect of any transaction (other than the Merger)
involving any disposition or other change of ownership of a substantial portion
of the Company's stock or assets (an "Acquisition Transaction"); (ii)
participate in substantive discussions or engage in negotiations concerning an
Acquisition Transaction; or (iii) furnish or cause to be furnished to any
corporation, partnership, person or other entity or group (other than the
Parent and its representatives) (a "Person") any nonpublic
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information concerning the business, operations, properties or assets of the
Company in connection with an Acquisition Transaction; provided, however, and
notwithstanding anything else contained in this Section 5.11 or otherwise in
this Agreement, the Company and its officers, directors, Subsidiaries,
representatives and agents may engage in activities referred to in clause (ii)
above, and may furnish or cause to be furnished nonpublic information to, any
Person who, or representatives of any Person who, makes a written proposal with
respect to an Acquisition Transaction if the Company's Board of Directors
determines in good faith after consultation with its outside counsel that it is
obligated to consider such proposal in order to satisfy its fiduciary duties
under applicable law. If the Company determines to accept a proposal for or
otherwise engage in any Acquisition Transaction (other than the Merger), it may
terminate this Agreement provided it promptly pays to the Parent in
reimbursement for the Parent's expenses an amount in cash (not to exceed
$2,000,000) equal to the aggregate amount of the Parent's documented
out-of-pocket expenses reasonably incurred in connection with pursuing the
transactions contemplated by this Agreement as certified in good faith by the
Parent and with reasonable detail ("Compensable Expenses"). If the Parent
terminates this Agreement pursuant to Section 7.1(e), the Company shall
promptly reimburse the Parent for its Compensable Expenses.
Section 5.12 Fees and Expenses. Except as set forth in Section
5.11, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby will
be paid by the party incurring such expenses.
Section 5.13 Brokers or Finders. Each of the Parent and the
Company represents, as to itself, its Subsidiaries and its affiliates, that no
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any broker's, or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement, except Donaldson, Lufkin & Jenrette Securities Corporation, whose
fees and expenses will be paid by the Company in accordance with the Company's
agreement with such firm, a copy of which has been provided to the Parent, and
CS First Boston Corporation, whose fees and expenses will be paid by the Parent
in accordance with the Parent's agreement with such firm, a copy of which has
been provided to the Company. Each of the Parent and the Company will
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other brokers, or finders, fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its Subsidiary or
affiliate.
Section 5.14 Rule 145. The Parent and the Surviving Corporation
will use their reasonable efforts to comply with the provisions of Rule 144(c)
under the Securities Act in order that such affiliates may resell such Parent
Common Stock pursuant to Rule 145(d) under the Securities Act.
Section 5.15 Board Membership. The Parent shall take such action
as may be required to increase the size of its Board of Directors in order to
enable Frederick R. Hipp and Warren Gfeller
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(and any substitute person designated by the Company prior to the Effective
Time) to be appointed to Parent's Board of Directors immediately after the
Effective Time.
Section 5.16 Takeover Statutes. If any "fair price",
"moratorium", "control share acquisition" or other form of anti-takeover
statute or regulation shall become applicable to the transactions contemplated
hereby, the Parent and the Company and their respective members of their Boards
of Directors shall grant such approvals and take such actions as are necessary
so that the transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated herein and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated herein.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of the parties to effect the Merger will be
subject to the satisfaction, on or prior to the Merger Filing Date, of the
following conditions:
(a) This Agreement (insofar as it relates to the Merger)
and the Merger have been approved and adopted by the affirmative vote of the
holders of Company Common Stock entitled to cast at least a majority of the
total number of votes entitled to be cast by holders of Company Common Stock;
(b) The issuance of the shares of Parent Common Stock in
the Merger has been approved by the affirmative vote of the holders of the
Parent Common Stock and the Preference Stock, voting together as a class,
entitled to cast at least a majority of the total number of votes voting on
such matter as required by the NYSE;
(c) Any waiting period under the HSR Act applicable to
the Merger has expired or been terminated;
(d) The S-4 has become effective under the Securities Act
and is not the subject of any stop order or proceeding seeking a stop order;
and the Parent has received all material state securities or blue sky permits
and other authorizations necessary to issue the shares of Parent Common Stock
pursuant to this Agreement and the Merger;
(e) No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger is in effect (each party agreeing to use all
reasonable efforts to have any such order reversed or injunction lifted);
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(f) The Parent Common Stock has been approved for listing
on the NYSE, subject to official notice of issuance;
(g) The indebtedness outstanding under the Company's
credit facility in the amount of approximately $80.6 million at April 30, 1996
has been refinanced or otherwise repaid; or
(h) The Parent and the Company each has received the
legal opinion of Baker & Botts L.L.P., reasonably satisfactory in form and
substance to the Company and its counsel and to the Parent and its counsel,
based, in each case, upon representation letters, dated on or about the date of
such opinion, substantially in the forms of Annex III and Annex IV hereto and
containing such other facts and representations as counsel may reasonably deem
relevant, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section 368(a)
of the Code.
Section 6.2 Conditions of Obligations of the Parent and the Sub.
The obligations of the Parent and the Sub to effect the Merger are further
subject to the Company not having failed to perform its material obligations
required to be performed by it under this Agreement within 10 days after
written notice is delivered by the Parent to the Company of such failure to
perform, the Company's representations and warranties in this Agreement being
true and correct in all material respects as of the Merger Filing Date and the
Company having obtained all material consents, waivers, approvals,
authorizations or orders required to be obtained by the Company for the
authorization, execution and delivery of this Agreement and the consummation by
it of the transactions contemplated hereby (including material consents under
the leases referred to in Section 3.7(b) of the Company Disclosure Schedule).
Section 6.3 Conditions of Obligations of the Company. The
obligation of the Company to effect the Merger is further subject to the Parent
and the Sub not having failed to perform their material obligations required to
be performed by them under this Agreement within 10 days after written notice
is delivered by the Company to the Parent of such failure to perform, the
Parent's and the Sub's representations and warranties in this Agreement being
true and correct in all material respects as of the Merger Filing Date, the
Parent's having taken action, effective immediately after the Effective Time,
to appoint to Parent's Board of Directors the persons specified in Section 5.15
and the Parent having offered to employ William W. Moreton as the Executive
Vice President and Chief Financial Officer of the Parent on terms substantially
as set forth in the form of employment agreement previously delivered by Mr.
Moreton to the Parent with such employment agreement to be effective
immediately after the Effective Time.
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ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Parent and the Company:
(a) by mutual consent of the Parent and the Company by
action of their respective Boards of Directors or special committees thereof;
(b) by either the Parent or the Company if the Merger is
not consummated before October 1, 1996 despite the good faith effort of such
party to effect such consummation (unless the failure to so consummate the
Merger by such date is due to the action or failure to act of the party seeking
to terminate this Agreement, and such action or failure to act constitutes a
breach of this Agreement);
(c) by either the Parent or the Company if any court of
competent jurisdiction has issued an injunction permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger, which
injunction has become final and non-appealable;
(d) by the Company pursuant to Section 5.11;
(e) by the Parent if the Board of Directors of the
Company or the special committee thereof shall have withdrawn or modified, in
any manner adverse to the Parent, its recommendation for approval of this
Agreement (insofar as it relates to the Merger) and the Merger;
(f) by the Company if the special committee of the Board
of Directors of the Parent shall have withdrawn or modified, in any manner
adverse to the Company, its recommendation for approval of the issuance of
Parent Common Stock in the Merger;
(g) by either the Parent or the Company, if one of the
conditions set forth in Article VI to its obligation to consummate the Merger
has not been satisfied; or
(h) by the Parent if more than 1,000,000 shares of
Company Common Stock represent Dissenting Shares as of the Closing Date.
Section 7.2 Effect of Termination. In the event of a termination
of this Agreement by either the Company or the Parent as provided in Section
7.1, this Agreement will forthwith become void and there will be no liability
or obligation on the part of the Parent, the Sub or the Company or their
respective officers or directors, other than (a) the provisions of the last
sentence of Section
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5.11, which will survive for a period of one year from the date of any such
termination if and only if the Parent has not received the payment pursuant to
Section 5.11 and such termination of this Agreement is pursuant to Section
7.1(d) or (e), (b) to the extent that such termination results from the willful
breach by a party hereto of any of its covenants or agreements set forth in
this Agreement and (c) the obligations of the respective parties under the
Confidentiality Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Survival of Representations and Warranties;
Enforcement of Certain Covenants.
(a) None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement will
survive the Effective Time.
(b) The covenants of the Parent set forth in Sections 5.9
and 5.10 hereof may be enforced after the Effective Time by any of the officers
or directors of the Company as of the Effective Time.
Section 8.2 Amendment. Subject to the DGCL, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors or special committees thereof, at any time
before or after approval of the matters presented at the meetings of the
stockholders of the Company and the Parent referred to in Section 5.7. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.3 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by the
respective Boards of Directors or special committees thereof, may to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
covenants, agreements or conditions contained here. Any agreement on the part
of a party hereto to any such extension or waiver will be valid only if set
forth in a written instrument signed on behalf of such party.
Section 8.4 Notices. All notices and other communications
hereunder will be in writing and will be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at
such other address for a party as is specified by like notice):
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<PAGE> 51
(a) if to the Parent or the Sub, to
Zapata Corporation
1717 St. James Place
Houston, Texas 77253-3581
Attention: Joseph L. von Rosenberg III
General Counsel
with a copy to
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: C. Michael Watson
and
Bracewell & Patterson L.L.P.
South Tower Pennzoil Place
711 Louisiana, Suite 2900
Houston, Texas 77002-2781
Attention: Edgar J. Marston
and
(b) if to the Company, to
Houlihan's Restaurant Group, Inc.
2 Brush Creek Boulevard
Kansas City, Kansas 64112
Attention: William W. Moreton
Executive Vice President and
Chief Financial Officer
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<PAGE> 52
with a copy to
Bryan Cave LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105-2180
Attention: Kendrick T. Wallace
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference will be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they will be deemed to be followed by
the words "without limitation." The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise
requires, will be deemed to refer June 4, 1996.
Section 8.6 Counterparts. This Agreement may be executed in two
or more counterparts, all of which will be considered one and the same
agreement and will become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein), and
the Confidentiality Agreement (a) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof, and (b) other
than Sections 5.9 and 5.10 are not intended to confer upon any person other
than the parties hereto and thereto any rights or remedies hereunder or
thereunder.
Section 8.8 Governing Law. This Agreement will be governed and
construed in accordance with the laws of the State of Delaware applicable to
contracts made, executed, delivered and performed wholly within the State of
Delaware, without regard to any applicable conflicts of law. The Company, the
Parent and the Sub hereby (a) submit to the jurisdiction of any State and
Federal courts sitting in the State of Delaware with respect to matters arising
out of or relating hereto, (b) agree that all claims with respect to such
matters may be heard and determined in an action or proceeding in such State or
Federal court and no other court, (c) waive the defense of an inconvenient
forum, and (d) agree that a final judgment in any such action or proceeding
will be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
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<PAGE> 53
Section 8.9 Specific Performance. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist and damages would be difficult to
determine. Accordingly, the parties agree that they will be entitled to
specific performance of the terms of this Agreement, in addition to any other
remedy at law or equity.
Section 8.10 Publicity. Except as otherwise required by law or
the rules of the NYSE, for so long as this Agreement is in effect, neither the
Company nor the Parent will, or will permit any of its Subsidiaries to, issue
or cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without having
consulted with the other party.
Section 8.11 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Sub may assign, in its
sole discretion, any or all rights, interests and obligations hereunder to any
direct or indirect wholly owned Subsidiary of the Parent incorporated under the
laws of the State of Delaware. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.12 Validity. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof or thereof, which will remain in full force and
effect.
Section 8.13 Conveyance Tax. The Company shall be liable for and
shall hold the holders of shares of the Company Common Stock harmless against
any New York State Real Property Gains Tax, New York State Real Estate Transfer
Tax and New York City Real Property Transfer Tax which becomes payable in
connection with the transactions contemplated by this Agreement.
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<PAGE> 54
IN WITNESS WHEREOF, the Parent, the Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
ZAPATA CORPORATION
By: KENNETH W. ROBICHAU
------------------------------------
Authorized Officer
ZAPATA ACQUISITION CORP.
By: SHARON BRUNNER
------------------------------------
Authorized Officer
HOULIHAN'S RESTAURANT GROUP, INC.
By: WILLIAM W. MORETON
------------------------------------
Authorized Officer
Executive Vice President
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<PAGE> 55
SUPPLEMENTAL AGREEMENT
of
MALCOLM I. GLAZER
As of the date hereof, the undersigned represents, warrants, covenants
and agrees with Zapata Corporation ("Parent") as follows:
(a) Capitalized terms that are not defined herein shall
have the meanings ascribed to them in the Agreement and Plan of Merger, dated
as of June 4, 1996, by and among the Parent, Zapata Acquisition Corp. and
Houlihan's Restaurant Group, Inc. ("Company") (the "Merger Agreement");
(b) The Agreement dated as of April 30, 1996 between the
undersigned and the Parent ("Standstill Agreement") is in full force and effect
and neither the undersigned nor any other member of the Glazer Group is in
default thereunder;
(c) The undersigned and the other members of the Glazer
Group own of record or beneficially an aggregate of 10,408,717 shares of Parent
Company Stock, representing all the Voting Securities and Outstanding Voting
Securities of the Parent Beneficially Owned by the Glazer Group;
(d) The undersigned and the other members of the Glazer
Group own of record or beneficially an aggregate of 7,325,815 shares of Company
Common Stock, representing all the Voting Securities and Outstanding Voting
Securities of the Company Beneficially Owned by the Glazer Group;
(e) As required by the terms of the Standstill Agreement,
the undersigned has executed and delivered, and has caused each other member of
the Glazer Group to execute and deliver, to the HOL Special Committee (as
defined in the Standstill Agreement) an irrevocable proxy covering all Voting
Securities of the Parent that the members of the Glazer Group would be entitled
to vote at the meeting of the Parent's stockholders contemplated by Section 5.7
of the Agreement;
(f) Between the date hereof and the Effective Time, the
undersigned will not, and, to the extent within his actual control, will not
permit any other member of the Glazer Group to, take any action that would
result in an increase or decrease in the number of Voting Securities or
Outstanding Voting Securities of either the Parent or the Company that is
Beneficially Owned by the Glazer Group;
(g) The undersigned agrees to exercise, and, to the
extent within his actual control, cause all other members of the Glazer Group
to exercise, the Residual Election with respect to all Glazer Shares; and
(1 of 2)
<PAGE> 56
(h) On the Merger Filing Date, the undersigned will
deliver to the Parent and the Company a certificate confirming that each of the
undersigned and, to the extent within his actual control, the other members of
the Glazer Group has complied with its respective obligations set forth herein
and that the representations and warranties set forth herein are true and
correct in all material respects as of that date.
(i) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(j) This Agreement is not intended to, and shall not, confer upon
any person other than the parties hereto any rights or remedies.
(k) This Agreement shall terminate automatically upon any
termination of the Merger Agreement pursuant to Article VII thereof or upon
termination of the Standstill Agreement.
IN WITNESS WHEREOF, this Supplemental Agreement has been executed as
of this 4th day of June, 1996.
/s/ MALCOLM I. GLAZER
------------------------------------------
Malcolm I. Glazer, Individually and
as Trustee of the Malcolm I. Glazer Trust
U/A dated March 23, 1990, as amended
(2 of 2)
<PAGE> 1
EXHIBIT 2
STERN & CO.
MEDIA COMMUNICATIONS - INVESTOR RELATIONS
215 Park Avenue South, New York, NY 10003
Tel: (212) 777-7722 Fax: (212) 777-9025
World Wide Web: http://sternco.com.sternco.html
FOR IMMEDIATE RELEASE
ZAPATA CORPORATION ANNOUNCES DEFINITIVE MERGER AGREEMENT
FOR ACQUISITION OF HOULIHAN'S RESTAURANT GROUP
June 5, 1996 - Zapata Corporation (NYSE: ZAP) - ("Zapata") and Houlihan's
Restaurant Group, Inc. ("Houlihan's") announced today that they have entered
into a definitive merger agreement providing for Zapata's previously announced
acquisition of Houlihan's for a combination of cash and stock valued at $8.00
per share. In view of Malcolm Glazer's ownership of 35.2% of Zapata's
outstanding share and 73.3% of Houlihan's outstanding shares, the merger
agreement has been approved by special committees of the directors of both
Zapata and Houlihan's who are not members of the Malcolm Glazer family. The
merger agreement has also been approved by the board of directors of Houlihan's.
The merger agreement provides that Houlihan's will be merged into a newly
organized subsidiary of Zapata. Holders of Houlihan's common stock may elect
to receive for the shares (i) $8.00 in cash, without interest, (ii) $8.00 in
market value of Zapata common stock, (iii) $4.00 in cash, without interest, and
$4.00 in market value of Zapata common stock, or (iv) a residual combination of
cash and Zapata common stock (aggregating $8.00 in value) determined so that
the aggregate merger consideration to all holders of Houlihan's common stock is
equally divided between cash and Zapata common stock. Malcolm Glazer has
agreed to elect to receive the residual combination of cash and stock with
respect to the shares owned by him and his affiliates. In the event that
stockholders not affiliated with Malcolm Glazer as a group exercise elections
to receive such an amount of cash in the merger that the aggregate ownership of
Zapata common stock by Malcolm Glazer and his affiliates after the merger would
exceed 49.9% of Zapata's then outstanding common stock, the cash elections of
the unaffiliated stockholders will be reduced pro rata, and the cash portion of
the residual elections will be increased pro rata, to assure that the forgoing
49.9% ownership threshold is not exceeded. The market value of Zapata common
stock will be equal to the average of the closing price of Zapata common stock
for the 20 trading days immediately preceding the second trading day prior to
the date of the meeting of Houlihan's stockholders to be held to approve the
transaction.
The merger is subject, among other things, to approval by the stockholders of
both companies, compliance with the Hart-Scott-Rodino-Antitrust Improvements
Act, registration of the Zapata shares issuable in the merger under the
Securities Act of 1933 and receipt of consent from Houlihan's lending bank or
the refinancing of Houlihan's outstanding bank debt. Subject to the
satisfaction of these conditions, it is expected that the transaction will
close in August 1996.
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