AGREEMENT AND PLAN OF MERGER
among
CONAGRA, INC.,
CAG ACQUISITION SUB, INC.
and
INTERNATIONAL HOME FOODS, INC.
Dated as of June 22, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER .....................................................2
Section 1.1 The Merger .....................................................2
Section 1.2 Closing ........................................................3
Section 1.3 Effective Time .................................................3
Section 1.4 Certificate of Incorporation....................................3
Section 1.5 By-Laws.........................................................3
Section 1.6 Directors and Officers..........................................4
ARTICLE II CONVERSION OF SHARES ...........................................4
Section 2.1 Conversion of Shares ...........................................4
Section 2.2 Exchange Procedures ............................................5
Section 2.3 Dividends; Transfer Taxes; Withholding .........................6
Section 2.4 Fractional Shares ..............................................7
Section 2.5 Undistributed Exchange Fund.....................................7
Section 2.6 Dissenting Shares ..............................................7
Section 2.7 Options ........................................................8
Section 2.8 Closing of Transfer Books .....................................10
Section 2.9 Further Assurances ............................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY ...................................................10
Section 3.1 Organization and Good Standing ................................11
Section 3.2 Certificate of Incorporation and By-Laws ......................12
Section 3.3 Capitalization ................................................12
Section 3.4 Company Subsidiaries ..........................................13
Section 3.5 Corporate Authority ...........................................13
Section 3.6 Compliance with Applicable Law ................................14
Section 3.7 Non-Contravention .............................................14
Section 3.8 Government Approvals; Required Consents .......................15
Section 3.9 SEC Documents and Other Reports ...............................15
Section 3.10 Absence of Certain Changes or Events ..........................16
Section 3.11 Actions and Proceedings .......................................16
Section 3.12 Absence of Undisclosed Liabilities ............................17
Section 3.13 Certain Contracts and Arrangements ............................17
Section 3.14 Taxes .........................................................18
Section 3.15 Intellectual Property .........................................20
Section 3.16 Information in Disclosure Documents and Registration
Statement .....................................................21
Section 3.17 Employee Benefit Plans; ERISA .................................21
Section 3.18 Environmental Matters .........................................22
Section 3.19 Affiliate Transactions ........................................25
Section 3.20 Opinion of Financial Advisor ..................................25
Section 3.21 Brokers .......................................................25
Section 3.22 Fees...........................................................25
Section 3.23 Lack of Ownership of Parent Common Stock.......................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB .........................................26
Section 4.1 Organization and Good Standing ................................26
Section 4.2 Certificate of Incorporation and By-Laws ......................27
Section 4.3 Capitalization ................................................27
Section 4.4 Corporate Authority ...........................................28
Section 4.5 Compliance with Applicable Law.................................29
Section 4.6 Non-contravention .............................................29
Section 4.7 Government Approvals; Required Consents .......................30
Section 4.8 SEC Documents and Other Reports ...............................30
Section 4.9 Absence of Certain Changes or Events ..........................31
Section 4.10 Information in Disclosure Schedule and Registration
Statement .....................................................31
Section 4.11 Employee Benefit Plans; ERISA..................................31
Section 4.12 Lack of Ownership of Company Common Stock......................32
Section 4.13 Required Vote of Parent Stockholders...........................32
Section 4.14 Absence of Undisclosed Liabilities.............................32
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER ........................32
Section 5.1 Conduct of Business by the Company Pending the Merger .........32
Section 5.2 Conduct of Business by the Parent Pending the Closing..........35
ARTICLE VI ADDITIONAL AGREEMENTS .........................................36
Section 6.1 Access and Information; Confidentiality .......................36
Section 6.2 No Solicitation ...............................................36
Section 6.3 Third-Party Standstill Agreements .............................38
Section 6.4 Registration Statement ........................................39
Section 6.5 Proxy Statements; Stockholder Approval ........................38
Section 6.6 Compliance with the Securities Act ............................38
Section 6.7 Other Actions..................................................40
Section 6.8 Public Announcements ..........................................42
Section 6.9 Directors' and Officers' Indemnification and Insurance ........42
Section 6.10 Expenses ......................................................43
Section 6.11 Listing Application ...........................................44
Section 6.12 Supplemental Disclosure .......................................44
Section 6.13 Stockholder Litigation.........................................44
Section 6.14 Tax Matters....................................................44
Section 6.15 Investigation and Agreement by the Parties; No Other
Representations or Warranties..................................45
Section 6.16 Resignations...................................................46
Section 6.17 Amendment of Advisory and Oversight Agreement..................46
Section 6.18 Section 16(b) Board Approval...................................46
Section 6.19 Transfer of Assets.............................................47
Section 6.20 Other Registration Statements..................................47
Section 6.21 Opinion of Financial Advisor...................................47
Section 6.22 401(k) Plan Distributions......................................47
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER ......................48
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger ....48
Section 7.2 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger .............................................48
Section 7.3 Conditions to Obligation of the Company to Effect the49
Merger ........................................................49
ARTICLE VIII TERMINATION ...................................................50
Section 8.1 Termination ...................................................50
Section 8.2 Effect of Termination..........................................51
ARTICLE IX GENERAL PROVISIONS ............................................52
Section 9.1 Amendment and Modifications ...................................52
Section 9.2 Waiver ........................................................52
Section 9.3 Survivability; Investigations .................................53
Section 9.4 Notices .......................................................54
Section 9.5 Descriptive Headings; Interpretations
Section 9.6 Entire Agreement ..............................................54
Section 9.7 Governing Law .................................................54
Section 9.8 Enforcement ...................................................54
Section 9.9 Counterparts ..................................................55
Section 9.10 Assignment; Third-Party Beneficiaries .........................55
Section 9.11 No Recourse Against Others.....................................55
Section 9.12 Severability...................................................56
Section 9.13 Attorneys' Fees................................................56
Exhibit "A" Form of Stock Voting Agreement
Exhibit "B" Form of Registration Rights Agreement
Exhibit "C" Form of Option Consent Letter
Exhibit "D" Form of Affiliate Letter
Exhibit "E" Form of Tax Opinion
Exhibit "F" Form of Amendment to Advisory Agreement
Exhibit "G" Form of Amendment to Oversight Agreement
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INDEX OF DEFINED TERMS
"accumulated funding deficiency" has the meaning specified in Section 3.17(b).
"Advisory Agreement" has the meaning specified in Section 3.22(b).
"Advisory Agreement Amendment" has the meaning specified in Section 6.17.
"affiliate" has the meaning specified in Section 6.6.
"Agreement" shall mean this Agreement and Plan of Merger.
"Antitrust Laws" has the meaning specified in Section 6.7(d).
"Applicable Law" has the meaning specified in Section 3.6.
"Average Trading Price" has the meaning specified in Section 2.1(a).
"Benefit Plans" has the meaning specified in Section 3.17(a).
"Cap" has the meaning specified in Section 6.9(b).
"Cashout Options" has the meaning specified in Section 2.7(e)(ii).
"Certificate of Merger" has the meaning specified in Section 1.3.
"Certificate" has the meaning specified in Section 2.1(d).
"Charter Documents" has the meaning specified in Section 3.2.
"Chase" has the meaning specified in Section 3.20.
"Class B Stock" has the meaning specified in Section 4.3(a).
"Class C Stock" has the meaning specified in Section 4.3(a).
"Class D Stock" has the meaning specified in Section 4.3(a).
"Class E Stock" has the meaning specified in Section 4.3(a).
"Closing" has the meaning specified in Section 1.2.
"Closing Date" has the meaning specified in Section 1.2.
"Code" shall have the meaning set forth in the Recitals.
"Company" shall mean International Home Foods, Inc.
"Company Affiliate" has the meaning specified in Section 9.11.
"Company 10-K" has the meaning specified in Section 3.12.
"Company Common Stock" has the meaning specified in Section 2.1(a).
"Company Disclosure Schedule" has the meaning specified in Article III.
"Company Material Adverse Effect" has the meaning specified in Section 3.1.
"Company Multiemployer Plan" has the meaning specified in Section 3.17(b)(ii).
"Company Permits" has the meaning specified in Section 3.6.
"Company Plan" has the meaning specified in Section 3.17(b)(i).
"Company Rule 145 Affiliates" has the meaning specified in Section 6.6.
"Company SEC Documents" has the meaning specified in Section 3.9(a).
"Company Severance Agreements" has the meaning specified in Section 3.13(a).
"Company Stockholder Meeting" has the meaning specified in Section 6.5(a).
"Company Voting Debt" has the meaning specified in Section 3.3(c).
"Confidentiality Agreement" has the meaning specified in Section 6.1(b).
"Consent" has the meaning specified in Section 6.7(b).
"Contract" has the meaning specified in Section 3.7.
"Costs" has the meaning specified in Section 6.9(a).
"DGCL" has the meaning set forth in the Recitals.
"Dissenting Shares" has the meaning specified in Section 2.6.
"DOJ" has the meaning specified in Section 6.7(d).
"Economic Value" has the meaning specified in Section 2.7(e)(iv).
"Effective Time" has the meaning specified in Section 1.3.
"Environmental Claims" has the meaning specified in Section 3.18(g)(i).
"Environmental Laws" has the meaning specified in Section 3.18(g)(ii).
"Environmental Permits" has the meaning specified in Section 3.18(a).
"ERISA" has the meaning specified in Section 3.17(b).
"ERISA Affiliates" has the meaning specified in Section 3.17(b)(iii).
"Exchange Act" has the meaning specified in Section 3.8.
"Exchange Agent" has the meaning specified in Section 2.2(a).
"Exchange Fund" has the meaning specified in Section 2.2(a).
"FTC" has the meaning specified in Section 6.7(d).
"GAAP" has the meaning specified in Section 3.9(a).
"Governmental Entity" has the meaning specified in Section 3.6.
"Hazardous Materials" has the meaning specified in Section 3.18(g)(iii).
"Hicks Muse Stockholders" has the meaning specified in Section 1.1.
"HMCo" has the meaning specified in Section 3.21.
"HSR Act" has the meaning specified in Section 3.8.
"Indemnifiable Claim" has the meaning specified in Section 6.9(a).
"Indemnitee" has the meaning specified in Section 6.9(a).
"Indemnitee Expenses" has the meaning specified in Section 6.9(a).
"Indemnity Agreement" has the meaning specified in Section 6.9(a).
"Intellectual Property" has the meaning specified in Section 3.15.
"IRS" has the meaning specified in Section 3.14(a).
"Liens" has the meaning specified in Section 3.4.
"Material Contracts" has the meaning specified in Section 3.13(a).
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning specified in Section 2.1(a).
"Merger Sub" shall mean CAG Acquisition Sub, Inc.
"Merger Sub Common Stock" has the meaning specified in Section 2.1(b).
"Mexican Commission" has the meaning specified in Section 6.7(d).
"Mexican Law" has the meaning specified in Section 6.7(d).
"multiemployer plan" has the meaning specified in Section 3.17(b)(ii).
"Option Plan" has the meaning specified in Section 2.7(e)(i).
"Options" has the meaning specified in Section 2.7(e)(i).
"Other Subsidiary" has the meaning specified in Section 3.1.
"Oversight Agreement" has the meaning specified in Section 3.22(b).
"Oversight Agreement Amendment" has the meaning specified in Section 6.17.
"Parent" shall mean ConAgra, Inc.
"Parent Capital Stock" has the meaning specified in Section 4.3(a).
"Parent Common Stock" has the meaning specified in Section 2.1(a).
"Parent Disclosure Schedule" has the meaning specified in Article IV.
"Parent Material Adverse Effect" has the meaning specified in Section 4.1.
"Parent Option Plans" has the meaning specified in Section 4.3(a).
"Parent Permits" has the meaning specified in Section 4.5.
"Parent SEC Documents" has the meaning specified in Section 4.8.
"pension plan" has the meaning specified in Section 3.17(b)(i).
"Per Share Cash Consideration" has the meaning specified in Section 2.1(a).
"Per Share Stock Consideration" has the meaning specified in Section 2.1(a).
"person" has the meaning specified in Section 9.5.
"Preferred Stock" has the meaning specified in Section 3.3(a).
"Proxy Statement" has the meaning specified in Section 3.16.
"Registration Rights Agreement" has the meaning set forth in the Recitals.
"Registration Statement" has the meaning specified in Section 3.16.
"Release" has the meaning specified in Section 3.18(g)(iv).
"reportable event" has the meaning specified in Section 3.17(b).
"Reorganization Assumptions" has the meaning specified in Section 6.14.
"Representatives" has the meaning specified in Section 6.2(a).
"Reverse Merger Election" has the meaning specified in Section 1.1.
"Rollover Options" has the meaning specified in Section 2.7(e)(iii).
"SEC" has the meaning specified in Section 3.9(a).
"Securities Act" has the meaning specified in Section 3.8.
"Shares" has the meaning specified in Section 2.1(a).
"Significant Subsidiary" has the meaning specified in Section 3.1.
"Stock Action" has the meaning specified in Section 2.1(e).
"Stock Voting Agreements" has the meaning set forth in the Recitals.
"Subsequent Company SEC Documents" has the meaning specified in Section 3.9(a).
"Subsequent Parent SEC Documents" has the meaning specified in Section 4.8.
"Subsidiary" has the meaning specified in Section 3.1.
"Superior Proposal" has the meaning specified in Section 6.2(b).
"Surviving Corporation" has the meaning specified in Section 1.1.
"Takeover Proposal" has the meaning specified in Section 6.2(a).
"Tax" has the meaning specified in Section 3.14(h).
"Tax Opinion" has the meaning specified in Section 6.14.
"Tax Returns" has the meaning specified in Section 3.14(h).
"Taxes" has the meaning specified in Section 3.14(h).
"Termination Date" has the meaning specified in Section 8.1(b).
"welfare plan" has the meaning specified in Section 3.17(b)(i).
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 22, 2000 (this
"Agreement"), by and among ConAgra, Inc., a Delaware corporation ("Parent"), CAG
ACQUISITION SUB, INC., a Delaware corporation and newly formed, wholly owned
subsidiary of Parent (the "Merger Sub"), and International Home Foods, Inc., a
Delaware corporation (the "Company").
RECITALS:
(a) The Boards of Directors of Parent and the Company
have each approved and deem it advisable and in the
best interests of their respective stockholders for
Parent to acquire the Company upon the terms and
subject to the conditions of this Agreement; and
(b) Subject to the election provided in Section 1.1, it
is intended that the transaction be accomplished by a
merger of the Company with and into Merger Sub, with
Merger Sub continuing as the surviving corporation,
(the "Merger"); and
(c) As a condition and an inducement to Parent and Merger
Sub entering into this Agreement and incurring the
obligations set forth herein, concurrently with the
execution and delivery of this Agreement, certain
stockholders of the Company, who own an aggregate of
approximately 43% of the outstanding shares of
Company Common Stock (as hereinafter defined), are
entering into separate Stock Voting Agreements with
Parent in the form of Exhibit "A" hereto
(collectively, the "Stock Voting Agreements"); and
(d) The Board of Directors of the Company has approved
this Agreement and the Stock Voting Agreements and
the transactions contemplated thereby in accordance
with the provisions of Sections 203 and 251 of the
General Corporation Law of the State of Delaware
("DGCL"), and has resolved, subject to the terms of
this Agreement, to recommend the adoption of this
Agreement by its stockholders in accordance with this
Agreement; and
(e) The Board of Directors of Merger Sub has unanimously
approved this Agreement and the transactions
contemplated hereby and has unanimously resolved,
subject to the terms of this Agreement, to recommend
the adoption of this Agreement by Parent, its sole
shareholder; and
(f) The Board of Directors of Parent has approved the
transactions contemplated hereby as sole shareholder
of Merger Sub; and
(g) Concurrently with the execution and delivery of this
Agreement, Parent is entering into a Registration
Rights Agreement with certain stockholders of the
Company in the form of Exhibit "B" hereto (the
"Registration Rights Agreement").
(h) The parties hereto desire, if possible, that the
Merger will qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereto, and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for
purposes of Section 368 of the Code (subject to the
election provided in Section 1.1).
AGREEMENT:
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 The Merger. Upon the terms and subject to the conditions
contained in this Agreement, and in accordance with the DGCL, at the Effective
Time (as hereinafter defined), the Company shall be merged with and into Merger
Sub, the separate corporate existence of the Company shall thereupon cease, and
Merger Sub shall continue as the surviving corporation (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware. In accordance with Section
259 of the DGCL, all of the rights, privileges, powers, immunities, purposes and
franchises of Merger Sub and the Company shall vest in the Surviving Corporation
and all of the debts, liabilities, obligations and duties of Merger Sub and the
Company shall become the debts, liabilities, obligations and duties of the
Surviving Corporation. In lieu of the Company being merged with and into Merger
Sub, if all of the conditions set forth in Article VII (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date (as hereinafter
defined)) have been satisfied or waived, and if either (i) the Tax Opinion (as
hereinafter defined) cannot be, or is not, delivered, or (ii) Parent reasonably
determines in good faith that the combination of (a) the number of Company
Stockholders exercising appraisal rights pursuant to Section 262 of the DGCL,
(b) the trading price of Parent Common Stock immediately prior to the Effective
Time, (c) the cash portion of the Merger Consideration, and (d) the amount of
cash payable in lieu of fractional shares, could result in the cash payable to
or for the benefit of the Company Stockholders as a result of the Merger
exceeding 60% of the total fair market value of the cash and Parent Common Stock
payable and deliverable to the Company Stockholders as a result of the Merger,
then, in either case, Parent shall have the right at any time prior to the
Effective Time to irrevocably elect (the "Reverse Merger Election") by notice
delivered to the Company, and upon the terms and subject to the conditions set
forth in this Agreement, to cause the "Merger" to be a merger of Merger Sub with
and into the Company at the Effective Time, in which case, following the Merger,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the Surviving Corporation. If the Reverse Merger Election is made,
the parties acknowledge and agree that the Merger shall not, and shall not be
intended to, qualify as a reorganization under Section 368(a) of the Code.
Section 1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Vinson & Elkins L.L.P., 1325
Avenue of the Americas, 17th Floor, New York, New York 10019-6026 , at 10:00
a.m., local time, on the second business day after the conditions set forth in
Sections 7.1(a), (c) and (d) have been satisfied or on such other date and at
such other time and place as Parent and the Company shall agree (the date on
which the Closing actually occurs being referred to herein as the "Closing
Date").
Section 1.3 Effective Time. The Merger shall become effective at the
time of filing of, or at such later time specified in, a properly executed
certificate of merger (the "Certificate of Merger"), in the form required by and
executed in accordance with the DGCL, filed with the Secretary of State of the
State of Delaware, in accordance with the provisions of Section 251 of the DGCL.
Such filing shall be made contemporaneously with, or immediately after, the
Closing. When used in this Agreement, the term "Effective Time" shall mean the
date and time at which the Merger shall become effective.
Section 1.4 Certificate of Incorporation. Unless the Reverse Merger
Election is made, from and after the Effective Time, the Certificate of
Incorporation of Merger Sub as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with Applicable Law (as hereinafter defined);
provided, however, that Article I of such Certificate of Incorporation shall be
amended to read in its entirety as follows: "The name of this Corporation is
"International Home Foods, Inc." If the Reverse Merger Election is made, the
Certificate of Incorporation of the Company shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by Applicable Law.
Section 1.5 By-Laws. From and after the Effective Time, the By-Laws of
Merger Sub in effect immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation until thereafter amended in accordance with
Applicable Law, provided that if the Reverse Merger Election is made, the
By-Laws of the Company in effect immediately prior to the Effective Time shall
be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with Applicable Law.
Section 1.6 Directors and Officers. From and after the Effective Time,
the directors of Merger Sub immediately prior to the Effective Time shall become
the directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation or
By-Laws of the Surviving Corporation or as otherwise provided by law. The
officers of the Company at the Effective Time shall become the officers of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation or By-Laws of the Surviving
Corporation or as otherwise provided by law.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any shares of
Company Common Stock (as defined herein) or any shares of capital stock of
Merger Sub:
(a) Each share of Common Stock, par value $.01 per share, of the
Company ("Company Common Stock" or "Shares") issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled pursuant to
Section 2.1(c) hereof and Dissenting Shares (as defined in Section 2.6)) shall
be converted into the right to receive (i) that number of validly issued, fully
paid and nonassessable shares of Common Stock, par value $5.00 per share, of
Parent ("Parent Common Stock"), determined by dividing $11.00 by the "Average
Trading Price" (the "Per Share Stock Consideration"), which quotient shall be
rounded to the nearest fifth decimal place and (ii) $11.00 in cash (the "Per
Share Cash Consideration"). For purposes of this Agreement, "Average Trading
Price" shall mean the average closing price of Parent Common Stock on the NYSE
Composite Transactions List (as reprinted by The Wall Street Journal) for the
ten (10) full trading days ending on the fifth (5th) full trading day
immediately preceding the Closing Date, provided, however, in no event shall the
Average Trading Price (x) be greater than $22.00; nor (y) be less than $18.00.
For purposes of this Agreement, "Merger Consideration" shall mean the Per Share
Stock Consideration and the Per Share Cash Consideration to which holders of
shares of Company Common Stock are entitled pursuant to this Section 2.1(a).
(b) Each share of common stock, par value $.01, of Merger Sub ("Merger
Sub Common Stock") issued and outstanding immediately prior to the Effective
Time shall be converted into one duly issued, validly authorized, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(c) All Shares that are owned by the Company as treasury stock shall
automatically be cancelled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor.
(d) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Company Common Stock shall
cease to be outstanding and shall be cancelled and retired and shall cease to
exist, and, except as otherwise provided in Sections 2.1(c) and 2.6, each holder
of a certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock (a "Certificate") shall thereafter cease to
have any rights with respect to such shares of Company Common Stock, except the
right to receive the applicable Merger Consideration and any dividends or other
distributions to which holders become entitled all in accordance with this
Agreement upon the surrender of such Certificate.
(e) If between the date of this Agreement and the Effective Time, the
Parent shall split, combine or otherwise reclassify the Parent Common Stock, or
pay a stock dividend or other stock distribution in Parent Common Stock, or
otherwise change the Parent Common Stock into other securities, or make any
other such stock dividend or distribution in capital stock of Parent in respect
of the Parent Common Stock (collectively a "Stock Action"), the Average Trading
Price and the maximum and minimum limits on the adjustment of the Average
Trading Price set forth in clauses (x) and (y) of Section 2.1(a), each shall be
correspondingly adjusted to reflect such Stock Action, upon surrender of the
certificate formerly representing Shares in the manner provided in Section 2.2
hereof.
Section 2.2 Exchange Procedures.
(a) Parent shall designate a bank or trust company to act as Exchange
Agent hereunder (the "Exchange Agent"). Immediately following the Effective
Time, but no later than the next business day, Parent shall deliver, in trust,
to the Exchange Agent, for the benefit of the holders of Shares, for exchange in
accordance with this Article II through the Exchange Agent, (i) cash in an
amount necessary to make any cash payment due under Sections 2.1(a) and 2.4
hereof, and (ii) certificates evidencing the shares of Parent Common Stock
issuable pursuant to Section 2.1(a) in exchange for outstanding Shares. The cash
and the certificates evidencing the shares of Parent Common Stock delivered to
the Exchange Agent pursuant to this Section 2.2(a) and comprising the Merger
Consideration shall be hereinafter referred to as the "Exchange Fund". The
Exchange Agent shall invest any cash included in the Exchange Fund in one or
more bank accounts or in high-quality, short-term investments, as directed by
Parent, on a daily basis. Any interest and other income resulting from such
investments will be paid to Parent.
(b) As soon as practicable after the Effective Time, but in no event
more than five business days thereafter, Parent shall cause the Exchange Agent
to mail to each holder of record of Certificates (i) a form of letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent, and (ii) instructions for use in
surrendering such Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (A) that number of shares of Parent
Common Stock equal to the product of the Per Share Stock Consideration
multiplied by the number of Shares formerly represented by the surrendered
Certificate; provided, however, that each holder shall receive cash in lieu of
any fractional share of Parent Common Stock to which such holder would otherwise
be entitled pursuant to Section 2.4 hereof, (B) any amounts to which the holder
is entitled pursuant to Section 2.3 hereof after giving effect to any required
tax withholdings, and (C) payment by check of an amount equal to the product of
the Per Share Cash Consideration multiplied by the number of Shares formerly
represented by the surrendered Certificate, after giving effect to any required
tax withholding, and the Certificate so surrendered shall forthwith be
cancelled. Until surrendered as contemplated by this Section 2.2(b), each
Certificate shall be deemed from and after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration. In no event
shall the holder of any such surrendered Certificate be entitled to receive
interest on any cash to be received in the Merger.
(c) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond, in such reasonable and customary amount as Parent may direct,
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration.
(d) At the Closing and immediately after the Effective Time, any
Company Rule 145 Affiliate, and any affiliate of any Company Rule 145 Affiliate,
shall be entitled to surrender any Certificates and Options held by such person
in exchange for (i) certificates of Parent Common Stock representing the stock
portion of the Merger Consideration to which such person is entitled, (ii)
payment by wire transfer of immediately available funds of the cash portion of
the Merger Consideration to which such person is entitled and (iii) in respect
of such surrendered Options, the cash that such person is entitled pursuant to
Section 2.7 hereof.
Section 2.3 Dividends; Transfer Taxes; Withholding. No dividends or
other distributions that are declared on or after the Effective Time on Parent
Common Stock, or are payable to the holders of record thereof who became such on
or after the Effective Time, shall be paid to any person entitled by reason of
the Merger to receive certificates representing shares of Parent Common Stock,
until such person shall have surrendered its Certificate(s) as provided in
Section 2.2 hereof. Subject to applicable law, there shall be paid to each
person receiving a certificate representing such shares of Parent Common Stock,
at the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such certificate and having a
record date on or after the Effective Time but prior to such surrender and a
payment date on or subsequent to such surrender. In no event shall the person
entitled to receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of such certificate
representing shares of Parent Common Stock and the distribution of such cash
payment in a name other than that of the registered holder of the Certificate so
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Parent or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Exchange Agent are required to deduct and withhold under the Code
or any provision of state, local or foreign tax law, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Stock in
respect of whom such deduction and withholding were made by Parent or the
Exchange Agent.
Section 2.4 Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with respect to shares
shall be payable on or with respect to any fractional share and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of Parent. In lieu of any such fractional share of
Parent Common Stock, Parent shall pay to each former stockholder of the Company
who otherwise would be entitled to receive a fractional share of Parent Common
Stock an amount in cash (without interest) rounded to the nearest whole cent,
determined by multiplying (i) the per share closing price of Parent Common Stock
on the NYSE Composite Transactions List (as reprinted by The Wall Street
Journal) on the date on which the Effective Time shall occur (or, if Parent
Common Stock shall not trade on the NYSE on such date, the first day of trading
in Parent Common Stock thereafter) by (ii) the fractional interest in a share of
Parent Common Stock to which such holder would otherwise be entitled.
Section 2.5 Undistributed Exchange Fund. Any portion of the Exchange
Fund, together with any dividends or distributions payable in respect thereof
pursuant to Section 2.3 hereof, which remains undistributed to the former
holders of Company Common Stock for six months after the Effective Time shall be
delivered to Parent, upon its request, and any such former holders who have not
theretofore surrendered to the Exchange Agent their certificates in compliance
with this Article II shall thereafter look only to Parent for payment of their
claim for the applicable Merger Consideration and any dividends or distributions
with respect thereto (in each case, without interest thereon). None of Parent,
Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall
be liable to any person in respect of any Merger Consideration from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.6 Dissenting Shares. Each outstanding share of Company Common
Stock as to which a written demand for appraisal is duly made in accordance with
Section 262 of the DGCL at or prior to the Company Stockholder Meeting and not
withdrawn at or prior to the Company Stockholder Meeting and which is not voted
(or consented in writing) in favor of adoption of this Agreement shall not be
converted into or represent a right to receive the Merger Consideration unless
and until the holder thereof shall have failed to perfect, or shall have
effectively withdrawn or lost, such appraisal rights under said Section 262, at
which time each such share shall be converted into the right to receive the
Merger Consideration. All such shares of Company Common Stock as to which such a
written demand for appraisal is so filed and not withdrawn at or prior to the
Company Stockholder Meeting and which are not voted (or consented in writing) in
favor of adoption of this Agreement, except any such shares of Company Common
Stock the holder of which shall have effectively withdrawn or lost such
appraisal rights under said Section 262, are herein referred to as "Dissenting
Shares." The Company shall give Parent prompt notice upon receipt by the Company
of any written demands for appraisal, withdrawal of such demands, and any other
written communications delivered to the Company pursuant to said Section 262,
and the Company shall give Parent the opportunity, to the extent permitted by
law, to participate in all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not settle or offer to settle any such demands.
Section 2.7 Options.
(a) Prior to the Effective Time, the Company shall take such action as
may be necessary for all Options (as hereinafter defined) granted pursuant to
the Option Plan (as hereinafter defined) to be exercisable in full as of
immediately prior to the Effective Time.
(b) The Company shall take all requisite action such that, at the
Effective Time, all Cashout Options (as hereinafter defined) held by each
particular holder shall be canceled and such holder shall be entitled to receive
from the Company, in respect of each Cashout Option, cash (subject to any
applicable withholding tax) in an amount equal to the difference of (i) the
product of (x) the Per Share Cash Consideration, multiplied by (y) two and (ii)
the per share exercise price of such Cashout Option. From and after the
Effective Time, each Cashout Option shall only represent the right to receive
the cash payment provided in this Section 2.7(b).
(c) The Company shall take all requisite action such that, at the
Effective Time, all Rollover Options (as hereinafter defined) held by each
particular holder shall be assumed by Parent and deemed to constitute an option
to acquire, except as provided in Section 2.7(f), on the same terms and
conditions, mutatis mutandis (including, without limitation adjustments for any
stock dividend, subdivision, reclassification, recapitalization, split or other
similar event), as were applicable under such Rollover Option prior to the
Effective Time, a number of shares of Parent Common Stock equal to the product
of (i) the number of shares of Parent Common Stock the holder of such Rollover
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such Rollover Option in full immediately prior to the Effective
Time (not taking into account whether or not such Rollover Option was in fact
then exercisable), multiplied by (ii) two, at a price per share equal to (x) the
per share exercise price for a share of Company Common Stock purchasable
pursuant to such Rollover Option as of immediately prior to the Effective Time,
divided by (y) the quotient realized by dividing (1) the product of (A) the Per
Share Cash Consideration, multiplied by (B) two, by (2) the Average Trading
Price calculated pursuant to Section 2.1(a) and subject to the adjustment
limitations contained therein.
(d) The Company shall take all requisite action such that, at the
Effective Time, there shall not be outstanding any options, warrants or other
rights to acquire capital stock from the Surviving Corporation.
(e) As used herein, the following terms shall have the following
meanings:
(i) "Options" shall mean the options issued and outstanding as
of the Effective Time granted pursuant to the Company's 1997 Stock Option Plan
(the "Option Plan").
(ii) "Cashout Options" shall mean as to a particular holder of
Options, that number of Options that represent one-half of Economic Value (as
hereinafter defined) of all Options (rounded down to the nearest whole share of
Company Common Stock) held by such holder. In determining which Options of a
particular holder are to be treated as Cashout Options (x) to the extent
possible Cashout Options shall be allocated equally to each particular grant of
Options having different exercise prices and different remaining terms (provided
that in the case of Options held by a person who is a party to a Company
Severance Agreement, Cashout Options shall first be allocated to the Economic
Value of all Options, if any, held by such person the exercisability of which is
accelerated by Section 2.7(a) and second, as otherwise contemplated by this
clause (x)) and (y) Options that do not have a positive Economic Value shall not
be treated as a Cashout Option.
(iii) "Rollover Options" shall mean as to a particular holder
of Options, all Options held by such holder that are not Cashout Options.
(iv) "Economic Value" shall mean as to each Option held by a
particular holder the difference between (x) the per share exercise price
thereunder for a share of Company Common Stock, determined as of immediately
prior to the Effective Time, and (y) the product of (1) the Per Share Cash
Consideration, multiplied by (2) two.
(f) From and after the Effective Time, the Parent and the Surviving
Corporation shall be deemed to have waived and hereby agree not to enforce any
rights that they may have in respect of Rollover Options under Section 8 of the
Option Plan; provided that such waiver and agreement not to enforce such
provisions shall in respect of any Rollover Options that are Incentive Options
be conditioned upon the holder thereof executing and delivering to the Parent a
Consent Letter in the form of Exhibit "C" hereto consenting to the treatment
from and after the Effective Time of such Incentive Options as Non-Qualified
Options (as defined in the Option Plan).
(g) In the event that the exercise of any Rollover Option would result
in the issuance of a fractional share of Parent Common Stock such fractional
share shall be aggregated with all other fractional shares attributable to all
other Rollover Options then being exercised by such holder and to the extent
that a fractional share thereafter remains then, such holder shall be entitled
to receive a cash payment for any such remaining fractional share based upon the
last sale price per share of Parent Common Stock on the trading day immediately
preceding the date of exercise. Except as contemplated by Section 2.7(f), from
and after the Effective Time, Parent and the Surviving Corporation shall comply
with the terms of the Option Plan.
(h) Prior to the Effective Time, Parent shall cause to be taken all
corporate action necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery upon exercise of Rollover Options in
accordance with this Section 2.7. At the Effective Time, Parent shall file with
the SEC a registration statement on Form S-8 (or any successor or appropriate
forms) with respect to the Parent Common Stock subject to the Rollover Options
and shall use its reasonable best efforts to cause the effectiveness of such
registration statement as promptly as possible (and current status of the
prospectus or prospectuses contained therein) and to thereafter maintain such
effectiveness for so long as any Rollover Options remain outstanding.
Section 2.8 Closing of Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to Parent, they shall be cancelled and exchanged as
provided in this Article II.
Section 2.9 Further Assurances. If, at any time after the Effective
Time, Parent shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of the Company or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to or under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule (each reference
contained herein to such disclosure schedule qualifies the referenced
representation and warranty to the extent specified therein and such other
representations and warranties contained herein (regardless of whether or not
such representation or warranty contains a reference to such disclosure
schedule) to the extent a matter in such disclosure schedule is disclosed in
such a way as to make its relevance to the information called for by such other
representation or warranty readily apparent on its face) of the Company attached
hereto (the "Company Disclosure Schedule"), the Company represents and warrants
to Parent and Merger Sub as follows:
Section 3.1 Organization and Good Standing. The Company and each
Subsidiary (as hereinafter defined) that is a Significant Subsidiary (as
hereinafter defined) and a corporation, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each has the corporate power and authority to carry on its
business as it is now being conducted. Each Other Subsidiary (as hereinafter
defined) that is a corporation is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and
each has the corporate power and authority to carry on its business as it is now
being conducted, except where the failure (i) to be so organized, validly
existing or in good standing, or (ii) to have such power and authority, would
not reasonably be expected to have a material adverse effect, individually or in
the aggregate, on the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, or the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement (a "Company Material Adverse Effect"). Each other Subsidiary
that is a partnership or a limited liability company is duly organized and
validly existing under the laws of its jurisdiction of organization, and each
has the power and authority to carry on its business as it is now being
conducted, except where the failure (i) to be so organized and validly existing
or (ii) to have such power and authority, would not reasonably be expected to
have a Company Material Adverse Effect. The Company and each Subsidiary that is
a corporation is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Company Material Adverse
Effect. As used in this Agreement, a "Subsidiary" of any person means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which 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 of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. As used in this Agreement, a
"Significant Subsidiary" has the meaning assigned to such term in Regulation S-X
promulgated under the Securities Act. As used in this Agreement, the term "Other
Subsidiary" shall mean any Subsidiary that is not a Significant Subsidiary.
Except as set forth in Section 3.1 of the Company Disclosure Schedule, the
Company does not have any non-corporate subsidiaries.
Section 3.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificate of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of the Company and each of
its Significant Subsidiaries have been delivered to Parent. The Certificate of
Incorporation, By-laws and equivalent organizational documents (collectively the
"Charter Documents") of the Company and each of its Significant Subsidiaries are
in full force and effect. Neither the Company nor any of its Significant
Subsidiaries is in violation of any provision of its Charter Documents. The
Charter Documents of each Subsidiary that is not a Significant Subsidiary are in
full force and effect, and no such Subsidiary is in violation of any provision
of its Charter Documents, except where the failure of such Charter Documents to
be in full force and effect, or where such violation, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
300,000,000 shares of Common Stock, $0.01 par value, and (ii) 100,000,000 shares
of preferred stock, $0.01 par value ("Preferred Stock"). As of May 31, 2000, (i)
78,530,049 shares of Company Common Stock were issued, of which 74,130,049 were
outstanding and 4,400,000 shares were held in the treasury of the Company, and
(ii) 13,444,021 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding Options. The Company has no shares of Preferred
Stock issued and outstanding. Since May 31, 2000, the Company has not issued any
shares of capital stock, or any security convertible into or exchangeable for
shares of such capital stock, other than the issuance of shares of Company
Common Stock upon the exercise of Options and since May 31, 2000, the Company
has not acquired any additional shares of Company Common Stock in treasury.
There were outstanding, as of May 31, 2000, no options, warrants or other rights
to acquire (including through the conversion or exchange of securities) capital
stock from the Company other than the Options, representing in the aggregate the
right to purchase 11,216,002 shares of Company Common Stock under the Option
Plan. Except as disclosed in Section 3.3 of the Company Disclosure Schedule, no
options or warrants or other rights to acquire capital stock from the Company
have been issued or granted since May 31, 2000. As of May 31, 2000, the weighted
average exercise price of the Options was approximately $12.158. All of the
issued and outstanding Shares are, and any shares of Company Common Stock which
may be issued upon the exercise of Options will be, validly issued, fully paid
and nonassessable, and not subject to preemptive rights.
(b) Except as described in Section 3.3(a) hereof: (i) no shares of
capital stock or other equity securities of the Company are authorized, issued
or outstanding, or reserved for issuance, and there are no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments of any character to which the Company or any of its Subsidiaries is
a party relating to the issued or unissued capital stock or other equity
interests of the Company or any of its Subsidiaries, requiring the Company or
any of its Subsidiaries to grant, issue or sell any shares of the capital stock
or other equity interests of the Company or any of its Subsidiaries by sale,
lease, license or otherwise; (ii) neither the Company nor its Subsidiaries have
any obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of the capital stock or other equity interests of the Company
or its Subsidiaries; (iii) neither the Company nor any of its Subsidiaries
(individually or in the aggregate), directly or indirectly, owns, or has agreed
to purchase or otherwise acquire, the capital stock or other equity interests
of, or any interest convertible into or exchangeable or exercisable for such
capital stock or such equity interests, of any corporation, partnership, joint
venture or other entity which would be material in value to the Company, except
as disclosed in Section 3.3 of the Company Disclosure Schedule, and all of such
investments are owned free and clear of all Liens (as hereinafter defined),
except as disclosed in Section 3.3 of the Company Disclosure Schedule; and (iv)
there are no voting trusts, proxies or other agreements or understandings to or
by which the Company or any of its Subsidiaries is a party or is bound with
respect to the voting of any shares of capital stock or other equity interests
of the Company or any of its Subsidiaries.
(c) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote (whether currently or upon the occurrence of an event)
on any matters on which stockholders of the Company or any of its Subsidiaries
may vote ("Company Voting Debt") are issued or outstanding or subject to
issuance.
Section 3.4 Company Subsidiaries. Section 3.4 of the Company Disclosure
Schedule sets forth a list of each Subsidiary of the Company. All of the
outstanding shares of capital stock or other ownership interests in each of the
Company's Subsidiaries have been validly issued, and are fully paid,
nonassessable and, except as disclosed in Section 3.4 of the Company Disclosure
Schedule, are owned by the Company or another Subsidiary of the Company free and
clear of all pledges, claims, options, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and are not
subject to preemptive rights.
Section 3.5 Corporate Authority.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, in the case of the consummation of the
Merger, subject to the adoption of this Agreement by the Company's stockholders,
to consummate the transactions contemplated hereby. The execution and delivery
by the Company of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by its Board of
Directors and, in the case of the consummation of the Merger, except for the
adoption of this Agreement by the Company's stockholders, no other corporate or
stockholder action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation by
it of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with its terms. The preparation, filing and distribution of the Proxy Statement
(as hereinafter defined) to be filed with the SEC has been duly authorized by
the Board of Directors of the Company.
(b) Prior to execution and delivery of this Agreement and the Stock
Voting Agreements, the Board of Directors of the Company (at a meeting duly
called and held) has (i) approved and declared advisable this Agreement, the
Stock Voting Agreements, the Merger and the other transactions contemplated
hereby and thereby, and such approval is sufficient to render inapplicable to
the Merger and all other transactions contemplated hereby or thereby the
restrictions contained in Section 203 of the DGCL, (ii) determined that the
transactions contemplated hereby are fair to and in the best interests of the
holders of Company Common Stock, and (iii) determined to recommend this
Agreement to the Company's stockholders for adoption at the stockholders meeting
contemplated by Section 6.5(a) hereof. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock, voting together as a
single class, is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt this Agreement or to approve the
Merger or the transactions contemplated hereby. The Company has taken all steps
necessary to approve and irrevocably exempt the transactions contemplated by
this Agreement and the Stock Voting Agreements from the provisions of Section
203 of the DGCL and from any applicable charter, organizational document or
other agreement, arrangement or understanding to which the Company is a party
containing any change of control, "anti-takeover" or similar provision. To the
Knowledge of the Company, no other state or foreign takeover statute is
applicable to the Merger or the other transactions contemplated herein.
Section 3.6 Compliance with Applicable Law. (i) Each of the Company and
its Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities (as
hereinafter defined) necessary for the conduct of their respective businesses
("Company Permits"), except for failures to hold or to comply with such Company
Permits which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; (ii) with respect to the
Company Permits, (x) no action or proceeding is pending or, to the knowledge of
the Company, threatened, and (y) to the knowledge of the Company, no fact exists
or event has occurred that would, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect; (iii) the business of the
Company and its Subsidiaries is being conducted in compliance with all
applicable laws, ordinances, regulations, judgments, decrees or orders
("Applicable Law") of any federal, state, local, foreign or multinational court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or administrative agency or commission (a "Governmental
Entity"), except for violations or failures to so comply that would not,
individually, or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect; and (iv) no investigation or review by any Governmental
Entity with respect to the Company or its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than, in each case, those which
would not, individually, or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 3.7 Non-Contravention. Except as disclosed in Section 3.7 of
the Company Disclosure Schedule, the execution and delivery by the Company of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, (i) result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, any loan, guarantee
of indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or license
(any of the foregoing, a "Contract") binding upon the Company or any of its
Subsidiaries, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries, (ii) conflict with or
result in any violation of any provision of the Certificate of Incorporation or
By-Laws or other equivalent organizational document, in each case as amended, of
the Company or any of its Subsidiaries, or (iii) conflict with or violate any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (i) and (iii), any such right of
termination, cancellation or acceleration, violation, conflict, default, right,
loss or Lien that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.8 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the Company
or is necessary for the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) except: (i) in connection, or in
compliance, with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any non-United States competition, antitrust and investment
laws and any applicable state securities or "blue sky" law, (ii) the filing of a
notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) the filing of notification under the Competition
Act (Canada), (iv) filings under the Mexican Law (as defined in Section 6.7),
(v) the filing of Certificate of Merger with the Secretary of State of the State
of Delaware, (vi) such consents, approvals, authorizations, permits, filings and
notifications listed in Section 3.8 of the Company Disclosure Schedule, (vii)
filing required by the NYSE, (viii) filings required in connection with Company
Permits, (ix) in connection, or in compliance, with the provisions of federal,
state, local and foreign tax law and (x) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.9 SEC Documents and Other Reports. The Company has filed all
documents required to be filed prior to the date hereof by it and its
Subsidiaries with the Securities and Exchange Commission (the "SEC") since
November 19, 1997 (the "Company SEC Documents"). Except as set forth in Section
3.9 of the Company Disclosure Schedule, as of their respective dates, or if
amended, as of the date of the last such amendment, the Company SEC Documents
complied, and all documents required to be filed by the Company with the SEC
after the date hereof and prior to the Effective Time (the "Subsequent Company
SEC Documents"; provided, however, that the Subsequent Company SEC Documents
shall not include the Proxy Statement) will comply, in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the applicable rules and regulations promulgated thereunder and none of
the Company SEC Documents contained, and the Subsequent Company SEC Documents
will not contain, any untrue statement of a material fact or omitted, or will
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, or are to be made, not misleading. The consolidated financial statements
(including related notes) of the Company included in the Company SEC Documents
fairly present in all material respects, and the consolidated financial
statements (including related notes) of the Company included in the Subsequent
Company SEC Documents will fairly present in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries, as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the respective periods
then ended (subject, in the case of the unaudited statements, to normal and
recurring year-end audit adjustments which were not, and, as to the Subsequent
Company SEC Documents, are not expected to be, material and the fact that
certain information and notes have been condensed or omitted in accordance with
the Exchange Act and the rules and regulations promulgated thereunder) in
conformity with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto). Since December 31, 1999, the Company
has not made any change in the accounting practices or policies applied in the
preparation of its financial statements, except as may be required by GAAP.
Section 3.10 Absence of Certain Changes or Events. Except as set forth
in the Company SEC Documents, since December 31, 1999, the Company and its
Subsidiaries have conducted their respective businesses and operations in all
material respects in the ordinary and usual course consistent with past practice
and, except as set forth in the Company SEC Documents or Section 3.10 of the
Company Disclosure Schedule, there has not occurred (i) through the date hereof,
any change in the business, condition (financial or otherwise) or the results of
operations of the Company and its Subsidiaries that has caused a Company
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend or distribution of any kind by the Company on any class of its capital
stock; (iii) any material increase in the compensation payable or to become
payable by the Company or any Subsidiary to its directors, officers or
management employees or any material increase in any bonus, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
directors, officers or management employees; (iv) any material change by the
Company or its Subsidiaries in accounting methods, principles or practices
except as required by GAAP; (v) any material change in financial or tax
accounting methods, principles or practices by the Company or any Subsidiary,
except insofar as may have been required by the Code; or (vi) any event that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of Section 5.1 hereof.
Section 3.11 Actions and Proceedings. Except as set forth in the
Company SEC Documents, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of their properties, assets or business, or, to the knowledge
of the Company, any of the Company's or its Subsidiaries' current or former
directors or officers or any other person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such other than those that would not
reasonably be expected to have a Company Material Adverse Effect. Except for
such actions contemplated by Section 6.13 that may arise after the date hereof,
or as set forth in Section 3.11 of the Company Disclosure Schedule or in the
Company SEC Documents, there are no actions, suits or legal, administrative,
regulatory or arbitration proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, any of their
properties, assets or business, or, to the knowledge of the Company, any of the
Company's or its Subsidiaries' current or former directors or officers or any
other person whom the Company or any of its Subsidiaries has agreed to
indemnify, as such, that (individually or in the aggregate) are reasonably
likely to have a Company Material Adverse Effect, and, except for such actions
contemplated by Section 6.13 that may arise after the date hereof, or as set
forth in Section 3.11 of the Company Disclosure Schedule or in the Company SEC
Documents, to the Knowledge of the Company, no event has occurred, and no state
of facts exists, which are reasonably likely to result in any such action, suit
or proceeding.
Section 3.12 Absence of Undisclosed Liabilities. Except as set forth in
the Company SEC Documents or in Section 3.12 of the Company Disclosure Schedule
and for liabilities or obligations which are accrued or reserved against on the
balance sheet (or reflected in the notes thereto) included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 (the "Company
10-K"), neither the Company nor any of its Subsidiaries has any liabilities or
obligations (including, without limitation, Tax (as hereinafter defined)
liabilities) (whether absolute, accrued, known or unknown, contingent or
otherwise), other than (i) liabilities or obligations incurred in the ordinary
course of business since December 31, 1999 and (ii) liabilities or obligations
which would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
Section 3.13 Certain Contracts and Arrangements.
(a) Except as disclosed in Part I of Section 3.13 of the Company
Disclosure Schedule or as disclosed in the Company SEC Documents and except for
this Agreement and the Stock Voting Agreements, as of the date hereof, there are
no contracts to which the Company or any of its Subsidiaries is a party or by
which it is bound which are or would be required to be filed as an exhibit to
the Company SEC Documents or Subsequent Company SEC Documents (any contracts so
filed or required to be so filed collectively, the "Material Contracts"). Part 1
of Section 3.13 of the Company Disclosure Schedule lists all contracts to which
the Company or any of its Subsidiaries is a party or by which they are bound
which (i) contain provisions restricting or limiting the Company's or its
affiliates' ability to compete or otherwise engage in specified lines of
business, or (ii) include any obligation, or contingent obligation, to provide
severance, change of control, golden parachute, stay-pay or similar payments,
excluding, however, severance provisions included in collective bargaining
agreements, and severance policies described on Part II of Section 3.13 of the
Company Disclosure Schedule. The Agreements or arrangements described in Section
3.13(a)(ii) are herein referred to as "Company Severance Agreements".
(b) The aggregate principal amount of indebtedness for borrowed money
of the Company and its Subsidiaries outstanding as of the date hereof is
approximately $1,145,000,000.
(c) Neither the Company nor any of its Subsidiaries is in default under
any Material Contract, and there has not occurred any event that, with the
giving of notice or the lapse of time or both, would constitute such a default
by the Company or any of its Subsidiaries or, to the knowledge of the Company, a
default thereunder by any other party thereto, except as set forth in the
Company SEC Documents or for such defaults as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.14 Taxes.
(a) Except to the extent that, in the aggregate, breaches of this
Section 3.14(a) would not result in a Company Material Adverse Effect: (i) the
Company and each of its Subsidiaries has filed all Tax Returns (as hereinafter
defined) required to have been filed on or prior to the date hereof, or
appropriate extensions therefor have been properly obtained, and such Tax
Returns are true, correct and complete; (ii) all Taxes (whether imposed directly
or indirectly) shown to be due on such Tax Returns either (x) have been timely
paid or (y) extensions for payment have been properly obtained or such Taxes are
being timely and properly contested and, in either case, proper accruals
pursuant to GAAP have been established on the Company's consolidated financial
statements with respect thereto; (iii) the Company and each of its Subsidiaries
have complied with all rules and regulations relating to the withholding of
Taxes; (iv) except as set forth in Section 3.14(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has waived any statute
of limitations in respect of its Taxes or Tax Returns; (v) Tax Returns of the
Company and its Subsidiaries relating to federal, foreign and material state
income Taxes have not been examined by the Internal Revenue Service ("IRS") or
the appropriate taxing authority, except as disclosed in Section 3.14 of the
Company Disclosure Schedule, which sets forth all closed and pending audits,
examination or claims by any taxing authority of any Tax Returns, and no
extension of the statute of limitations for the assessment of any federal,
foreign and material state income Taxes has been granted by the Company or any
of its Subsidiaries, except as disclosed in Section 3.14 of the Company
Disclosure Schedule; (vi) no issues that have been raised by a taxing authority
in connection with the examination of any federal, foreign or state Tax Returns
of the Company or its Subsidiaries are currently pending; (vii) all deficiencies
asserted or assessments made as a result of any examination of such Tax Returns
by any taxing authority have been paid in full or are being timely and properly
contested and proper accruals pursuant to GAAP have been established on the
Company's consolidated financial statements with respect thereto; (viii) except
as set forth in Section 3.14 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any liability for Taxes of any person
other than the Company and its Subsidiaries under (a) Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law) or
(b) any express or implied agreement; (ix) except as set forth in Section 3.14
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has been a member of any affiliated group within the meaning of
Section 1504(a) of the Code other than the affiliated group of which the Company
is the common parent corporation; (x) the unpaid Taxes of the Company and its
Subsidiaries for Tax periods from December 31, 1998 through the Closing Date are
normal recurring Taxes attributable solely to the conduct of their businesses in
the ordinary course and in a manner consistent with past practices, and (xi) the
Company and its Subsidiaries (or, in the case of clause (a) below, each of the
Subsidiaries) as of the most recent practicable date (as well as on an estimated
pro forma basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby) do not have any: (a) excess loss accounts as
defined in Treas. Reg. Section 1.1502-19; (b) Code Section 481 adjustments
allocable to the Company or any Subsidiary; or (c) deferred gains or losses
allocable to the Company or its Subsidiaries arising out of any deferred
intercompany transaction as defined in Treas. Reg. Section 1.1502-13 or similar
provisions of U.S. federal, state, local or foreign tax law.
(b) No examination or audit by the IRS or any taxing authority of any
Tax Return of the Company and/or any of its Subsidiaries is currently in
progress or, to the knowledge of the Company, threatened or contemplated, in
each case, which involve claims that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect. Neither Company nor
any of its Subsidiaries has been informed by any jurisdiction that the
jurisdiction believes that Company or any of its Subsidiaries was required to
file any Tax Return that was not filed which failure or failures, individually
or in the aggregate, are reasonably likely to have a Company Material Adverse
Effect. The election under Section 338(h)(10) of the Code in connection with the
Company's and certain Subsidiaries' acquisition from American Home Products
Corporation on November 1, 1996, was made timely and properly.
(c) Neither Company nor any of its Subsidiaries is a "consent
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Company or its Subsidiaries are subject to an election under Section
341(f) of the Code.
(d) Neither the Company nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(e) Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that will not be deductible under either Code
Section 162(m) or Code Section 280G (or cause the Company or any of its
Subsidiaries to incur an obligation to reimburse a person for a Tax imposed
under Code Section 4999).
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, since December 31, 1999, the Company and its Subsidiaries have used
tax accounting methods, practices and elections consistent with past practices,
and have not used any improper, invalid or inconsistent method, practice or
election with respect to any period beginning on or prior to the date hereof,
except to the extent such method, practice or election would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(g) Except as set forth in Section 3.14(g) of the Company Disclosure
Schedule, to the knowledge of the Company, no state of facts or circumstances
exists which is reasonably likely to constitute grounds for any audit or
examination of, or the assessment of additional Taxes with respect to, Tax
Returns previously filed, or with respect to Tax Returns previously failed to
have been filed, by the Company or any of its Subsidiaries, where such audit or
examination or assessment would, individually or in the aggregate, have a
Company Material Adverse Effect.
(h) For purposes of this Agreement, a "Tax" or, collectively, "Taxes"
means any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions, levies, and liabilities, including,
without limitation, taxes based upon or measured by gross receipts, income,
profits, sales, use or occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise, unemployment
insurance, social security, business license, occupation, business organization,
stamp, environmental and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under any
law or any agreements or arrangements with any other person with respect to such
amounts and including, without limitation, any primary, contingent, transferee
or successor liability for taxes of another person, a predecessor entity or
former affiliate. "Tax Returns" means all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority in
connection with Taxes.
Section 3.15 Intellectual Property. Except as set forth in Section 3.15
of the Company Disclosure Schedule, the Company and its Subsidiaries own, or are
licensed or otherwise have the right to use, all United States and foreign
issued patents, patent rights, patent applications, registered trademarks,
trademark applications, registered service marks, service mark applications,
trade names, copyrights, software and know-how (the "Intellectual Property")
currently used by the Company and its Subsidiaries in their business, except
where the failure to so own, license or otherwise have the right to use such
Intellectual Property would not be reasonably be expected to have a Company
Material Adverse Effect. Except as would not reasonably be expected to have a
Company Material Adverse Effect and except as set forth in Section 3.15 of the
Company Disclosure Schedule, (i) the use of the Intellectual Property by the
Company and its Subsidiaries does not interfere with, infringe upon,
misappropriate or otherwise come into conflict with any patent, trademark,
service mark, trade name, copyright, brand name, logo, symbol or other
intellectual property or proprietary information of any other person, and (ii)
to the knowledge of the Company, no other person is interfering with, infringing
upon, misappropriating or otherwise coming into conflict with any Intellectual
Property of the Company or any of its Subsidiaries.
Section 3.16 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by the Company for
inclusion in (i) the Registration Statement on Form S-4 to be filed with the SEC
under the Securities Act for the purpose of registering the shares of Parent
Common Stock to be issued in connection with the Merger (the "Registration
Statement") or (ii) the proxy statement/prospectus to be distributed in
connection with the Company's meeting of stockholders to vote upon this
Agreement (the "Proxy Statement") will, in the case of the Registration
Statement, at the time it becomes effective or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the Company Stockholder Meeting (as defined herein)
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement, as of its effective date, will comply (with respect to information
relating to the Company) as to form in all material respects with the
requirements of the Securities Act, and the rules and regulations promulgated
thereunder, and as of the date of its initial mailing and as of the date of the
Company Stockholder Meeting, the Proxy Statement will comply (with respect to
information relating to the Company) as to form in all material respects with
the applicable requirements of the Exchange Act, and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, the Company makes no
representation with respect to any statement in the foregoing documents based
upon information supplied by Parent or Merger Sub for inclusion therein.
Section 3.17 Employee Benefit Plans; ERISA.
(a) Section 3.17(a) of the Company Disclosure Schedule sets forth the
name of each Company Plan (as hereinafter defined) and of each bonus, deferred
compensation (together with a list of participants therein), incentive
compensation, profit sharing, salary continuation (together with a list of
participants therein), employee benefit plan, stock purchase, stock option,
employment, severance, termination, golden parachute, consulting or supplemental
retirement plan or agreement (collectively, the "Benefit Plans"). With respect
to each Benefit Plan, to the extent applicable, the Company has delivered to
Parent correct and complete copies of (i) the plan documents and summary plan
descriptions, (ii) the most recent determination letter received from the IRS,
(iii) the most recent Form 5500 annual report, and (iv) all related agreements,
insurance contracts and other agreements which implement each Benefit Plan.
(b) Except to the extent that, in the aggregate, breaches of this
Section 3.17(b) and Sections 3.17(c), (d) and (e) would not result in a Company
Material Adverse Effect and except as described in Section 3.17(b) of the
Company Disclosure Schedule: (i) each Company Plan and Benefit Plan complies in
all respects with the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and all other applicable laws and administrative or
governmental rules and regulations, (ii) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company Plan
for which the 30-day notice requirement has not been waived (other than with
respect to the transactions contemplated by this Agreement); (iii) neither the
Company nor any of its ERISA Affiliates (as hereinafter defined) has withdrawn
from any Company Plan under Section 4063 of ERISA or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, to terminate any Company Plan subject to Title IV of
ERISA, (iv) no Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, (v) there are no actions, suits or claims pending or, to the
knowledge of the Company, threatened (other than routine claims for benefits)
with respect to any Company Plan or Benefit Plan, (vi) neither the Company nor
any of its ERISA Affiliates has incurred or would reasonably be expected to
incur any liability under or pursuant to Title IV of ERISA that has not been
satisfied in full, (vii) no non-exempt prohibited transactions described in
Section 406 of ERISA or Section 4975 of the Code have occurred, and (viii) all
Company Plans and Benefit Plans that are intended to be qualified under Section
401(a) of the Code have received a favorable determination letter as to such
qualification from the Internal Revenue Service, and no event has occurred,
either by reason of any action or failure to act, which could be expected to
cause the loss of any such qualification, and the Company is not aware of any
reason why any Company Plan and Benefit Plan is not so qualified in operation.
As used herein: (i) "Company Plan" means a "pension plan" (as defined in Section
3(2) of ERISA, other than a Company Multiemployer Plan) or a "welfare plan" (as
defined in Section 3(l) of ERISA) established or maintained by the Company or
any of its ERISA Affiliates or to which the Company or any of its ERISA
Affiliates has contributed in the last three years or otherwise may have any
liability; (ii) "Company Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability; and (iii) "ERISA Affiliate" means any member of a "controlled group"
of which the Company is a member or under "common control" with the Company
(within the meaning of Section 414(b) or (c) of the Code.
(c) Section 3.17(c) of the Company Disclosure Schedule sets forth the
name of each Company Multiemployer Plan. With respect to each Company
Multiemployer Plan, except as set forth on Schedule 3.17(c) of the Company
Disclosure Schedule, and except for such matters that, together with breaches of
Section 3.17(b), (d) and (e) that, in the aggregate, would not result in a
Company Material Adverse Effect, (i) neither the Company nor any Company
Subsidiary or ERISA Affiliate has withdrawn, partially withdrawn, or received
any notice of any claim or demand for withdrawal liability or partial withdrawal
liability, (ii) neither the Company nor any Company Subsidiary or ERISA
Affiliate knows or has been notified by any Company Multiemployer Plan that such
Company Multiemployer Plan is currently in reorganization or insolvency under or
within the meaning of Sections 4241 or 4245 of ERISA, that such Multiemployer
Plan intends to terminate or has been terminated under Section 4041A of ERISA,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, or that any such plan is or may
become insolvent, (iii) neither the Company nor any Company Subsidiary or ERISA
Affiliate has failed to make any required contributions to any such plan, (iv)
no such plan is a party to any pending merger or asset or liability transfer,
(v) to the knowledge of the Company, there are no PBGC proceedings against or
affecting any such plan, and (vi) neither the Company nor any Company Subsidiary
or ERISA Affiliate has (or may have as a result of the transaction contemplated
hereby) any withdrawal liability by reason of the sale of assets pursuant to
Section 4204 of ERISA. Except as otherwise set forth on Section 3.17(c) of the
Company Disclosure Schedule, Section 3.17(c) of the Company Disclosure Schedule
includes for each Company Multiemployer Plan, as of its last valuation date, the
amount of potential withdrawal liability for the Company, Company Subsidiary or
ERISA Affiliate, calculated according to the information made available pursuant
to ERISA Section 4221(a) and identified as the specific obligor. To the
knowledge of the Company, except as set forth on Section 3.17(c) of the Company
Disclosure Schedule, nothing has occurred or is expected to occur that would
increase the amount of the total potential withdrawal liability of a specified
obligor for any such plan over the amount shown in Section 3.17(c) of the
Company Disclosure Schedule, except where such increase would not have a Company
Material Adverse Effect.
(d) Except as disclosed in Section 3.17(d) of the Company Disclosure
Schedule, as of the last day of the most recent prior plan year, the market
value of assets under each Benefit Plan subject to Title IV of ERISA, other than
any Multiemployer Plan, equaled or exceeded the present value of benefit
liabilities thereunder (determined in accordance with the actuarial valuation
assumptions described on Section 3.17(d) of the Company Disclosure Schedule or
the actuarial valuation report provided to Parent).
(e) (i) Except as disclosed in Section 3.17(e) of the Company
Disclosure Schedule, no amount payable under any Company Plan will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code; and (ii) except as would not be reasonably likely to result in material
(individually or in the aggregate) liability, the consummation of the
transactions contemplated by this Agreement will not (either alone or in
combination with any other event, including a termination of employment) (A)
entitle any current or former director, officer or employee of the Company or
any of its ERISA Affiliates to severance pay, change of control payments, golden
parachute payments, unemployment compensation or any other payment, except as
expressly provided in this Agreement, (B) accelerate the time of payment or
vesting, or increase the amount of, compensation or other economic benefit
provided or made available to any such director, officer or employee, or (C)
accelerate or increase the funding obligation of the Company or its Subsidiaries
with respect to any Company Plan.
Section 3.18 Environmental Matters. Except as disclosed in Section 3.18
of the Company Disclosure Schedule or in the Company SEC Documents, and except
for such matters that would not, in the aggregate, have a Company Material
Adverse Effect:
(a) The Company and its Subsidiaries have obtained, or have timely
applied for, all environmental, health and safety permits, licenses and
governmental authorizations (collectively, "Environmental Permits") necessary
under applicable Environmental Laws (as hereinafter defined) to conduct their
business and operations as currently conducted.
(b) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws and Environmental Permits, and neither the Company
nor any of its Subsidiaries has received any written communication from any
person or Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in such compliance.
(c) There are no Environmental Claims (as hereinafter defined) pending
or, to the knowledge of the Company, threatened, against the Company or any of
its Subsidiaries, in either case arising out of (i) any real property currently
or formerly owned, leased or operated by the Company or any of its Subsidiaries,
or (ii) any current or former operations of the Company or any of its
Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has retained, or
assumed, either contractually or by operation of law, any liabilities of which
the Company has knowledge arising under applicable Environmental Laws.
(e) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws governing the investigation, remediation and
monitoring of a facility at the time of its transfer, including the New Jersey
Industrial Site Recovery Act and the Connecticut Transfer Act, to the extent
required to consummate the transactions contemplated by this Agreement.
(f) To the Knowledge of the Company, no event has occurred, and no
state of facts exists, that is reasonably likely to result in any Environmental
Claim described in Section 3.18(c) above.
(g) (i) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (in each case in writing) by any Person or entity (including any
Governmental Entity), alleging noncompliance, violation or potential liability
(including potential responsibility or liability for costs of enforcement,
investigation, cleanup, governmental response, removal or remediation, for
natural resources damages, property damage, personal injuries or penalties or
for contribution, indemnification, cost recovery, compensation or injunctive
relief) arising out of, or related to (x) the presence, Release (as hereinafter
defined) or threatened Release of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its Subsidiaries, or
(y) circumstances forming the basis of any violation or alleged violation of, or
liability under, any Environmental Law or Environmental Permit.
(ii) "Environmental Laws" mean all foreign, federal, state and
local laws, rules, regulations, orders, decrees, common law, judgments or
binding agreements issued, promulgated or entered into by or with any
Governmental Entity, relating to pollution, the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment, including laws and
regulations relating to Releases or threatened Releases of Hazardous Materials,
or otherwise relating to the generation, manufacture, processing, distribution,
use, treatment, storage, transport, handling of or exposure to Hazardous
Materials.
(iii) "Hazardous Materials" means (x) any petroleum or
petroleum products, fractions or wastes, radioactive materials or wastes,
friable asbestos and polychlorinated biphenyls; and (y) any other chemical,
material, substance or waste the generation, manufacture, processing,
distribution, possession, use, treatment, storage or Release of which is
prohibited, limited or regulated under any applicable Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
Section 3.19 Affiliate Transactions. Except as set forth in Section
3.19 of the Company Disclosure Schedule, or except as set forth in the Company
SEC Documents, there are no material Contracts or other material transactions
between the Company or any of its Subsidiaries, on the one hand, and any (i)
officer or director of the Company or of any of its Subsidiaries, (ii) record or
beneficial owner of five percent or more of any class of the voting securities
of the Company or (iii) affiliate (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
Section 3.20 Opinion of Financial Advisor. The Company has received the
written opinion of Chase Securities Inc. ("Chase") in the form and substance of
the written opinion provided to Parent prior to the execution and delivery of
this Agreement to the effect (as provided therein) that the Merger Consideration
is fair to the holders of Company Common Stock from a financial point of view
which opinion will be confirmed in writing.
Section 3.21 Brokers. Other than Chase and Hicks, Muse & Co. Partners,
L.P. ("HMCo"), no broker, finder, investment banker or financial advisor has
been retained by the Company or is entitled to any brokerage, finder's or other
fee or commission from the Company in connection with the transactions
contemplated by this Agreement.
Section 3.22 Fees.
(a) On the assumption that all employees subject or party to the
Company Severance Agreements are terminated immediately following the Closing
Date, the Company's and its Subsidiaries' obligations under the Company
Severance Agreements will not exceed, in the aggregate, $15,352,000 (as such
amount may be increased after September 15, 2000 for the amount of any bonus
accruing after such date in accordance with the terms of the applicable Company
Severance Agreements), provided that such amount does not include (i) amounts
payable pursuant to the Worker Adjustment and Retraining Notification Act (or
any similar state statute), (ii) amounts payable under the Company's severance
policies described in Section 3.22 of the Company Disclosure Schedule, or (iii)
the impact of the transactions contemplated herein with respect to the Options.
(b) Other than the Financial Advisory Agreement dated as of November 1,
1996 between the Company and HMCo (the "Advisory Agreement") and the Monitoring
and Oversight Agreement dated as of November 1, 1996 between the Company and
HMCo (the "Oversight Agreement"), and except as set forth in Section 3.22 of the
Company Disclosure Schedule, there is no agreement or other arrangement between
the Company or any Subsidiary and HMCo or any affiliate of HMCo (including,
without limitation, Hicks, Muse, Tate & Furst Incorporated and its affiliates).
The compensation, fees and other amounts, excluding the reimbursement of
expenses, payable by the Company or its Subsidiaries pursuant to the Advisory
Agreement as a result of the transactions contemplated herein shall not exceed,
in the aggregate, $10,000,000. No additional amounts will be paid or payable
under the Oversight Agreement other than regularly scheduled payments. In
addition to the foregoing, HMCO shall be entitled to reimbursement of expenses
through the Closing Date pursuant to the terms of the Advisory Agreement and the
Oversight Agreement provided that such expenses shall not exceed $50,000 in the
aggregate.
(c) The fees payable by the Company or its Subsidiaries to Chase for
the fairness opinion referred to in Section 3.20 above shall not exceed
$2,000,000, plus any required expense reimbursement.
Section 3.23 Lack of Ownership of Parent Common Stock. Neither the
Company nor any of its Subsidiaries owns any shares of Parent Common Stock
(exclusive of any shares owned by Company Plans).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
Parent and Merger Sub, jointly and severally, represent and warrant to
the Company as follows:
Section 4.1 Organization and Good Standing. Each of Parent, Merger Sub
and each Subsidiary of Parent that is a Significant Subsidiary and a corporation
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and each has the corporate power and authority to
carry on its business as it is now being conducted. Each Other Subsidiary that
is a corporation is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and each has the
corporate power and authority to carry on its business as it is now being
conducted, except where the failure (i) to be so organized, validly existing or
in good standing, or (ii) to have such power and authority, would not reasonably
by expected to have a material adverse effect, individually or in the aggregate,
on the business, condition (financial or otherwise) or results of operations of
Parent and its Subsidiaries taken as a whole, or the ability of Parent or Merger
Sub to consummate the Merger and the other transactions contemplated by this
Agreement (a "Parent Material Adverse Effect"). Parent, Merger Sub and each
Significant Subsidiary that is a corporation is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificates of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of Parent and Merger Sub have
been made available to the Company. The Certificates of Incorporation and
By-laws, or equivalent organizational documents, of Parent and each of its
Subsidiaries are in full force and effect. Neither Parent nor any of its
Subsidiaries is in violation of any provision of its Certificate of
Incorporation, By-laws or equivalent organizational documents.
Section 4.3 Capitalization.
(a) The authorized capital stock of Parent consists of (i)
1,200,000,000 shares of Common Stock, par value $5.00 per share, constituting
Parent Common Stock, (ii) 150,000 shares of parent Class B Preferred Stock,
$50.00 par value ("Class B Stock"), (iii) 250,000 shares of Parent Class C
Preferred Stock, $100.00 par value ("Class C Stock"), (iv) 1,100,000 shares of
Parent Class D Preferred Stock, without par value ("Class D Stock"), and (v)
16,550,000 shares of parent Class E Preferred Stock, without par value ("Class E
Stock"). The Class B Stock, Class C Stock, Class D Stock and Class E Stock,
together with Parent Common Stock, is referred to as the "Parent Capital Stock".
As of May 28, 2000, (x) 492,347,367 shares of Parent Common Stock were issued
and outstanding, (y) 25,627,130 shares of Parent Common Stock were reserved for
issuance upon the exercise of outstanding options to purchase Parent Common
Stock, and (z) 31,789,509 shares of Parent Common Stock were held in the
treasury of Parent. Parent has no shares of Class B Stock, Class C Stock, Class
D Stock or Class E Stock issued and outstanding. Since May 28, 2000 through the
date hereof, Parent has not issued any shares of its capital stock, or any
security convertible into or exchangeable for shares of such capital stock,
other than upon the exercise of stock options and, since May 27, 2000 through
the date hereof, Parent has not acquired any additional shares of Parent Common
Stock in treasury. Except as set forth in the Parent SEC Documents, there were
outstanding as of May 28, 2000, no options, warrants or other rights to acquire
(including through the conversion or exchange of securities) capital stock from
Parent other than stock options representing in the aggregate the right to
purchase 25,627,130 shares of Parent Common Stock under the Parent 1982 Stock
Plan, 1985 Stock Plan, 1990 Stock Plan, 1995 Stock Plan, Golden Valley Stock
Plan and Goodmark Stock Plan (the "Parent Option Plans"). Except pursuant to the
Parent Option Plans, no options or warrants or other rights to acquire capital
stock from the Company have been issued or granted since May 28, 2000 through
the date hereof. As of May 28, 2000, the weighted average exercise price of such
options issued by Parent was approximately $23.2941. The authorized capital
stock of Merger Sub consists of 10,000 shares of Common Stock, par value $.01
per share, constituting the Merger Sub Common Stock. As of the date hereof,
1,000 shares of Merger Sub Common Stock are issued and outstanding, all of which
are owned by Parent, and no shares of Merger Sub Common Stock are held in the
treasury of Merger Sub. All of the issued and outstanding shares of Parent
Common Stock and Merger Sub Common Stock have been validly issued, and are fully
paid and nonassessable, and are not subject to preemptive rights. Each share of
Parent Common Stock to be issued in connection with the Merger or upon exercise
of the Rollover Options has been duly authorized and, when so issued, will be
fully paid and nonassessable, and will not be subject to preemptive rights.
(b) Except as set forth in the Parent SEC Documents, and except as
described in Section 4.3(a), as of the date hereof, (i) no shares of capital
stock or other equity securities of Parent or Merger Sub are authorized, issued
or outstanding, or reserved for issuance and there are no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments of any character to which Parent or Merger Sub or any of their
respective Subsidiaries is a party relating to the issued or unissued capital
stock or other equity interests of Parent or Merger Sub, requiring Parent or
Merger Sub to grant, issue or sell any shares of the capital stock or other
equity interests of Parent or Merger Sub or any of their respective Subsidiaries
by sale, lease, license or otherwise; (ii) neither Parent nor any of its
Subsidiaries have any obligation, contingent or otherwise, to repurchase, redeem
or otherwise acquire any shares of the capital stock or other equity interests
of Parent or Merger Sub or any of their respective Subsidiaries; (iii) none of
Parent or Merger Sub or any of their respective Subsidiaries (individually or in
the aggregate), directly or indirectly, owns, or has agreed to purchase or
otherwise acquire, the capital stock or other equity interests of, or any
interest convertible into or exchangeable or exercisable for such capital stock
or such equity interests, of any corporation, partnership, joint venture or
other entity which would be material in value to Parent; and (iv) there are no
voting trusts, proxies or other agreements or understandings to or by which
Parent or Merger Sub or any of their respective Subsidiaries is a party or is
bound with respect to the voting of any shares of capital stock or other equity
interests of Parent or Merger Sub or any of their respective Subsidiaries.
(c) No bonds, debentures, notes or other indebtedness of Parent or
Merger Sub having the right to vote (whether currently or upon the occurrence of
an event) on any matters on which the stockholders of Parent, Merger Sub or any
of its other Subsidiaries may vote are issued or outstanding or subject to
issuance.
Section 4.4 Corporate Authority.
(a) Each of Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly authorized by its respective
Board of Directors and no other corporate action on the part of Parent or Merger
Sub is necessary to authorize the execution and delivery by Parent and Merger
Sub of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes a valid and binding agreement of Parent
and Merger Sub and is enforceable against Parent and Merger Sub in accordance
with its terms. The preparation and filing of the Registration Statement to be
filed with the SEC has been duly authorized by the Board of Directors of Parent.
(b) Prior to the execution and delivery of this Agreement and the Stock
Voting Agreements, the Board of Directors of each of Parent and Merger Sub (at a
meeting duly called and held) has (i) approved and declared advisable this
Agreement, the Stock Voting Agreements, the Merger and the other transactions
contemplated hereby and thereby, and (ii) determined that the transactions
contemplated hereby are fair to and in the best interests of the holders of
Parent Common Stock and Merger Sub Common Stock.
Section 4.5 Compliance with Applicable Law. (i) Each of Parent and its
Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities
necessary for the conduct of their respective business ("Parent Permits"),
except for failures to hold or to comply with such Parent Permits which would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; (ii) with respect to the Parent Permits, no action or
proceeding is pending or, to the knowledge of Parent, threatened, and, to the
knowledge of Parent, no fact exists or event has occurred that would,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; (iii) the business of Parent and its Subsidiaries is
being conducted in compliance with all Applicable Laws of any Governmental
Entity, except for violations or failures to so comply that would not,
individually, or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; and (iv) no investigation or review by any Governmental
Entity with respect to Parent or its Subsidiaries is pending or, to the
knowledge of Parent, threatened, other than, in each case, those which would
not, individually, or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.6 Non-contravention. The execution and delivery by Parent and
Merger Sub of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, (i)
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, any
Contract binding upon Parent or any of its Subsidiaries, or result in the
creation of any Lien upon any of the properties or assets of Parent or any of
its Subsidiaries, (ii) conflict with or result in any violation of any provision
of the Certificate of Incorporation or By-Laws or other equivalent
organizational document, in each case as amended, of Parent or any of its
Subsidiaries, or (iii) conflict with or violate any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (i) and (iii), any such violation, conflict, default, right,
loss or Lien that, individually or in the aggregate, would not reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.7 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or is necessary for the consummation of the transactions contemplated
hereby (including, without limitation, the Merger) except: (i) in connection, or
in compliance, with the provisions of the Securities Act, the Exchange Act, any
non-United States competition, antitrust and investment laws and any applicable
state securities or "blue sky" law, (ii) the filing of a notification under the
HSR Act, (iii) the filing of a notification under the Competition Act (Canada),
(iv) filings required under the Mexican Law (as defined in Section 6.7), (v) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, (vi) in connection, or in compliance with the provisions of federal,
state, local and foreign tax law, (vii) filing required by the NYSE, and (viii)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.8 SEC Documents and Other Reports. Parent has filed all
documents required to be filed prior to the date hereof by it and its
Subsidiaries with the SEC since May 25, 1997 (the "Parent SEC Documents"). As of
their respective dates, or if amended as of the date of the last such amendment,
the Parent SEC Documents complied, and all documents required to be filed by
Parent with the SEC after the date hereof and prior to the Effective Time
("Subsequent Parent SEC Documents; provided, however, that the Subsequent Parent
SEC Documents shall not include the Registration Statement") will comply, in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder and none of the Parent SEC Documents contained, and the Subsequent
Parent SEC Documents will not contain, any untrue statement of a material fact
or omitted, or will 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, or are to be made, not misleading. The
consolidated financial statements (including related notes) of Parent included
in the Parent SEC Documents fairly present in all material respects, and the
consolidated financial statements (including related notes) of Parent included
in the Subsequent Parent SEC Documents will fairly present in all material
respects, the consolidated financial position of Parent and its consolidated
Subsidiaries, as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the respective periods
then ended (subject, in the case of the unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Exchange Act and the rules and regulations promulgated thereunder) in
conformity with GAAP (except in the case of the unaudited statements) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto). Since May 30, 1999, Parent has not made any
change in the accounting practices or policies applied in the preparation of its
financial statements, except as may be required by GAAP.
Section 4.9 Absence of Certain Changes or Events. Except as set forth
in the Parent SEC Documents, since May 30, 1999, Parent and its Subsidiaries
have conducted their respective businesses and operations in all material
respects in the ordinary and usual course consistent with past practice and,
except as set forth in the Parent SEC Documents, there has not occurred (i)
through the date hereof, any change in the business, condition (financial or
otherwise) or the results of operations of Parent and its Subsidiaries that
would reasonably be expected to have a Parent Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or distribution of any
kind by Parent on any class of its capital stock (other than regular quarterly
dividends); (iii) any material increase in the compensation payable or to become
payable by Parent or any Subsidiary to its directors, officers or management
employees or any material increase in any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with such
directors, officers or management employees; (iv) any material change by Parent
or its Subsidiaries in accounting methods, principles or practices except as
required by GAAP; or (v) any material change in financial or tax accounting
methods, principles or practices by Parent or any Subsidiary, except insofar as
may have been required by the Code.
Section 4.10 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by Parent or
Merger Sub for inclusion in (i) the Registration Statement or (ii) the Proxy
Statement will, in the case of the Registration Statement, at the time it
becomes effective or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the initial mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders of the Company to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement, as of its effective date, will comply
(with respect to information relating to Parent and Merger Sub) as to form in
all material respects with the requirements of the Securities Act, and the rules
and regulations promulgated thereunder, and as of the date of its initial
mailing and as of the date of the Company Stockholders Meeting, the Proxy
Statement will comply (with respect to information relating to Parent and Merger
Sub) as to form in all material respects with the applicable requirements of the
Exchange Act, and the rules and regulated thereunder. Notwithstanding the
foregoing, neither Parent nor Merger Sub makes any representation with respect
to any statement in the foregoing documents based upon information supplied by
the Company for inclusion therein.
Section 4.11 Employee Benefit Plans; ERISA. Except as described in any
of the Parent SEC Documents, as of the date hereof all "employee benefit plans"
as defined in Section 3(3) of ERISA, maintained or contributed to by Parent or
its Subsidiaries are in material compliance with their terms and all applicable
provisions of ERISA, the Code and any other applicable legislation, and Parent
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 Parent SEC Documents and (b)
for instances of noncompliance or liabilities or obligations that would not in
the aggregate have a Parent Material Adverse Effect.
Section 4.12 Lack of Ownership of Company Common Stock. Neither Parent
nor any of its Subsidiaries owns any shares of Company Common Stock or other
securities convertible into shares of Company Common Stock (exclusive of any
shares owned by Parent's employee benefit plans).
Section 4.13 Required Vote of Parent Stockholders. No vote of the
stockholders of Parent or Merger Sub (other than written consent of Parent Sub
as sole shareholder of Merger Sub to the adoption of this Agreement, which
written consent is being delivered contemporaneously with the execution of this
Agreement) is required by law or by the charter or by-laws of Parent or Merger
Sub in order for Parent and Merger Sub to consummate the Merger and the
transactions contemplated hereby.
Section 4.14 Absence of Undisclosed Liabilities. As of the date hereof,
neither Parent nor any of its Subsidiaries has any material liabilities or
obligations or obligations (whether absolute, accrued, known or unknown,
contingent or otherwise) of a type required by GAAP to be reflected on a
consolidated balance sheet, other than (i) liabilities or obligations incurred
in the ordinary course of business since December 31, 1999, (ii) liabilities or
obligations reflected in any of the Parent SEC Documents and (iii) liabilities
or obligations which would not in the aggregate reasonably be expected to have a
Parent Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger.
Prior to the Effective Time, unless Parent shall otherwise agree in writing or
as set forth in Section 5.1 of the Company Disclosure Schedule or in Section
2.7, 6.17 or 6.19 hereof, or as necessary or appropriate to satisfy its
obligations hereunder, the Company shall conduct, and cause each of its
Subsidiaries to conduct, its business only in the ordinary and usual course
consistent with past practice, and the Company shall use, and cause each of its
Subsidiaries to use, its reasonable best efforts to preserve intact the present
business organization, keep available the services of its present officers and
key employees, and preserve their existing business relationships. Without
limiting the generality of the foregoing, unless Parent shall otherwise agree in
writing (which agreement will not be unreasonably withheld), or as otherwise
contemplated in Sections 2.7, 6.17 or 6.19 hereof or as necessary or appropriate
to satisfy its obligations hereunder, or as set forth in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, the Company shall not,
nor shall it permit any of its Subsidiaries to:
(a) (i) amend its Certificate of Incorporation, as amended, By-Laws or
other organizational documents, (ii) split, combine or reclassify any shares of
its outstanding capital stock, (iii) other than dividends from one Subsidiary to
another Subsidiary or to the Company, declare, set aside or pay any dividend or
other distribution payable in cash, stock or property, or (iv) directly or
indirectly redeem or otherwise acquire any shares of its capital stock or shares
of the capital stock of any of its Subsidiaries;
(b) authorize for issuance, issue, deliver, sell, pledge, dispose of,
encumber or grant any Lien on, or authorize or propose the issuance, delivery,
sale, pledge, disposition of, encumbrance or grant of any Lien on, any shares of
its capital stock or any shares of the capital stock of any of its Subsidiaries,
or other voting securities or any securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such securities or
voting securities or any other ownership interest (or interest the value of
which is derived by reference to any of the foregoing), or enter into any
agreement with respect to any of the foregoing, other than the issuance of
Company Common Stock upon the exercise of Options outstanding on the date hereof
in accordance with their present terms;
(c) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (other than the acquisition of assets
which, taken together, do not constitute a business and which are of the type
currently used in the operations of the business of the Company and its
Subsidiaries in the ordinary course of business consistent with past practice);
provided, however, that the foregoing shall not prohibit the creation of new
Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement;
(d) other than (i) dispositions required to be made pursuant to an
agreement or contract to which the Company or any of its Subsidiaries is a party
or by which it is bound as of the date of this Agreement and (ii) dispositions
of inventory and excess or obsolete assets in the ordinary course of business
consistent with past practice, the Company shall not, and shall not permit any
Subsidiary of the Company to, sell, lease, encumber, license or otherwise
dispose of, or agree to sell, lease, encumber, license or otherwise dispose of,
any of its assets;
(e) (i) make any loans, advances or capital contributions to, or
investments in (other than acquisitions permitted by Section 5.1(c)), any other
person, other than (x) by the Company or a Subsidiary of the Company to or in
the Company or any direct or indirect wholly owned Subsidiary of the Company,
(y) pursuant to and in accordance with the terms of any contract or other legal
obligation of the Company or any of its Subsidiaries existing at the date of
this Agreement, or (z) in the ordinary course of business consistent with past
practice in an aggregate amount not in excess of $5,000,000, or (ii) create,
incur, assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans, advances or other non-equity securities not in existence as
of the date of this Agreement except (x) pursuant to the credit facilities,
indentures and other arrangements in existence on the date of this Agreement,
(y) for short-term borrowings (1) in the ordinary course of business consistent
with past practice or (2) the proceeds of which are used to refund existing or
maturing indebtedness or fund any acquisition transaction permitted by Section
5.1(c) or (z) intercompany indebtedness between the Company and any of its
wholly owned Subsidiaries or between such wholly owned Subsidiaries;
(f) pay, satisfy, discharge or settle any material claim, liabilities
or obligations (absolute, accrued, contingent or otherwise), other than in the
ordinary course of business and consistent with past practice or pursuant to
mandatory terms of any Company Contract in effect on the date hereof;
(g) modify or amend, or waive any benefit of, any non-competition
agreement to which the Company or any of its Subsidiaries is a party;
(h) enter into any new material line of business, or incur or commit to
any capital expenditures other than capital expenditures incurred or committed
to in the ordinary course of business consistent with past practice and which,
together with all such expenditures incurred or committed to during any fiscal
year, are not in excess of the respective amounts by category or in the
aggregate set forth in the Company's 2000 capital expenditure budget, a true and
complete copy of which is set forth in Section 5.1 of the Company Disclosure
Schedule;
(i) voluntarily permit any insurance policy naming the Company or any
Subsidiary of the Company as a beneficiary or a loss payee to be cancelled or
terminated other than in the ordinary course of business;
(j) (i) adopt, commit to adopt, enter into, terminate or amend (except
as may be required by Applicable Law or existing Contracts) any employee plan,
agreement, contract, arrangement or other Company Plan for the current or future
benefit or welfare of any past, present or future director, officer or employee,
(ii) except as required by existing Contracts or in the ordinary course of
business consistent with past practice, increase or commit or agree to increase
in any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee; provided, however, that, except as required by
existing Contracts, (x) no such increase or payment shall be made to or for the
benefit of any person listed in Section 5.1 of the Company Disclosure Schedule,
and (y) with respect to officers, any such increase shall not exceed 5% of the
current compensation or any such officer and such increase shall not be made
without consultation with Parent, (iii) other than pursuant to Section 2.7
hereof, take any action to fund or in any other way secure, or to accelerate or
otherwise remove restrictions with respect to, the payment of compensation or
benefits under any employee plan, agreement, contract, arrangement or other
Company Plan, (iv) issue any additional Options, or (v) make or agree to make
any contribution, other than regularly scheduled contributions, to any Company
Plan, except as required by law;
(k) (i) make any change in its accounting or tax policies or
procedures, except as required by Applicable Law or to comply with GAAP, (ii)
change its fiscal year, or (iii) make any material Tax election, other than in
the ordinary course of business consistent with past practice;
(l) take any action with knowledge that such action could reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied;
(m) enter into, implement, or otherwise become subject to or bound by
any new agreement, arrangement, commitment or program which provides for
severance, golden parachute, unemployment, stay-pay, change of control or
similar payments, or amend any existing agreement, arrangement, commitment or
program which provides for such payments;
(n) enter into any Material Contract, except as expressly permitted
pursuant to this Agreement; or
(o) authorize any of, or commit, resolve or agree to take any of, the
actions prohibited by paragraphs (a) though (n) of this Section 5.1.
Section 5.2 Conduct of Business by Parent Pending the Closing. Except
as set forth in Section 5.2 of the Parent Disclosure Schedule or as specifically
permitted by any other provision of this Agreement, Parent shall not (unless
required by Applicable Law or stock exchange regulations), between the date of
this Agreement and the Effective Time, directly or indirectly, do, or agree to
do, any of the following, without the prior written consent of the Company,
which consent will not be unreasonably withheld:
(a) amend or otherwise change Parent's Certificate of Incorporation or
By-laws or equivalent organizational documents in a manner that adversely
affects the rights of holders of Parent Common Stock or amend or otherwise
change Merger Sub's Certificate of Incorporation or By-Laws;
(b) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of Parent's
capital stock (other than regular quarterly cash dividends having record dates
and payment dates in accordance with Parent's historical practices);
(c) make any change in accounting policies or procedures, other than in
the ordinary course of business consistent with past practice or except as
required by GAAP or a Governmental Entity; or
(d) take any action with knowledge that such action could reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access and Information; Confidentiality.
(a) The Company shall (and shall cause its Subsidiaries and its and
their respective officers, directors, employees, auditors and agents to) afford
to Parent and to Parent's officers, employees, financial advisors, legal
counsel, accountants, consultants and other representatives (except to the
extent not permitted under Applicable Law as advised by counsel) reasonable
access during normal business hours throughout the period prior to the Effective
Time to all of its books and records and its properties, plants and personnel
and, during such period, shall furnish promptly to Parent a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal securities laws. Parent shall (and shall cause its Subsidiaries and
its and their respective officers, directors, employees, auditors and agents to)
afford to the Company and to the Company's officers, employees, financial
advisors, legal counsel, accountants, consultants and other representatives
(except to the extent not permitted under Applicable Law as advised by counsel)
reasonable access (i) by the Company throughout the period prior to the
Effective Time to members of senior management of Parent to the extent
reasonably necessary for the Company's Board of Directors to fulfill its
fiduciary duties under applicable laws, and (ii) by Chase throughout the period
prior to the Effective Time to members of senior management of Parent and to
such of Parent's or its Subsidiaries' books and records as reasonably determined
by Chase to be necessary in connection with any bringdowns or amendments of its
fairness opinion.
(b) Parent and the Company acknowledge and agree that the
Confidentiality Agreement dated December 2, 1998, between the Company and
Parent, as amended by that certain letter agreement dated June 9, 2000, between
the Company and Parent (together, the "Confidentiality Agreement") is in full
force and effect as of the date hereof.
Section 6.2 No Solicitation.
(a) The Company shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
Takeover Proposal (as hereinafter defined). The Company shall not directly or
indirectly, and it shall cause its officers, directors, employees,
representatives, agents or affiliates, including any investment bankers,
attorneys or accountants (collectively, "Representatives") retained by the
Company or any of its Subsidiaries or affiliates not to, (i) solicit, initiate,
encourage or otherwise facilitate (including by way of furnishing information)
any inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, tender offer, recapitalization,
consolidation, business combination, sale or other disposition of all or a
substantial portion of the assets of the Company and its Subsidiaries, taken as
a whole, sale of 15% or more of the shares of capital stock (including by way of
a tender offer, share exchange or exchange offer) or similar or comparable
transactions involving the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any one or combination of the
foregoing inquiries or proposals being referred to in this Agreement as a
"Takeover Proposal"), (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Takeover Proposal, or which may reasonably be expected to lead to a Takeover
Proposal, or (iii) enter into any agreement, arrangement or understanding with
respect to any such Takeover Proposal or which would require it to abandon,
terminate or fail to consummate the Merger or any other transaction contemplated
by this Agreement. Notwithstanding anything in this Agreement to the contrary,
the Board of Directors of the Company may, at any time prior to adoption of this
Agreement by the stockholders of the Company, furnish information (pursuant to a
customary confidentiality agreement no more favorable, in the aggregate, to the
party receiving information than the Confidentiality Agreement, except that such
confidentiality agreement need not require approval or request of the Company's
Board of Directors prior to making an inquiry or Takeover Proposal to the
Company or its Board of Directors to, or engage in discussions or negotiations
with, any person in response to an unsolicited bona fide written Takeover
Proposal of such person, if, and only to the extent that, (A) the Board of
Directors of the Company, after consultation with its financial advisors and
outside legal counsel to the Company, determines in good faith that such
Takeover Proposal is or could reasonably be expected to lead to a Superior
Proposal (as defined herein) and (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, the Company
provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
and the Company complies with Section 6.2(c).
(b) Notwithstanding anything in this Agreement to the contrary, the
Company's Board of Directors shall be permitted, at any time prior to adoption
of this Agreement by the stockholders of the Company, (i) to withdraw, modify or
change, or propose to withdraw, modify or change, the recommendation by the
Board of Directors of this Agreement, the Merger or the other transactions
contemplated by this Agreement if, after consultation with outside legal
counsel, the Company's Board of Directors concludes in good faith that failure
to take such action would result in a breach by the Company's Board of Directors
of its fiduciary obligations under Applicable Law; or (ii) in response to an
unsolicited Takeover Proposal, to approve or recommend, or propose to approve or
recommend, any Takeover Proposal and, in connection therewith, to withdraw,
modify or change the approval or recommendation by the Board of Directors of
this Agreement, the Merger or the other transactions contemplated by this
Agreement, but only if, in the case referred to in clause (ii), the Board of
Directors of the Company concludes in good faith that such Takeover Proposal, if
consummated, would constitute a Superior Proposal. "Superior Proposal" means any
written Takeover Proposal which the Board of Directors of the Company determines
in good faith (after consultation with its financial advisors and legal counsel)
taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, (i) would, if consummated, result
in a transaction that is more favorable to the Company's stockholders (in their
capacity as stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being completed
(provided that for purposes of this definition the term "Takeover Proposal"
shall have the meaning assigned to such term in Section 6.2(a), except that (x)
the reference to "15%" in the definition of Takeover Proposal shall be deemed to
be a reference to "50%", (y) "Takeover Proposal" must be a transaction involving
the Company, and (z) no such sale or other disposition of assets shall be deemed
to be a "sale or other disposition of all" or "substantial" unless such sale or
other disposition is for at least 75% of the assets of the Company and its
Subsidiaries, taken as a whole. Any withdrawal, modification or change in the
recommendation or the determination to do so of the Company's Board of Directors
of this Agreement, the Merger or the other transactions contemplated hereby made
in accordance with this Section 6.2(b) shall not constitute a breach of the
Company's representations, warranties, covenants or agreements contained in this
Agreement. Following termination of this Agreement, a public offering by the
Company of its voting securities (excluding, however, a secondary offering of
securities currently held by affiliates of the Company) in a manner intended to
result in a broad distribution of such securities will not constitute a
"Takeover Proposal."
(c) The Company shall notify Parent as promptly as reasonably
practicable (and no later than 24 hours) after receipt by the Company of any
Takeover Proposal or any request for non-public information in connection with a
Takeover Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company that it is considering
making, or has made, a Takeover Proposal. Such notice shall be made orally and
in writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact to the extent
available to the Company. The Company agrees to keep Parent informed, on a
reasonably current basis, of the status and terms of any such Takeover Proposal
(including any material changes to the details or terms thereof) and the status
of any such discussions or negotiations.
(d) Nothing contained in this Section 6.2 shall prohibit the Company or
its Board of Directors (i) from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any legally required disclosure to the stockholders of the Company
or (ii) prior to the adoption of this Agreement by the stockholders of the
Company, from taking any action as contemplated by Section 8.1(e).
Section 6.3 Third-Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Subsidiaries is a party, except
that the Company shall not be required hereunder to enforce, and may waive the
terms of, any such confidentiality or standstill agreement that restricts any
third party from making an inquiry or Takeover Proposal to the Company or its
Board of Directors, if, after consultation with outside legal counsel, the
Company's Board of Directors concludes in good faith that enforcement of such
terms or failure to waive such terms would result in a breach by the Company's
Board of Directors of its fiduciary obligations under Applicable Law.
Simultaneously with any such waiver or such action, the Company shall be deemed
to have made such waiver, or taken such action, with respect to the
Confidentiality Agreement, to the same extent as such waiver or action was taken
with respect to such other confidentiality or standstill agreement.
Section 6.4 Registration Statement. As promptly as practicable, Parent
and the Company shall in consultation with each other prepare and file with the
SEC the Proxy Statement and Registration Statement in preliminary form. Each of
the Company and Parent shall use its reasonable best efforts to have the Proxy
Statement cleared by the SEC and the Registration Statement declared effective
under the Securities Act and applicable state securities laws as soon as
practicable and keep the Registration Statement effective as long as is
necessary to consummate the Merger. The Company shall furnish Parent with all
information concerning the Company and the holders of its capital stock and
shall take such other action Parent may reasonably request in connection with
the Registration Statement and the issuance of shares of Parent Common Stock in
connection with the Merger. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company, any Subsidiary of the Company,
Parent or any Subsidiary of Parent, or their respective officers or directors,
should be discovered by such party which should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
Section 6.5 Proxy Statements; Stockholder Approval.
(a) The Company, acting through its Board of Directors, shall, subject
to and in accordance with Applicable Law, its Certificate of Incorporation and
its By-Laws, promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Registration Statement becomes
effective and the Proxy Statement has been cleared by the SEC a meeting of the
holders of Company Common Stock for the purpose of voting to adopt this
Agreement (the "Company Stockholder Meeting"), and, (i) except as set forth in
Sections 6.2(b) or 6.2(d), recommend adoption of this Agreement to the
stockholders of the Company and include in the Proxy Statement such
recommendation and (ii) except to the extent that the Company's Board of
Directors, after consultation with outside legal counsel, concludes in good
faith that such action is not consistent with the Company's Board of Director's
fiduciary obligations under Applicable Law take all reasonable action to solicit
and obtain such approval.
(b) The Company, as promptly as practicable, shall cause the definitive
Proxy Statement to be mailed to its stockholders as soon as practicable
following the date on which it is cleared by the SEC and the Registration
Statement is declared effective.
Section 6.6 Compliance with the Securities Act. Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying each person who, at
the time of the Company Stockholder Meeting, may be deemed to be an "affiliate"
of the Company, as such term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Company Rule 145 Affiliates"). The Company shall use
its reasonable best efforts to cause each person who is identified as a Company
Rule 145 Affiliate in such list to deliver to Parent on or prior to the
Effective Time a written agreement, substantially in the form of Exhibit "D"
hereto.
Section 6.7 Other Actions.
(a) Subject to the terms and conditions herein provided and applicable
legal requirements, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties hereto in doing, as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article VII are satisfied and to consummate and make effective the transactions
contemplated by this Agreement.
(b) Each of the parties shall use its reasonable best efforts to obtain
as promptly as practicable all consents, waivers, approvals, authorizations or
permits of, or registration or filing with or notification to (any of the
foregoing being a "Consent"), of any Governmental Entity or any other person
required in connection with, and waivers of any violations, defaults or breaches
that may be caused by, the consummation of the transactions contemplated by this
Agreement.
(c) Each party hereto shall promptly inform the other of any material
communication from the SEC, the United States Federal Trade Commission, the
United States Department of Justice or any other Governmental Entity regarding
any of the transactions contemplated by this Agreement. If any party hereto or
any affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to the
transactions contemplated by this Agreement, then such party shall use
commercially reasonable efforts to cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request.
(d) Without limiting the generality of the foregoing, Parent will, and
the Company will use its reasonable best efforts to, obtain all authorizations
or waivers required under the HSR Act, the Competition Act (Canada) and the
Mexican Federal Economic Competition Law (the "Mexican Law") to consummate the
transactions contemplated hereby, including, without limitation, making all
filings with the Antitrust Division of the Department of Justice ("DOJ") and the
Federal Trade Commission ("FTC"), the Competition Bureau (Canada) and the
Mexican Federal Economic Competition Commission ("Mexican Commission") required
in connection therewith (the initial filing with DOJ and FTC to occur no later
than five (5) business days, and the initial filing with Competition Bureau
(Canada) and the Mexican Commission to occur no later than ten (10) business
days, following the execution and delivery of this Agreement unless mutually
agreed otherwise) and responding as promptly as practicable to all inquiries
received from the DOJ, FTC, the Competition Bureau (Canada) or the Mexican
Commission for additional information or documentation. Each of Parent and the
Company shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act, the Competition Act
(Canada) and Mexican Law. Parent and the Company shall keep each other apprised
of the status of any communications with, and any communications with, and any
inquiries or requests for additional information from, the FTC, the DOJ, the
Competition Bureau (Canada) and the Mexican Commission. In the event a suit is
threatened or instituted challenging the Merger as violatile of the HSR Act, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, the Competition Act (Canada), as amended, the
Mexican Law, as amended, or any other federal, state or foreign law or
regulation or decree designed to prohibit, restrict or regulate actions for the
purpose or effect of monopolization or restraint or trade (collectively,
"Antitrust Laws"), each party hereto shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. The Company shall use its
reasonable best efforts to take such action as may be required, and Parent shall
take all actions as may be required, in order to obtain clearance under the HSR
Act, the Competition Act (Canada) and the Mexican Law in order to consummate the
Merger prior to the Termination Date (as hereinafter defined). Parent shall be
entitled to direct any proceedings or negotiations with any Governmental Entity
relating to any of the foregoing, provided that it shall afford Company a
reasonable opportunity to participate therein. In addition, Parent shall, and
the Company shall use its reasonable best efforts to, take such action as may be
required by any federal or state court of the United States, in any suit brought
by any Governmental Entity or any other person challenging the Merger as
violative of the Antitrust Laws, or in proceedings threatened by the
Commissioner of Competition to bring an application under the Competition Act
(Canada) or proceedings threatened by the Mexican Commission under the Mexican
Law in order to avoid the entry of any permanent injunction or other permanent
order which has the effect of preventing the consummation of the Merger prior to
the Termination Date, and in the event that any permanent or preliminary
injunction or other order is entered or becomes reasonably foreseeable to be
entered in any proceeding that would make consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement unlawful or
that would prevent or delay consummation of the transactions contemplated
hereby, Parent shall take promptly any and all steps (including the appeal
thereof, the posting of a bond) necessary to vacate, modify or suspend such
injunction or order so as to permit such consummation prior to the Termination
Date.
(e) Failure of Parent to obtain clearance or expiration of the required
waiting period under the HSR Act, the Competition Act (Canada) or the Mexican
Law, as applicable, or to cause to be vacated, modified or suspended any
injunction or order resulting from a claim that the Merger is violative of the
Antitrust Laws, in either case resulting in the failure of the Merger to be
consummated on or prior to the Termination Date, shall be deemed a material
breach by Parent of this Section 6.7, unless such failure results from the
Company's failure, in any material respects, to perform its obligations set
forth in Section 6.7(d).
(f) If Parent is required to take any action in order to comply with
this Section 6.7, Parent may take such action concurrently with the closing of
the Merger on the Closing Date, and nothing in this Agreement shall require
Parent to take such action prior to the Closing Date.
Section 6.8 Public Announcements. Parent and the Company shall each use
their reasonable best efforts to consult with each other before issuing any
press releases or making any public statement with respect to the transactions
by this Agreement and shall not issue any such press release or such public
statement prior to such consultation, except as may be required by applicable
law or obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.9 Directors' and Officers' Indemnification and Insurance.
(a) Parent, Merger Sub and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of any
Indemnitee (as hereinafter defined) as provided in the Company's Certificate of
Incorporation, Company's By-laws, charter or By-laws of any Subsidiary of the
Company or any Indemnity Agreement (as hereinafter defined) shall survive the
Merger and continue in full force and effect to the fullest extent permitted by
law. To the extent permitted by (i) the DGCL, or (ii) any agreement disclosed in
Section 6.9 of the Company Disclosure Schedule which provides for
indemnification by the Company or any Subsidiary of the Company of any
Indemnitee in effect on the date of this Agreement (including any indemnity
provisions contained in any agreement disclosed in Section 6.9 of the Company
Disclosure Schedule which provides for the registration of securities) (each, an
"Indemnity Agreement"), advancement of Indemnitee Expenses (as hereinafter
defined) pursuant to this Section 6.9 shall be mandatory rather than permissive
and the Surviving Corporation shall advance Costs (as hereinafter defined) in
connection with such indemnification, in all such cases subject to receipt of
any undertaking to repay required by the DGCL. Parent shall cause the Surviving
Corporation to expressly assume at Closing and thereafter honor in accordance
with their terms, to the fullest extent permitted under the DGCL, all Indemnity
Agreements. With respect to any determination of whether an Indemnitee is
entitled to indemnification by the Surviving Corporation under this Section
6.9(a), the Indemnitee shall have the right, as contemplated by the DGCL, to
require that such determination be made by special, independent legal counsel
selected by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed material services
for the Company or for Indemnitee within the last three (3) years. For the
purposes of this Section 6.9, (i) "Indemnitee Expenses" shall include reasonable
attorneys' fees and all other costs, charges and expenses paid or incurred in
connection with investigation, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate in
any Indemnifiable Claim (as hereinafter defined), (ii) an "Indemnitee" shall
mean any individual who on or prior to the Effective Time was an employee,
officer or director of the Company or any of its Subsidiaries, and the heirs,
executors, trustees, fiduciaries and administrators of any such employee,
officer or director, (iii) "Costs" shall mean all losses, Indemnitee Expenses,
claims, damages, liabilities, judgments, or amounts paid in settlement in
respect to any Indemnifiable Claim, and (iv) "Indemnifiable Claim" shall mean
any actual or alleged act, omission, statement, misstatement, event, or
occurrence related to the fact that Indemnitee is or was a director, officer,
agent, employee, or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, trustee, agent, employee, or
fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust, or other enterprise, or by reason of any actual or alleged thing
done or not done by Indemnitee in any such capacity. For purposes of this
provision, the Company agrees that Indemnitee's service on behalf of or with
respect to any Subsidiary or employee benefits plan of the Company or any
Subsidiary of the Company shall be deemed to be at the request of the Company.
(b) For a period of six years after the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, maintain officers' and directors'
liability insurance and fiduciary liability insurance covering the Indemnitees
who are currently covered by the Company's existing officers' and directors' or
fiduciary liability insurance policies on terms no less advantageous to such
indemnified parties than such existing insurance; provided, however, that
neither Parent nor the Surviving Corporation will be required in order to
maintain such policies to pay an annual premium in excess of 150% of the greater
of (i) the last annual premium paid by the Company prior to the date of this
Agreement and (ii) the annual premium for the year in which the Closing occurs
(the "Cap"); and provided, further, that, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, then Parent shall, or shall cause the Surviving Corporation to, maintain
policies that, in Parent's good faith judgment, provide the maximum coverage
available at an annual premium equal to the Cap.
(c) From and after the Effective Time, Parent shall cause the Surviving
Corporation not to alter, amend or otherwise modify the Certificate of
Incorporation or By-Laws of the Surviving Corporation in any manner that
adversely affects or otherwise prejudices the rights of any of the Indemnified
Parties under this Section 6.9.
(d) Notwithstanding any other provisions hereof, the obligations of the
Company, the Surviving Corporation and Parent contained in this Section 6.9
shall be binding upon the successors and assigns of Parent and the Surviving
Corporation. In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person or (ii) transfers all or substantially all of its properties or
assets to any Person, then, and in each case, proper provision shall be made so
that successors and assigns of the Company or the Surviving Corporation, as the
case may be, honor the indemnification obligations set forth in this Section
6.9.
(e) The obligations of the Company, the Surviving Corporation, and
Parent under this Section 6.9 shall survive the consummation of the Merger and
shall not be terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 6.9 applies without the consent of such affected
Indemnitee (it being expressly agreed that the Indemnitees to whom this Section
6.9 applies shall be third party beneficiaries of this Section 6.9, each of whom
may enforce the provisions of this Section 6.9).
Section 6.10 Expenses. Except as otherwise set forth in Sections 8.2(b)
and (c), each party hereto shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
Section 6.11 Listing Application. Parent shall cause the shares of
Parent Common Stock to be issued pursuant to this Agreement in the Merger or
upon exercise of the Rollover Options to be listed for trading on the New York
Stock Exchange or on any securities exchange on which shares of Parent Common
Stock shall be listed at the Effective Time.
Section 6.12 Supplemental Disclosure. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (ii) any failure of the Company or Parent, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.12 shall not have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VII of this Agreement or otherwise limit or affect the remedies available
hereunder to any party.
Section 6.13 Stockholder Litigation. The Company shall give Parent the
reasonable opportunity to participate in the defense or settlement of any
stockholder litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's written consent, which shall not be unreasonably
withheld or delayed. The assertion or filing of any such litigation shall not be
a breach of Section 3.11 or Section 3.12.
Section 6.14 Tax Matters. The parties acknowledge their respective
desire to structure the Merger to constitute a reorganization within the meaning
of Section 368(a) of the Code, provided, however, such tax treatment shall not
be a condition to either parties' obligation to close the transactions
contemplated herein. Parent and the Company will use their reasonable good faith
efforts to achieve such tax treatment. If based upon the Reorganization
Assumptions (as defined below), the fair market value (determined as of the
Effective Time) of the stock consideration provided in the Merger would be at
least 40% of the fair market value (determined as of the Effective Time) of the
total consideration received by the stockholders of the Company pursuant to the
Merger, the Company shall deliver to Parent an opinion of Vinson & Elkins
L.L.P., special counsel to the Company, in the form attached hereto as Exhibit
"E" to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code, and that accordingly the Company will not
recognize gain or loss for federal income tax purposes as a result of the
Merger, and stockholders of the Company that do not elect dissenters' rights
will not recognize gain or loss for federal income tax purposes, except to the
extent of the cash payment made pursuant to Section 2.1(a) hereof and any cash
received in lieu of fractional shares of Parent Common Stock, (the "Tax
Opinion"). The issuance of the Tax Opinion shall be conditioned on the receipt
by such tax counsel of representation letters from each of the Company, Parent,
Merger Sub, and certain stockholders of the Company, in each case, in form and
substance reasonably satisfactory to Vinson & Elkins L.L.P. The specific
provisions of each such representation letter shall be in form and substance
reasonably satisfactory to such tax counsel, and each such representation letter
shall be dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect. For purposes of this Agreement
the term "Reorganization Assumptions" shall mean the following assumptions: (A)
the average consideration paid to all dissenting stockholders of the Company in
satisfaction of their appraisal rights is $22 per share of Company Common Stock,
and (B) the fair market value of Parent Common Stock as of the Effective Time is
equal to the closing price of Parent Common Stock on the New York Stock Exchange
at the end of the trading day immediately preceding the Effective Time of the
Merger.
Section 6.15 Investigation and Agreement by the Parties; No Other
Representations or Warranties.
(a) Parent and Merger Sub, on the one hand, and the Company, on the
other, each acknowledges and agrees that it has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the other party and its Subsidiaries and their businesses and
operations, and such party has requested such documents and information from the
other party as such party considers material in determining whether to enter
into this Agreement and to consummate the transactions contemplated in this
Agreement. Each of Parent and Merger Sub, on the one hand, and the Company, on
the other hand, acknowledge and agree that it has had an opportunity to ask all
questions of and receive answers from the other party with respect to any matter
such party considers material in determining whether to enter into this
Agreement and to consummate the transactions contemplated in this Agreement. In
connection with each party's investigation of the other party and its
Subsidiaries and their businesses and operations, each party and its
representatives have received from the other party or its representatives
certain projections and other forecasts for the other party and its Subsidiaries
and certain estimates, plans and budget information. Each party acknowledges and
agrees that there are uncertainties inherent in attempting to make such
projections, forecasts, estimates, plans and budgets; that such party is
familiar with such uncertainties; that such party is taking full responsibility
for making its own evaluation of the adequacy and accuracy of all estimates,
projections, forecasts, plans and budgets so furnished to it or its
representatives; and that such party will not (and will cause all of its
respective Subsidiaries or other Affiliates or any other person acting on its
behalf to not) assert any claim or cause of action against any of the other
party's direct or indirect partners, directors, officers, employees, agents,
stockholders, Affiliates, consultants, counsel, accountants, investment bankers
or representatives with respect thereto, or hold any such other person liable
with respect thereto.
(b) Each of Parent and Merger Sub, on the one hand, and the Company, on
the other, agrees that, except for the representations and warranties made by
the other party that are expressly set forth in Article III and Article IV of
this Agreement, as applicable, neither the other party nor any of its
representatives or Affiliates has made and shall not be deemed to have made to
such party or to any of its representatives or Affiliates any representation or
warranty of any kind. Without limiting the generality of the foregoing, each
party agrees that neither the other party nor any of its Affiliates makes or has
made any representation or warranty to such party or to any of its
representatives or Affiliates with respect to:
(i) any projections, forecasts, estimates, plans or budgets of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows (or any component thereof) or future
financial condition (or any component thereof) of the other party or any of its
Subsidiaries or the future business, operations or affairs of the other party or
any of its Subsidiaries heretofore or hereafter delivered to or made available
to such party or its counsel, accountants, advisors, lenders, representatives or
Affiliates; and
(ii) any other information, statement or documents heretofore
or hereafter delivered to or made available to such party or its counsel,
accountants, advisors, lenders, representatives or Affiliates with respect to
the other party or any of its Subsidiaries or the business, operations or
affairs of the other party or any of its Subsidiaries, except to the extent and
as expressly covered by a representation and warranty made by the other party
and contained in Article III or Article IV of this Agreement, as applicable.
Section 6.16 Resignations. At Closing, the Company shall deliver to
Parent written resignations of the directors of the Company, together with those
officers designated by Parent at least ten (10) days prior to the Effective
Time.
Section 6.17 Amendment of Advisory and Oversight Agreements.
Simultaneously with the execution of this Agreement, the Company shall execute,
and deliver to Parent a true and correct copy of, (a) an amendment to the
Advisory Agreement in substantially the form attached as Exhibit "F" (the
"Advisory Agreement Amendment") and (b) an amendment to the Oversight Agreement
in substantially the form attached as Exhibit "G" (the "Oversight Agreement
Amendment").
Section 6.18 Section 16(b) Board Approval.
(a) Prior to Closing, the Board of Directors of Parent shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the acquisition of Parent Common Stock at the Effective Time by officers
and directors of Parent (including officers or directors of the Company who
become, prior to, at, or following the Effective Time of the Merger, officers or
directors of Parent) as a result of the conversion of shares of Company Common
Stock in the Merger and the assumption of the Options by Parent at the Effective
Time. Such resolution shall set forth the name of the applicable "insiders" for
purposes of Section 16 of the Exchange Act, the number of securities to be
acquired by each individual, that the approval is being granted to exempt the
transaction under Rule 16b-3 under the Exchange Act, and, for the Options to be
assumed by Parent at the Effective Time, the material terms of the options and
warrants to purchase Parent Common Stock acquired by such insiders as a result
of the assumption by Parent of such Options.
(b) Prior to Closing, the Board of Directors of the Company shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the conversion at the Effective Time of the shares of the Company Common
Stock held by officers and directors of the Company into shares of Parent Common
Stock as a result of the conversion of shares in the Merger, and the assumption
and cashout by Parent at the Effective Time of the Options of the officers and
directors of the Company. Such resolution shall set forth the name of the
applicable "insiders" for purposes of Section 16 of the Exchange Act and, for
each "insider," the number of shares of Company Common Stock to be converted
into shares of Parent Common Stock at the Effective Time, the number and
material terms of the Options to be assumed and cashed out by Parent at the
Effective Time, and that the approval is being granted to exempt the transaction
under Rule 16b-3 under the Exchange Act.
Section 6.19 Transfer of Assets. Prior to the Closing, the Company
shall transfer the assets set forth on Section 6.19 of the Company Disclosure
Schedule, on an as is, where is basis, with no warranties, to an entity in which
the Company has no equity interest. As consideration for such assets, such
entity shall assume the lease described on Section 6.19 of the Company
Disclosure Schedule (and obtain a release of the Company with respect thereto),
and shall assume all other obligations with respect to such leased premises,
including, without limitation, utilities, phone system, and equipment lease
obligations. Such transfer, assignment and release shall be in form and
substance reasonably satisfactory to Parent.
Section 6.20 Other Registration Statements. Parent shall perform, in
all material respects, its obligations under the Registration Rights Agreement
required to be performed prior to the Effective Time.
Section 6.21 Opinion of Financial Advisor. A true, correct and complete
copy of the written opinion delivered by Chase as set forth in Section 3.20,
which opinion shall be included in the Proxy Statement, has been delivered to
Parent by the Company.
Section 6.22 401(k) Plan Distributions. The Surviving Corporation and
its Subsidiaries shall, or Parent shall cause the Surviving Corporation and its
Subsidiaries to, cause a distribution of vested account balances from the
Company's 401(k) plan, to each employee participating in the plan who terminates
employment with the Company and all ERISA Affiliates after the Closing Date, as
soon as administratively feasible following such employee's termination of
employment, to the extent permissible under applicable law and not inconsistent
with any other contractual obligation of the Surviving Corporation, its
Subsidiaries or Parent; provided, however, the preceding shall not prohibit the
transfer of the assets and liabilities of any Company 401(k) plan to a 401(k)
plan of the Parent.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
the requisite vote (as described in Section 3.5(b)) of the stockholders of the
Company in accordance with Applicable Law.
(b) Governmental Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity, which the failure to
obtain, make or occur would have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have a Material Adverse Effect
on Parent or the Company (as the Surviving Corporation) or would materially
impair the operations of the Surviving Corporation, assuming the Merger had
taken place, shall have been obtained, shall have been made or shall have
occurred.
(c) Waiting Periods. The waiting period (and any extension thereof)
under the HSR Act, the Competition Act (Canada) and the Mexican Law, as
applicable shall have expired or been terminated and, as applicable, clearance
thereunder shall have been obtained.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC.
(e) No Injunction. No Governmental Entity having jurisdiction over the
Company or Parent, or any of their respective Subsidiaries, shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the Merger or
the Stock Voting Agreements illegal or otherwise prohibiting consummation of the
Merger.
Notwithstanding the foregoing provisions of this Section 7.1, if the
conditions set forth herein shall not be satisfied due to Parent's failure to
comply with Section 6.7(d) or (e), such failure shall not be excused by the
foregoing provisions of this Section 7.1 and such failure shall constitute a
material breach of this Agreement.
Section 7.2 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger. The obligation of Parent and Merger Sub to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by Parent:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak expressly as of an earlier
date) as of the Effective Time as though made on and as of the Effective Time;
provided, however, that this condition shall be deemed to have been satisfied
unless the individual or aggregate impact of all inaccuracies of such
representations and warranties (without regard to any materiality or Material
Adverse Effect qualifier(s) contained in any and each such representation or
warranty) would have a Company Material Adverse Effect. Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect.
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak expressly as of
an earlier date) as of the Effective Time as though made on and as of the
Effective Time; provided, however, that this condition shall be deemed to have
been satisfied unless the individual or aggregate impact of all inaccuracies of
such representations and warranties (without regard to any materiality or
Material Adverse Effect qualifier(s) contained in any and each such
representation or warranty) would have a Parent Material Adverse Effect. The
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and the Company shall have received a certificate signed on behalf of
Parent by the Chief Financial Officer of Parent to such effect.
(c) Stock Exchange Listing. The shares of Parent Common Stock to be
issued in the Merger or upon exercise of the Rollover Options shall have been
authorized for listing on the NYSE, subject to official notice of listing.
(d) Registration Rights Agreement. The Parent shall have complied in
all material respects with its obligations under the Registration Rights
Agreement required to be performed prior to the Effective Time.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated, and the
Merger and the other transactions contemplated hereby may be abandoned, at any
time prior to the Effective Time, whether before or after adoption of this
Agreement by the stockholders of the Company under the following circumstances:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) the Merger shall not have
been consummated on or before November 30, 2000, as such date may be extended by
the 15-day cure period provided for in Sections 8.1(d) and (f) (the "Termination
Date"), or (ii) the stockholders of the Company do not adopt this Agreement by
the requisite vote at a meeting duly convened therefor or any adjournment
thereof; provided that the party seeking to terminate this Agreement pursuant to
clause (i) of this Section 8.1(b) shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger on or before the
Termination Date; and provided, further, that Parent shall have no right to
terminate this Agreement under this clause (i) of this Section 8.1(b) if the
Merger shall not have become effective prior to the Termination Date due to
Parent's failure to comply with Section 6.7(d) or (e), which failure shall
constitute a material breach of this Agreement by Parent;
(c) by either Parent or the Company, if any permanent injunction,
order, decree or ruling by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this Section 8.1(c) shall have used reasonable best
efforts to remove such injunction or overturn such action; provided, further,
that Parent shall have no right to terminate this Agreement under this Section
8.1(c) if the Merger shall not become effective prior to the Termination Date
due to Parent's failure to comply with Section 6.7(d) or (e), which failure
shall constitute a material breach of this Agreement by Parent;
(d) by Parent, if (i) there has been a material breach of the
representations or warranties, covenants or agreements of the Company set forth
in this Agreement, which breach is not curable or, if curable, is not cured
within fifteen (15) days after written notice of such breach is given by Parent
to the Company; provided, however, that this termination right under this clause
(i) of this Section 8.1(d) shall not be available unless the individual or
aggregate impact of all inaccuracies of such representations and warranties
(without regard to any materiality or Material Adverse Effect qualifier(s)
contained in any and each such representation or warranty) would have a Company
Material Adverse Effect, or (ii) the Board of Directors of the Company (x) fails
to convene a meeting of the Company's stockholders to adopt this Agreement on or
before the later of (A) November 28, 2000, or (B) within 45 days (but not sooner
than 20 business days after the date the Proxy Statement is first mailed to
stockholders) following the date that the Registration Statement shall have
become effective and the Proxy Statement has been cleared by the SEC, or, in
either case, postpones the date scheduled for the meeting of the stockholders of
the Company to adopt this Agreement beyond such date, except, in either case (1)
with the written consent of Parent, or (2) if such failure or postponement is
due to a breach by Parent of this Agreement, (y) fails to recommend the adoption
of this Agreement to the Company's stockholders in accordance with Section
6.5(a) hereof, or (z) withdraws or amends or modifies in a manner adverse to
Parent its recommendation or approval in respect of this Agreement or the Merger
or fails to reconfirm such recommendation within two business days of a written
request for such confirmation by Parent;
(e) by the Company, prior to adoption of this Agreement by the
stockholders of the Company concurrently with the Company, entering into a
definitive acquisition, merger or similar agreement to effect a Superior
Proposal; provided, however, that the Company may not terminate this Agreement
pursuant to this subsection (e) unless (i) five days shall have elapsed after
delivery to Parent of a written notice of the Company's intention to so
terminate this Agreement and informing Parent of the terms and conditions of
such Superior Proposal and the identity of the person or group making such
Superior Proposal, and (ii) at the end of such five (5) day period, the Board of
Directors of the Company believes that such proposal for Superior Proposal is
still superior to the transaction contemplated under this Agreement as such may
be modified as proposed by Parent. During such five (5) day period, the Company
shall fully cooperate with Parent in a manner consistent with the fiduciary
duties of the Board of Directors with the intent of enabling Parent to agree to
propose for the consideration of the Company's Board of Directors a modification
of the terms and conditions of this Agreement so that the transactions
contemplated hereby may be effected; and
(f) by the Company, if there has been a material breach of any of the
representations or warranties, covenants or agreements of Parent or Merger Sub
set forth in this Agreement, which breach is not curable or, if curable, is not
cured within fifteen (15) days after written notice of such breach is given by
the Company to Parent; provided, however, that this termination right under this
Section 8.1(f) shall not be available unless the individual or aggregate impact
of all inaccuracies of such representations and warranties (without regard to
any materiality or Material Adverse Effect qualifier(s) contained in any and
each such representation or warranty) would have a Parent Material Adverse
Effect.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement pursuant to this
Article VIII, the Merger shall be deemed abandoned and this Agreement shall
forthwith become void, except that the provisions of Section 6.10, this Section
8.2, Article IX and the terms of the Confidentiality Agreement shall survive any
termination of this Agreement; provided, however, that nothing in this Agreement
shall relieve any party from liability for any breach of this Agreement;
provided that, subject to Section 8.2(d), nothing herein shall relieve any party
from liability for any breaches hereof which at a minimum shall be the
reasonable expenses incurred by of the non-breaching party in connection with
the transactions contemplated herein.
(b) If (A) Parent shall have terminated this Agreement pursuant to
Section 8.1(d)(ii) (x), (y) or (z), or (B) the Company shall have terminated
this Agreement pursuant to Section 8.1(e), then, in any such case, the Company
shall pay Parent within one (1) business day following such termination, a
termination fee of $50,000,000, payable by wire transfer of immediately
available funds to an account designated by Parent.
(c) If Parent or Company shall have terminated this Agreement pursuant
to Section 8.1(b)(ii), and within twelve (12) months after the date of such
termination the Company (i) consummates a Takeover Proposal, or (ii) enters into
a Definitive Agreement to do so (or a tender offer with respect thereto is
commenced), then, in any such case, the Company shall pay Parent, within one (1)
business day following consummation of any Takeover Proposal, a termination fee
of $50,000,000, payable by wire transfer of immediately available funds to an
account designated by Parent.
(d) Notwithstanding anything to the contrary contained herein, receipt
by Parent of the amounts payable pursuant to Section 8.2(b) or Section 8.2(c)
shall constitute full settlement of any and all liabilities of the Company for
damages under this Agreement in respect of a termination of this Agreement
pursuant to Sections 8.1(d)(ii)(x), (y) or (z), 8.1(e), or 8.1(b)(ii).
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Amendment and Modification. At any time prior to the
Effective Time, whether before or after adoption of this Agreement by the
stockholders of the Company, this Agreement may be amended, modified or
supplemented by written agreement (referring specifically to this Agreement) of
Parent and the Company with respect to any of the terms contained herein;
provided, however, that after adoption of this Agreement by the stockholders of
the Company, no such amendment, modification or supplementation shall be made
which under Applicable Law requires the approval of such stockholders, without
the further approval of such stockholders.
Section 9.2 Waiver. At any time prior to the Effective Time, Parent, on
the one hand, and the Company, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive compliance
by the other with any of the agreements or conditions contained herein which may
legally be waived. Any such extension or waiver shall be valid only if set forth
in an instrument in writing specifically referring to this Agreement and signed
on behalf of such party.
Section 9.3 Survivability; Investigations. The respective
representations and warranties of Parent and Merger Sub, on the one hand, and
the Company, on the other hand, contained herein or in any certificates or other
documents delivered prior to or as of the Effective Time (i) shall not be deemed
waived or otherwise affected by any investigation made by any party hereto and
(ii) shall not survive beyond the Effective Time. The covenants and agreements
of the parties hereto (including the Surviving Corporation after the Merger)
shall survive the Effective Time, without limitation (except for those which, by
their terms, contemplate a shorter survival period).
Section 9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
If to Parent or Merger Sub, to:
ConAgra, Inc.
One ConAgra Drive
Omaha, Nebraska, 68102
Attention: Dwight J. Goslee
Telephone: (402) 595-4091
Telecopier: (402) 595-4709
with copies to:
McGrath, North, Mullin & Kratz, P.C.
1400 One Central Park Plaza
222 South Fifteenth Street
Omaha, Nebraska, 68102
Attention: Roger W. Wells
Telephone: (402) 341-3070
Telecopier: (402) 341-0216
If to the Company, to:
International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey, 07054
Attention: General Counsel
Telephone: (973) 359-9920
Telecopier: (973) 254-5897
with a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: A. Winston Oxley
Telephone: (214) 220-7700
Telecopier: (214) 220-7716
Section 9.5 Descriptive Headings; Interpretation. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. References in this
Agreement to Sections, Exhibits or Articles mean a Section, Exhibit or Article
of this Agreement unless otherwise indicated. References to this Agreement shall
be deemed to include the Exhibits hereto, the Company Disclosure Schedule,
unless the context otherwise requires. The term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, a Governmental Entity or an unincorporated
organization. The disclosure of any matter in any section of the Company
Disclosure Schedule shall not be deemed to constitute an admission by any party
or to otherwise imply that any such matter is material or may have a Company
Material Adverse Effect for purposes of this Agreement.
Section 9.6 Entire Agreement. This Agreement (including the Exhibits,
the Company Disclosure Schedule, the Stock Voting Agreement and the Registration
Rights Agreement), together with the Confidentiality Agreement, constitutes the
entire agreement between the parties and supersedes all other prior agreements
and understandings, both written and oral, among the parties or any of them,
with respect to the subject matter hereof.
Section 9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the provisions thereof relating to conflicts of law.
Section 9.8 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Delaware.
Section 9.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
Section 9.10 Assignment; Third-Party Beneficiaries. This Agreement and
the rights, interests and obligations hereunder shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns;
provided, however, that no party hereto may assign or otherwise transfer its
rights, interests or obligations hereunder without the prior written consent of
the other parties hereto. Except for the provisions of Article II and Section
6.9, nothing in this Agreement is intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.11 No Recourse Against Others. Each of the following is
herein referred to as a "Company Affiliate:" (a) any direct or indirect holder
of any equity interests or securities in the Company (whether limited or general
partners, members, stockholders, or otherwise), (b) any Affiliate of the
Company, or (c) any director, officer, employee, representative or agent of (i)
the Company, (ii) any Affiliate of the Company, or (iii) any such holder of
equity interests or securities referred to in clause (a) above. Except to the
extent that a Company Affiliate is an express signatory party thereto, no
Company Affiliate shall have any liability or obligation of any nature
whatsoever in connection with or under this Agreement, the Stock Voting
Agreements or the Registration Rights Agreement or the transactions contemplated
hereby or thereby, and Parent and Merger Sub hereby waive and release all claims
of any such liability and obligation, except as set forth below. Notwithstanding
the provisions of the preceding sentence, Parent and Merger Sub neither waive
nor release, any claims that they may otherwise have against any Company
Affiliate for such Company Affiliate's actual, intentional misrepresentation (a)
of any fact to the Company's independent auditors, or any item reflected in the
Company's SEC Documents or Subsequent SEC Documents, and (b) to the extent that
such misrepresentation has caused the Company SEC Documents or Subsequent SEC
Documents to materially misstate the financial position of the Company and its
consolidated Subsidiaries, at such date, or the consolidated results of their
operations and their consolidated cash flow for the period then ended.
Section 9.12 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.13 Attorneys' Fees. If any action or law or equity, including
an action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses from the other party, which fees and
expenses shall be in addition to any other relief which may be awarded.
<PAGE>
IN WITNESS WHEREFORE, Parent, Merger Sub and the Company have caused
this Agreement and Plan of Merger to be executed on its behalf by their
respective officers thereunto duly authorized, all as of the date first above
written.
CONAGRA, INC.
By: /s/ Bruce C. Rohde
Its: Chairman and Chief Executive Officer
CAG ACQUISITION SUB, INC.
By: /s/ Bruce C. Rohde
Its: President
INTERNATIONAL HOME FOODS, INC.
By: /s/ C. Dean Metropoulos
Its: Chief Executive Officer
