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AGREEMENT AND PLAN OF MERGER
Among
BERKSHIRE HATHAWAY INC.,
B ACQUISITION, INC.
and
BENJAMIN MOORE & CO.
Dated as of November 8, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.01. The Offer........................................................2
SECTION 1.02. Company Action...................................................3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.......................................................5
SECTION 2.02. Effective Time; Closing..........................................5
SECTION 2.03. Effect of the Merger.............................................5
SECTION 2.04. Certificate of Incorporation; By-laws............................5
SECTION 2.05. Directors and Officers...........................................6
SECTION 2.06. Conversion of Securities.........................................6
SECTION 2.07. Stock Options; ESPP..............................................6
SECTION 2.08. Surrender of Shares; Stock Transfer Books........................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries.....................9
SECTION 3.02. Certificate of Incorporation and By-laws........................10
SECTION 3.03. Capitalization..................................................10
SECTION 3.04. Corporate Authority Relative to this Agreement..................10
SECTION 3.05. No Conflict; Required Filings and Consents......................11
SECTION 3.06. Compliance......................................................11
SECTION 3.07. SEC Filings; Financial Statements...............................12
SECTION 3.08. Absence of Certain Changes or Events............................12
SECTION 3.09. Absence of Litigation...........................................13
SECTION 3.10. Employee Benefit Plans..........................................13
SECTION 3.11. Labor Matters...................................................15
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement................15
SECTION 3.13. Real Property and Leases........................................15
SECTION 3.14. Intellectual Property...........................................16
SECTION 3.15. Taxes...........................................................17
SECTION 3.16. Environmental Matters...........................................17
SECTION 3.17. State Takeover Statute..........................................18
SECTION 3.18. Brokers.........................................................18
SECTION 3.19. Exclusivity of Representations..................................19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
SECTION 4.01. Corporate Organization..........................................19
SECTION 4.02. Corporate Authority Relative to this Agreement..................19
SECTION 4.03. No Conflict; Required Filings and Consents......................19
SECTION 4.04. Financing.......................................................20
SECTION 4.05. Offer Documents; Proxy Statement................................20
SECTION 4.06. Absence of Litigation...........................................21
SECTION 4.07. No Prior Activities.............................................21
SECTION 4.08. Parent Not an Interested Stockholder............................21
SECTION 4.09. Brokers 21
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger...........21
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Shareholders' Meeting...........................................23
SECTION 6.02. Proxy Statement.................................................24
SECTION 6.03. Company Board Representation; Section 14(f).....................24
SECTION 6.04. Access to Information; Confidentiality..........................25
SECTION 6.05. No Solicitation of Transactions.................................25
SECTION 6.06. Employee Benefits Matters.......................................27
SECTION 6.07. Directors' and Officers' Indemnification and Insurance..........28
SECTION 6.08. Further Action; Consents; Filings...............................30
SECTION 6.09. Public Announcements............................................31
SECTION 6.10. Minority Shares of Benjamin Moore & Co., Limited................31
SECTION 6.11. Notification of Certain Matters.................................31
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger........................................32
SECTION 7.02. Conditions to Obligations of Parent and Purchaser to Effect
the Merger....................................................32
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.....................................................32
SECTION 8.02. Effect of Termination...........................................34
SECTION 8.03. Fees and Expenses...............................................34
SECTION 8.04. Amendment.......................................................35
SECTION 8.05. Waiver..........................................................35
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iii
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties..................35
SECTION 9.02. Notices.........................................................35
SECTION 9.03. Certain Definitions.............................................36
SECTION 9.04. Severability....................................................37
SECTION 9.05. Entire Agreement; Assignment....................................38
SECTION 9.06. Parties in Interest.............................................38
SECTION 9.07. Governing Law...................................................38
SECTION 9.08. Waiver of Jury Trial............................................38
SECTION 9.09. Specific Performance............................................39
SECTION 9.10. Disclosure Schedule.............................................39
SECTION 9.11. Headings........................................................39
SECTION 9.12. Counterparts....................................................39
ANNEX A Conditions to the Offer
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iv
Glossary of Defined Terms
(Not Part of this Agreement)
Defined Term Location of Definition
------------ ----------------------
1999 Balance Sheet...................................... ss. 3.07(c)
Acquisition Agreement................................... ss. 6.05(b)
Acquisition Proposal.................................... ss. 6.05(a)
Action.................................................. ss. 3.09
affiliate............................................... ss. 9.03(a)
Agreement............................................... Preamble
beneficial owner........................................ ss. 9.03(b)
Board................................................... Recitals
business day............................................ ss. 9.03(c)
Canadian Competition Act................................ ss. 3.05(b)
Canadian Per Share Price................................ ss. 6.10
Canadian Sub............................................ ss. 6.10
Canadian Sub Option Spread.............................. ss. 6.10
Canadian Sub Stock Option............................... ss. 6.10
Certificate of Incorporation............................ ss. 2.04(a)
Certificate of Merger................................... ss. 2.02
Certificates............................................ ss. 2.08(b)
Claim................................................... ss. 6.07(a)
Code.................................................... ss. 3.10(a)
Company................................................. Preamble
Company Intellectual Property........................... ss. 3.14
Company Preferred Stock................................. ss. 3.03(a)
Company Stock Option.................................... ss. 2.07(a)
Company Stock Option Plans.............................. ss. 2.07(a)
Confidentiality Agreement............................... ss. 6.04(b)
control................................................. ss. 9.03(d)
Disclosure Schedule..................................... Article III
Effective Time.......................................... ss. 2.02
Environmental Law....................................... ss. 3.16(d)
ERISA................................................... ss. 3.10(a)
ESPP.................................................... ss. 2.07(b)
Exchange Act............................................ ss. 1.01(a)
Expiration Date......................................... ss. 6.05(a)
Fee..................................................... ss. 8.03(a)
Financial Advisor....................................... ss. 1.02(a)
GAAP.................................................... ss. 3.07(b)
Governmental Antitrust Authority........................ ss. 6.08(c)(i)
Governmental Authority.................................. ss. 3.05(b)
Hazardous Substances.................................... ss. 3.16(d)
HSR Act................................................. ss. 1.01(a)
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Defined Term Location of Definition
------------ ----------------------
Indemnified Party....................................... ss. 6.07(a)
Intellectual Property................................... ss. 3.14
IRS..................................................... ss. 3.10(a)
ISRA.................................................... ss. 3.05(b)
knowledge of the Company................................ ss. 9.03(e)
Law..................................................... ss. 3.05(a)
Liens................................................... ss. 3.13(b)
Material Adverse Effect................................. ss. 3.01(a)
Material Subsidiary..................................... ss. 3.01(b)
Maximum Premium......................................... ss. 6.07(c)
Merger.................................................. Recitals
Merger Consideration.................................... ss. 2.06(a)
Minimum Condition....................................... ss. 1.01(a)
Minority Purchase Transaction........................... ss. 6.10
Minority Shares......................................... ss. 6.10
Multiemployer Plan...................................... ss. 3.10(b)
Multiple Employer Plan.................................. ss. 3.10(b)
New Jersey Law.......................................... Recitals
Offer................................................... Recitals
Offer Documents......................................... ss. 1.01(b)
Offer to Purchase....................................... ss. 1.01(b)
Option Spread........................................... ss. 2.07(a)
Outside Date............................................ ss. 8.01(b)(i)
Parent.................................................. Preamble
Paying Agent............................................ ss. 2.08(a)
Per Share Amount........................................ Recitals
Permitted Liens......................................... ss. 3.13(b)
person.................................................. ss. 9.03(f)
Plans................................................... ss. 3.10(a)
Proxy Statement......................................... ss. 3.12
Purchaser............................................... Preamble
Schedule 14D-9.......................................... ss. 1.02(b)
Schedule TO............................................. ss. 1.01(b)
SEC..................................................... ss. 1.01(a)
SEC Reports............................................. ss. 3.07(a)
Securities Act.......................................... ss. 3.07(a)
Shares.................................................. Recitals
Shareholders............................................ Recitals
Shareholders Agreement.................................. Recitals
Shareholders' Meeting................................... ss. 6.01(a)
Subsidiary.............................................. ss. 3.01(a)
subsidiary.............................................. ss. 9.03(g)
Superior Proposal....................................... ss. 6.05(a)
Surviving Corporation................................... ss. 2.01
Taxes................................................... ss. 3.15
Transactions............................................ ss. 1.02(a)
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AGREEMENT AND PLAN OF MERGER, dated as of November 8, 2000 (this
"Agreement"), among Berkshire Hathaway Inc., a Delaware corporation ("Parent"),
B Acquisition, Inc., a New Jersey corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and Benjamin Moore & Co., a New Jersey corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that it is in the best interests of their
respective shareholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of common stock, par value $3.33 1/3 per share, of the
Company ("Shares") for $37.82 per Share (such amount, or any greater amount per
Share paid pursuant to the Offer, being the "Per Share Amount"), net to the
seller in cash, upon the terms and subject to the conditions of this Agreement
and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the New
Jersey Business Corporation Act, as amended ("New Jersey Law"), following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's and Purchaser's willingness to enter
into this Agreement, Parent and Purchaser have entered into a Shareholders
Agreement, dated as of the date hereof (the "Shareholders Agreement"), with the
shareholders named therein (the "Shareholders"), pursuant to which the
Shareholders have, among other things, (1) agreed to tender all Shares owned by
the Shareholders pursuant to the Offer, (2) granted to Parent an option to
purchase all of the Shares owned by the Shareholders, and (3) agreed to vote all
Shares beneficially owned by the Shareholders in favor of the Merger and this
Agreement and against any Acquisition Proposal (as defined herein), in each case
subject to and on the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided this Agreement shall not
have been terminated in accordance with Section 8.01, Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) the Offer as promptly as practicable after the
date hereof, but in no event later than seven business days after the public
announcement of the execution of this Agreement. The obligation of Purchaser to
accept for payment, and to pay for, Shares tendered pursuant to the Offer shall
be subject only to the condition (the "Minimum Condition") that at least the
number of Shares that when added to the Shares already owned by Parent,
Purchaser or any subsidiary of Parent, if any, shall constitute two-thirds of
the then outstanding Shares on a fully diluted basis (on a "fully diluted basis"
meaning the number of Shares outstanding, together with the Shares which the
Company may be required to issue pursuant to options or obligations outstanding
at that date and which do not terminate upon consummation of the Offer under any
employee stock or similar benefit plans or otherwise, whether or not vested or
then exercisable) shall have been validly tendered and not withdrawn prior to
the expiration of the Offer and to the satisfaction or waiver by Purchaser of
the other conditions set forth in Annex A hereto. Purchaser expressly reserves
the right to waive any such condition, to increase the price per Share payable
in the Offer, and to make any other changes in the terms and conditions of the
Offer; provided, however, Purchaser may not (i) waive the Minimum Condition
(except under circumstances whereby the "Option" (as defined in the Shareholders
Agreement) is or, upon the expiration of the Offer, will be, exercisable in
accordance with its terms, provided that such Option is exercised by Parent or
Purchaser as soon as practicable after it becomes so exercisable and, upon any
such exercise, the Minimum Condition will be satisfied), (ii) decrease the price
per Share payable in the Offer, (iii) reduce the maximum number of Shares to be
purchased in the Offer, (iv) impose conditions to the Offer in addition to those
set forth in Annex A hereto, (v) except as provided below, extend the Offer,
(vi) change the form of consideration payable in the Offer, or (vii) make any
other change in the terms or conditions of the Offer that is otherwise adverse
to the Company or the holders of Shares. Notwithstanding the foregoing,
Purchaser may, without the consent of the Company, (i) extend the Offer for up
to 30 business days beyond the scheduled expiration date, which shall be 20
business days following the commencement of the Offer, if, at the scheduled
expiration date of the Offer, any of the conditions to Purchaser's obligation to
accept for payment, and to pay for, the Shares, shall not be satisfied or, to
the extent permitted by this Agreement, waived, (ii) extend the Offer for any
period required by any rule, regulation or interpretation of the Securities and
Exchange Commission (the "SEC"), or the staff thereof, applicable to the Offer,
or (iii) extend the Offer for an aggregate period of not more than five business
days beyond the latest applicable date that would otherwise be permitted under
clause (i) or (ii) of this sentence, if, as of such date, all of the conditions
to Purchaser's obligations to accept for payment, and to pay for, the Shares are
satisfied or waived, but the number of Shares validly tendered and not withdrawn
pursuant to the Offer equals 75% or more, but less than 90%, of the outstanding
Shares on a fully diluted basis, so long as the Purchaser irrevocably waives the
satisfaction of any of the conditions to the Offer set forth on Annex A hereto
(other than the Minimum Condition and the condition set forth in paragraph (a)
of Annex A hereto) that
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subsequently may not be satisfied during any such extension of the Offer. If, on
the initial scheduled expiration date of the Offer, (x) the sole condition
remaining unsatisfied is the failure of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), to have expired or been terminated, then Purchaser shall extend the Offer
from time to time until five business days after the expiration or termination
of the applicable waiting period under the HSR Act and (y) if the condition set
forth in paragraph (c) or (d) of Annex A shall not have been satisfied, the
Purchaser shall, so long as the breach can be cured and the Company is
vigorously attempting to cure such breach, extend the Offer from time to time
until five business days after such breach is cured (provided that Purchaser
shall not be required to extend the Offer beyond 30 business days after such
initial scheduled expiration date). The Per Share Amount shall be net to the
seller in cash, upon the terms and subject to the conditions of the Offer and
Section 2.08(e). Subject to the terms and conditions of the Offer, Purchaser
shall, and Parent shall cause Purchaser to, pay, as promptly as practicable
after expiration of the Offer, for all Shares validly tendered and not
withdrawn. The Company shall not tender Shares held by it or by any of its
Subsidiaries pursuant to the Offer, except pursuant to Section 2.07(b).
(b) On the date of commencement of the Offer, Purchaser shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
amendments and supplements thereto, the "Schedule TO") with respect to the
Offer. The Schedule TO shall contain or shall incorporate by reference an offer
to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and all other ancillary offer documents (the Schedule TO, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent and Purchaser shall cause the Offer Documents to be
disseminated to the holders of Shares as soon as practicable following the
commencement of the Offer. The Offer Documents shall comply in all material
respects with the provisions of applicable federal securities laws. Parent and
Purchaser, on the one hand, and the Company, on the other hand, shall correct
promptly any information provided by it for use in the Offer Documents that
shall have become false or misleading in any material respect, and Parent and
Purchaser shall cause the Schedule TO, as so corrected, to be filed with the
SEC, and the other Offer Documents, as so corrected, to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents (and shall provide any
comments thereon as soon as practicable) prior to the filing thereof with the
SEC. In addition, Parent and Purchaser shall provide the Company and its counsel
in writing with any comments that Parent, Purchaser or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments and with copies of any written responses and telephonic
notification of any verbal responses by Parent, Purchaser or their counsel.
SECTION 1.02. Company Action. (a) The Company hereby approves of
and consents to the Offer and represents that (i) the Board, at a meeting duly
called and held, has unanimously (A) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger
(collectively, the "Transactions"), are fair to and in the best interests of the
holders of Shares, (B) approved this Agreement and the Transactions and (C)
recommended that the holders of Shares accept the Offer and approve this
Agreement and
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the Transactions, and (ii) JP Morgan Securities Inc. (the "Financial Advisor")
has delivered to the Board a written opinion that the consideration to be
received by the holders of Shares pursuant to each of the Offer and the Merger
is fair to the holders of Shares from a financial point of view as of the date
of such opinion. Except as required by the fiduciary duties of the Board under
applicable law after having received advice from outside legal counsel, the
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence.
(b) On the date of commencement of the Offer, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, the "Schedule 14D-9")
containing, except as required by the fiduciary duties of the Board under
applicable law after having received advice from outside legal counsel, the
recommendation of the Board described in Section 1.02(a), and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act, and any other applicable federal securities laws. The Schedule
14D-9 shall comply in all material respect with the provisions of applicable
federal securities laws. The Company shall take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to the holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company, on the one hand, and Parent and Purchaser, on the
other hand, shall correct promptly any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9, as so
corrected, to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent, Purchaser and their counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 (and shall provide any comments thereon as soon as
practicable) prior to the filing thereof with the SEC. In addition, the Company
shall provide Parent, Purchaser and their counsel in writing with any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after receipt of such comments and with copies of
any written responses and telephonic notification of any verbal responses by the
Company or its counsel.
(c) The Company shall promptly furnish Purchaser with, or cause
Purchaser to be furnished with, mailing labels containing the names and
addresses of all record holders of Shares and with security position listings of
Shares held in stock depositories, each as of a recent date, together with all
other available listings and computer files containing names, addresses and
security position listings of record holders and beneficial owners of Shares.
The Company shall furnish Purchaser with such additional information, including,
without limitation, updated listings and computer files of shareholders, mailing
labels and security position listings, and such other assistance in
disseminating the Offer Documents to holders of the Shares as Parent or
Purchaser may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Parent
and Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement shall be terminated, shall
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deliver to the Company all copies of such information then in their possession
or the possession of their agents or representatives.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with New Jersey Law, at
the Effective Time (as hereinafter defined) Purchaser shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 2.02. Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Department of
Treasury/Division of Commercial Recording, in such form as is required by, and
executed in accordance with the relevant provisions of, New Jersey Law. The
Merger shall become effective on the date on which the Certificate of Merger has
been duly filed with the Department of Treasury/Division of Commercial Recording
or such other time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time". Prior to the filing of the Certificate of Merger, a closing
shall be held at the offices of Munger, Tolles & Olson LLP, 355 South Grand
Avenue, Los Angeles, California 90071 or such other place as the parties shall
agree, for the purpose of confirming the satisfaction or waiver, as the case may
be, of the conditions set forth in Article VII.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of New
Jersey Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers,
immunities, purposes and franchises of the Company and Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Purchaser shall become
the debts, liabilities, obligations, restrictions, disabilities and duties of
the Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-laws. (a) Subject
to the provisions of Section 6.07, at the Effective Time, the Restated
Certificate of Incorporation of the Company, as amended (the "Certificate of
Incorporation"), shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by Law and such certificate of
incorporation.
(b) Subject to the provisions of Section 6.07, the by-laws of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided by
law, the certificate of incorporation of the Surviving Corporation and such
by-laws.
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SECTION 2.05. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Purchaser,
the Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 2.06(b)) shall be canceled and shall be converted automatically
into the right to receive an amount equal to the Per Share Amount in
cash (the "Merger Consideration"), payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in Section
2.08, of the certificate that formerly evidenced such Share. All such
Shares when so converted shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.08(b) hereof, without
interest;
(b) Each Share held in the treasury of the Company and each Share
owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto; and
(c) Each share of common stock, no par value per share, of
Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, no par value per
share, of the Surviving Corporation.
SECTION 2.07. Stock Options; ESPP. (a) The Company shall take all
necessary action to ensure that each outstanding stock option (a "Company Stock
Option"), whether or not exercisable and whether or not vested, under the
Company's 1998 Stock Incentive Plan, 1993 Stock Option Plan, or any stock option
agreement or employment agreement (the "Company Stock Option Plans") shall be
canceled by the Company immediately prior to the Effective Time, and each holder
of a canceled Company Stock Option shall be entitled to receive at the Effective
Time or as soon as practicable thereafter from the Company in consideration for
the cancellation of such Company Stock Option an amount (the "Option Spread")
equal to the product of (i) the number of Shares previously subject to such
Company Stock Option and (ii) the excess, if any, of the Merger Consideration
over the exercise price per Share previously subject to such Company Stock
Option. The Option Spread, after reduction for applicable tax withholding, if
any, shall be paid in cash. Prior to the Effective Time, the Company shall take
all necessary action to approve the disposition of the Company Stock Options and
the Shares in
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connection with the Transactions to the extent necessary to exempt such
dispositions under Rule 16b-3 of the Exchange Act.
(b) The Company shall take all actions necessary to pass-through
tender rights with respect to the Shares held on behalf of the participants in
the Employee Stock Purchase Plan ("ESPP") and to tender those shares for which
instructions are received in accordance with those instructions. The Company
shall receive the proceeds on behalf of the ESPP participants and shall remit
those proceeds to the participants after withholding the balance of all
outstanding amounts due under any promissory notes thereunder from the proceeds
received in respect of the Shares.
(c) The aggregate outstanding balance with respect to the
promissory notes issued under the Company Option Plans and the ESPP as of
October 31, 2000 is approximately $9,300,000.
SECTION 2.08. Surrender of Shares; Stock Transfer Books. (a) When
and as needed, Purchaser shall deposit or cause to be deposited (and Parent
shall provide all necessary funds and otherwise cause Purchaser to deposit),
with a bank or trust company designated by Parent or Purchaser (and reasonably
acceptable to the Company) to act as agent (the "Paying Agent") for the holders
of Shares, the funds to which holders of Shares shall become entitled pursuant
to Section 2.06(a). Such funds shall be invested by the Paying Agent as directed
by Parent or the Surviving Corporation.
(b) (i) Promptly after the Effective Time, but in no event more
than three business days thereafter, Parent shall cause to be mailed to each
person who was, at the Effective Time, a holder of record of Shares entitled to
receive the Merger Consideration pursuant to Section 2.06(a) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates evidencing such Shares (the "Certificates")
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and shall be in such form and have such other provisions as Parent and the
Surviving Corporation may reasonably specify) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be reasonably
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each Share
formerly evidenced by such Certificate, and such Certificate shall then be
canceled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of the holder of
such Certificate. If the payment equal to the Merger Consideration is to be made
to a person other than the person in whose name the surrendered certificate
formerly evidencing Shares is registered on the stock transfer books of the
Company, it shall be a condition of payment that the certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the certificate surrendered, or shall have
established to the satisfaction of the Surviving Corporation that such taxes
either have been paid or are not applicable.
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(ii) In the event 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, the Paying Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided that the person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(c) At any time following the sixth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(e) Parent, Purchaser, the Surviving Corporation and the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable to a holder of Shares pursuant to the Offer or Merger such amounts as
Parent, Purchaser, the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the Code
(as defined in Section 3.10 of this Agreement) or any provision of state, local
or foreign tax law. To the extent amounts are so withheld by Parent, Purchaser,
the Surviving Corporation or the Paying Agent, the withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which the deduction and withholding was made.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the Disclosure Schedule delivered by the Company to
Parent and Purchaser concurrently with the execution of this Agreement (the
"Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries. (a)
Each of the Company and each Subsidiary (as defined below) is a corporation or a
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted, except where (i) with respect to any Material Subsidiary, the
failure to have such governmental approvals and (ii) with respect to any
Subsidiary other than a Material Subsidiary, the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals, does not, individually or in the aggregate, have a Material Adverse
Effect (as defined below). Each of the Company and each Material Subsidiary is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties and
assets owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that do not, individually or in the
aggregate, have a Material Adverse Effect. When used in connection with the
Company or any subsidiary of the Company ("Subsidiary"), the term "Material
Adverse Effect" means any change, effect, condition, event or circumstance (x)
that is materially adverse to the business, operations, the results of
operations or the financial condition of the Company and the Subsidiaries, taken
as a whole, or (y) that is materially adverse to the Company's ability to
consummate the Transactions, except to the extent that any such change, effect,
condition, event or circumstance that is materially adverse to the Company's
ability to consummate the Transactions is caused directly or indirectly by any
action or inaction of Parent or Purchaser in breach of this Agreement; provided,
however, that "Material Adverse Effect" shall not include any change, effect,
condition, event or circumstance arising out of or attributable to (i) any
decrease in the market price of the Shares (but not any change, effect,
condition, event or circumstance underlying such decrease to the extent that it
would otherwise constitute a Material Adverse Effect), (ii) changes, effects,
conditions, events or circumstances that generally affect the industries in
which the Company or the Subsidiaries operate (including legal and regulatory
changes), (iii) general economic conditions or changes, effects, conditions or
circumstances affecting the securities markets generally or (iv) changes arising
from the consummation of the Transactions or the announcement of the execution
of this Agreement.
(b) Each Subsidiary that is a "Significant Subsidiary," as defined
in Rule 405 of the Securities Act, or is otherwise material to the financial
condition or results of operation of the Company is so identified in Section
3.01(b) of the Disclosure Schedule and is referred to herein as a "Material
Subsidiary".
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SECTION 3.02. Certificate of Incorporation and By-laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-laws, each as amended to date, of
the Company. Such Certificate of Incorporation and By-laws are in full force and
effect. Neither the Company nor any Material Subsidiary is in material violation
of any of the provisions of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. (a) The authorized capital stock of
the Company consists of 120,000,000 Shares and 500,000 shares of preferred
stock, par value $10.00 per share ("Company Preferred Stock"). As of the date
hereof, (i) 26,469,381 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, (ii) 13,023,555 Shares are held in
the treasury of the Company, and (iii) 1,288,906 Shares are reserved for future
issuance pursuant to outstanding employee stock options granted pursuant to the
Company's Stock Option Plans. As of the date hereof, no shares of Company
Preferred Stock are issued and outstanding. Except as set forth in this Section
3.03, there are not, and, as of the Effective Time, there will not be, any
shares of capital stock issued and outstanding (other than the issuance of
Shares pursuant to the exercise of outstanding employee stock options granted
prior to the date hereof pursuant to the Company's Stock Option Plans as set
forth in this Section 3.03), or any options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Subsidiary. All Shares subject to
issuance as aforesaid, upon issuance, will be duly authorized, validly issued,
fully paid and nonassessable. There are no outstanding contractual obligations
of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any
Shares or any capital stock of any Subsidiary or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any Subsidiary or any other person.
(b) The Company owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of its Material Subsidiaries,
free and clear of any liens, charges, encumbrances, adverse rights or claims and
security interests whatsoever which would reasonably be expected to have, in the
aggregate, a Material Adverse Effect, and all such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights.
SECTION 3.04. Corporate Authority Relative to this Agreement. The
Company has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval of this
Agreement by the holders of two-thirds of the then-outstanding Shares, if and to
the extent required by applicable law, and the filing and recordation of
appropriate merger documents as required by New Jersey Law). This Agreement has
been
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duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Purchaser, constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws, now or hereafter in effect,
affecting creditors' rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company or any Material Subsidiary, (ii) conflict with or
violate any law, statute, rule, regulation, order, judgment or decree ("Law")
applicable to the Company or any Material Subsidiary or by which any property or
asset of the Company or any Material Subsidiary is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, result in the loss of a
material benefit under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with respect to
clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences that do not, individually or in the aggregate, have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company and the
consummation by the Company of the Transactions will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental, administrative or regulatory authority or agency, domestic or
foreign (a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Exchange Act, the pre-merger notification requirements of the HSR
Act, the notification requirements of the Competition Act (Canada), R.S. 1985,
c.C-34, as amended ("Canadian Competition Act"), the requirements of the
Industrial Site Recovery Act of the State of New Jersey, N.J.S.A. 13:1k-6, et
seq. ("ISRA") and filing and recordation of appropriate merger documents as
required by New Jersey Law, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or materially delay consummation of the Offer or the Merger,
or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement, and do not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.06. Compliance. Neither the Company nor any Subsidiary
is in conflict with, or in default, breach or violation of, (i) any Law
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or asset of the
Company or any
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Subsidiary is bound or affected, except for any such conflicts, defaults,
breaches or violations that do not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each of its Subsidiaries hold all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses as presently conducted except
where the failure to hold such license, franchise, permit or authorization or
such noncompliance or default would not, when aggregated with all other such
failures, reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company
has filed all forms, reports and documents required to be filed by it with the
SEC since January 1, 1998 (collectively, including any exhibits or schedules
thereto, and documents incorporated by reference therein, the "SEC Reports"). As
of their respective dates and, if amended, as of the date of the last such
amendment, the SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports complies as to form
in all material respects with applicable accounting requirements and the rules
and regulations of the SEC with respect thereto and was prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein (except as otherwise noted therein
and subject, in the case of unaudited statements, to normal and recurring
year-end adjustments).
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and the consolidated Subsidiaries as at December 31, 1999,
including the notes thereto, neither the Company nor any Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations (i) incurred in the ordinary course of business consistent with past
practice since December 31, 1999 or (ii) that do not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes or Events. Except as
disclosed in the SEC Reports filed prior to the date hereof, since December 31,
1999 to the date of this Agreement, (a) the Company and the Subsidiaries have
conducted their businesses in all material respects in the ordinary course and
consistent with past practice, (b) there has not been any Material Adverse
Effect, and no events have occurred that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the
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SEC Reports filed prior to the date hereof, since June 30, 2000 to the date of
this Agreement, none of the Company or any Subsidiary has taken any action that,
if taken after the date of this Agreement, would constitute a breach of any of
the covenants set forth in Section 5.01. Except as disclosed in the SEC Reports
filed prior to the date hereof, since December 31, 1999, none of the Company or
any Subsidiary has taken any action referred to in Section 5.01(g).
SECTION 3.09. Absence of Litigation. Except as disclosed in the
SEC Reports filed prior to the date hereof, there is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary, or any
material property or material asset of the Company or any Subsidiary, before any
court or arbitrator or Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect. As of
the date hereof, neither the Company, nor any Subsidiary nor any material
property or material asset of the Company or any Subsidiary, is subject to any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority or arbitral panel that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. (a) Plans and Material
Documents. Section 3.10(a) of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental executive retirement plans and excess benefit plan,
severance or other benefit plans, programs, trusts, or arrangements, and all
employment, termination, severance, compensation or other contracts or
agreements, whether legally enforceable or not, to which the Company or any
Subsidiary is a party, with respect to which the Company or any Subsidiary has
any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary, (ii) each employee benefit
plan for which the Company or any Subsidiary could incur liability under Section
4069 of ERISA in the event such plan has been or were to be terminated, (iii)
any plan in respect of which the Company or any Subsidiary could incur liability
under Section 4212(c) of ERISA and (iv) any material contracts, arrangements or
understandings or any change of control arrangements between the Company or any
Material Subsidiary and any employee of the Company or any Material Subsidiary
including, without limitation, any contracts, arrangements or understandings
relating to a sale of the Company or any Material Subsidiary (collectively, the
"Plans"). Each Plan is in writing and the Company has made available to the
Purchaser a true and complete copy of each Plan and each material document, if
any, prepared in connection with each such Plan, including, without limitation,
(i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently prepared
actuarial report and financial statement in connection with each such Plan.
Neither the Company nor any Subsidiary has any express or implied commitment,
whether legally enforceable or not, (i) to create or incur liability with
respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to
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modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by ERISA or the Internal Revenue Code of 1986, as
amended through the date hereof (the "Code").
(b) Absence of Certain Types of Plans. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan") or a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which the Company or any Subsidiary could
incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer
Plan"). None of the Plans (i) provides for the payment of separation, severance,
termination or similar-type benefits to any person, (ii) obligates the Company
or any Subsidiary to pay separation, severance, termination or similar-type
benefits solely or partially as a result of any transaction contemplated by this
Agreement or (iii) obligates the Company or any Subsidiary to make any payment
or provide any benefit that could fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code. None of the Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or any
Subsidiary.
(c) Compliance. Each Plan is now and always has been operated in
all material respects in accordance with its terms and the requirements of all
applicable Laws, regulations and rules promulgated thereunder, including,
without limitation, ERISA and the Code. The Company and its Subsidiaries have
performed all material obligations required to be performed by them under, are
not in material default under or in material violation of, and have no knowledge
of any material default or violation by any party to, any Plan. No action, claim
or proceeding is pending or, to the knowledge of the Company, threatened with
respect to any Plan (other than claims for benefits in the ordinary course),
which could reasonably be expected to have a Material Adverse Effect and, to the
knowledge of the Company, no fact or event exists that could reasonably be
expected to give rise to any such action, claim or proceeding.
(d) Qualification of Certain Plans. Each Plan that is intended to
be qualified under Section 401(a) of the Code or Section 401(k) of the Code has
timely received a favorable determination letter from the IRS and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter or letters from the IRS
that could reasonably be expected to adversely affect the qualified status of
any such Plan or the exempt status of any such trust.
(e) Absence of Certain Liabilities. To the knowledge of the
Company, there has not been any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
Except as would not reasonably be expected to have a Material Adverse Effect,
neither the Company nor any Subsidiary has incurred any liability under, arising
out of or by operation of Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists that could give rise to any such liability.
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SECTION 3.11. Labor Matters. (i) Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary,
nor, to the knowledge of the Company, are there any activities or proceedings of
any labor union to organize any such employees; (ii) neither the Company nor any
Subsidiary has breached or otherwise failed to comply with any provision of any
such agreement or contract, and there are no grievances outstanding against the
Company or any Subsidiary under any such agreement or contract; (iii) there are
no controversies pending or, to the knowledge of the Company, threatened between
the Company or any Subsidiary and any of their respective employees, which could
reasonably be expected to have a Material Adverse Effect; (iv) there are no
unfair labor practice complaints pending against the Company or any Subsidiary
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any Subsidiary that could
reasonably be expected to have a Material Adverse Effect; and (v) there is
currently no strike, slowdown, work stoppage or lockout, or, to the knowledge of
the Company, threat thereof, by or with respect to any employees of the Company
or any Subsidiary.
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the times the Schedule 14D-9, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to shareholders of the Company, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. Neither the proxy statement to be sent to the shareholders of
the Company in connection with the Shareholders' Meeting (as hereinafter
defined) nor the information statement to be sent to such shareholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"), shall, at the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to shareholders of the Company, at the time of the Shareholders' Meeting
and at the Effective Time, contain any statement which, at the time and in light
of the circumstances under which it was made, is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Shareholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent,
Purchaser or any of Parent's or Purchaser's representatives for inclusion in the
foregoing documents. The Schedule 14D-9 and the Proxy Statement shall comply in
all material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.
SECTION 3.13. Real Property and Leases. (a) Except as disclosed in
the SEC Reports filed prior to the date hereof, the Company and the Subsidiaries
have sufficient title to or leasehold interest in all their real properties
necessary to conduct their respective businesses as currently conducted, with
only such exceptions as would not, individually or in the aggregate, have a
Material Adverse Effect.
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(b) Each parcel of real property owned or leased by the Company or
any Subsidiary (i) is owned or leased free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other encumbrance to title, or
any option, right of first refusal, or right of first offer (collectively,
"Liens"), other than (A) Liens for current taxes, assessments or other
governmental charges not yet delinquent or which are being contested in good
faith, (B) inchoate mechanics' and materialmen's Liens for construction in
progress, (C) workmen's, repairmen's, warehousemen's and carriers' Liens arising
in the ordinary course of business of the Company or such Subsidiary consistent
with past practice, (D) zoning laws and other land use restrictions that do not
materially impair the present use of the property, (E) Liens arising by reason
of deposits to secure public or statutory obligations in lieu of surety or
appeal bonds entered into in the ordinary course of business, and (F) Liens and
other imperfections of title and encumbrances that would not, individually or in
the aggregate, have a Material Adverse Effect (collectively, "Permitted Liens"),
and (ii) is neither subject to any governmental decree or order to be sold nor
is being condemned, expropriated or otherwise taken by any public authority with
or without payment of compensation therefor, nor, to the knowledge of the
Company, has any such condemnation, expropriation or taking been proposed.
(c) All leases of real property and all amendments and
modifications thereto, are in full force and effect and have not been modified
or amended, and there exists no default under any such lease by the Company or
any Material Subsidiary, nor any event which, with notice or lapse of time or
both, would constitute a default thereunder by the Company or any Material
Subsidiary, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.14. Intellectual Property. The Company or its
Subsidiaries own or have the right to use all Intellectual Property that is
material to the operation of their businesses ("Company Intellectual Property"),
except for such failures to own or have rights to use that would not reasonably
be expected to have a Material Adverse Effect. Except for such infringements as
would not have a Material Adverse Effect, to the knowledge of the Company, the
Company Intellectual Property does not infringe the Intellectual Property of any
third party, and no claim has been asserted to the Company or any of its
Subsidiaries that the use of the Company Intellectual Property infringes the
Intellectual Property of any third party. Except as would not have a Material
Adverse Effect, to the knowledge of the Company, no person is engaging in any
activity that infringes the Company Intellectual Property. All Company
Intellectual Property is subsisting and in force, except for such failures to be
so subsisting and in force that would not reasonably be expected to have a
Material Adverse Effect. For purposes hereof, "Intellectual Property" means: (i)
United States, international and foreign patents and patent applications, (ii)
trademarks, trade names and service marks, including registrations and
applications for registration thereof, (iii) copyrights, including registrations
and applications for registration thereof, (iv) confidential and proprietary
information, including trade secrets and know-how and (v) domain names.
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SECTION 3.15. Taxes. The Company and the Subsidiaries have timely
filed or will file all federal, state, local and foreign Tax returns and reports
required to be filed by them and have paid and discharged all Taxes due whether
or not shown thereon or have adequate provisions in the Company's books and
records to cover any liability for such Taxes, other than (i) such payments as
are being contested in good faith by appropriate proceedings and (ii) such
filings, payments or other occurrences that would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the IRS nor any other taxing
authority or agency, domestic or foreign, is now asserting or, to the knowledge
of the Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for any Taxes or interest thereon or penalties in connection
therewith. Neither the Company nor any Subsidiary has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax. Neither the Company nor any Subsidiary has made an
election under Section 341(f) of the Code. There are no Tax liens upon any
property or assets of the Company or any of the Subsidiaries except liens for
current Taxes not yet due or for Taxes being contested in good faith by
appropriate proceeding. No audit of any material Tax return of the Company or
any Subsidiary is being conducted or has been threatened by the IRS or any
taxing authority or agency, domestic or foreign. Neither the Company nor any
Subsidiary has any liability for the Taxes of any person (other than the Company
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of state, local or foreign law), as a transferee or
successor, by contract, or, to the knowledge of the Company, otherwise. To the
knowledge of the Company, there are no material "deferred intercompany
transactions" or "intercompany transactions" the gain or loss in which would be
required to be taken into account under the consolidated return Treasury
Regulations as a result of the Merger. As used in this Agreement, "Taxes" shall
mean all income, excise, gross receipts, ad valorem, sales, employment,
franchise, profits, gains, property, transfer, use, payroll, intangibles or
other taxes, fees, stamp taxes, duties, charges, levies or assessments of any
kind whatsoever (whether payable directly or by withholding), together with any
interest and any penalties, additions to tax or additional amounts imposed by
any Tax authority with respect thereto.
SECTION 3.16. Environmental Matters. (a) Except as would not,
individually or in the aggregate, have a Material Adverse Effect: (i) to the
knowledge of the Company, the Company and its Subsidiaries are not in violation
of any Environmental Law; (ii) the Company and its Subsidiaries are not in
receipt of any pending, unresolved, written notice or claim, or subject to any
pending, unresolved litigation, action or governmental investigation in which it
is alleged that the Company or any of its Subsidiaries are actually or
potentially liable for any contamination by Hazardous Substances; (iii) the
Company and its Subsidiaries are not in receipt of any pending, unresolved,
written notice or claim, or subject to any pending, unresolved litigation,
action or governmental investigation in which it is alleged that the Company or
any of its Subsidiaries are actually or potentially liable under any
Environmental Law; (iv) to the knowledge of the Company, the Company and its
Subsidiaries have or have applied for, and are in compliance with, all permits,
licenses and other authorizations required under any Environmental Law; (v) to
the knowledge of the Company, during or prior to the period of (A) its or any
Subsidiary's ownership or operation of any of their respective properties, or
(B) its or any Subsidiary's participation in the management or use of any
property, there has been no release or threatened release of any Hazardous
Substances in, on, under or affecting any such
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property; and (vi) neither the Company nor any of its Subsidiaries are
signatories to, or the subject of, or to the knowledge of the Company, any of
the properties are subject to, any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory authority or
third party imposing any material liability or obligations pursuant to or under
any Environmental Laws.
(b) Parent and Purchaser acknowledge that (i) the representations
and warranties contained in this Section 3.16 are the only representations and
warranties being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health or safety
matter, including natural resources, related in any way to the Company or to
this Agreement or its subject matter, and (ii) no other representation contained
in this Agreement shall apply to any such matters and no other representation or
warranty, express or implied, is being made with respect thereto.
(c) None of the real property currently or, to the knowledge of
the Company, previously, owned by the Company is listed or, to the knowledge of
the Company, proposed for listing, on the National Priorities List or the
Comprehensive Environmental Response, Compensation, and Liability Information
System under the federal Comprehensive Environmental Response, Compensation, and
Liability Act.
(d) For purposes hereof, (i) "Environmental Law" means any
applicable federal, state, local or foreign statute, law, ordinance, regulation,
rule, code, order, consent decree or judgment, in effect as of the Effective
Time, relating to pollution or protection of the environment or human health and
safety as related to Hazardous Substance Exposure; and (ii) "Hazardous
Substances" means (A) those substances defined in or regulated under the
following federal statutes and their state counterparts in effect as of the
Effective Time: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (B) petroleum and petroleum products; (C)
polychlorinated biphenyls and asbestos; and (D) hazardous, toxic, radioactive,
or dangerous materials or other materials regulated under Environmental Laws.
SECTION 3.17. State Takeover Statute. The Company has taken all
action necessary such that the provisions of Section 14A: 10A-(4-5) of New
Jersey Law and the provisions of Article Eighth of the Certificate of
Incorporation will not apply to the Transactions. No other state takeover or
similar statute or regulation is applicable to the Transactions.
SECTION 3.18. Brokers. No broker, finder or investment banker
(other than the Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and the Financial Advisor pursuant to which such firm would be entitled
to any payment relating to the Transactions.
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SECTION 3.19. Exclusivity of Representations. The representations
and warranties made by the Company in this Agreement are in lieu of and are
exclusive of all other representations and warranties, including without
limitation any implied warranties. The Company hereby disclaims any such other
or implied representations and warranties, notwithstanding the delivery or
disclosure to Parent, Purchaser or their respective officers, directors,
employees, agents or representatives of any documentation or other information
(including any financial projections or other supplemental data).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to have such governmental approvals would not, individually or
in the aggregate, have a material adverse effect on the ability of Parent or
Purchaser to perform their obligations hereunder, or prevent or materially delay
consummation of the Transactions.
SECTION 4.02. Corporate Authority Relative to this Agreement. Each
of Parent and Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser, the performance by Parent and Purchaser of their
obligations hereunder and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Parent or Purchaser are
necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, the filing and recordation of appropriate
merger documents as required by New Jersey Law). This Agreement has been duly
and validly executed and delivered by Parent and Purchaser and, assuming due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of each of Parent and Purchaser enforceable against
each of Parent and Purchaser in accordance with its terms, subject to the effect
of any applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws, now or hereafter in effect, affecting creditors' rights generally and
subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of
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Incorporation or By-laws of either Parent or Purchaser, (ii) conflict with or
violate any Law applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) result in any breach of,
or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, result in the loss of a material benefit
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Purchaser is a party or by which
Parent or Purchaser or any property or asset of either of them is bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse effect on the ability
of Parent or Purchaser to perform their obligations hereunder, or prevent or
materially delay consummation of the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with, or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, the HSR Act, Canadian Competition
Act, ISRA and filing and recordation of appropriate merger documents as required
by New Jersey Law, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, have a material adverse effect on
the ability of Parent or Purchaser to perform their obligations hereunder, or
prevent or materially delay consummation of the Transactions.
SECTION 4.04. Financing. At or prior to the date that Purchaser
becomes obligated to accept for payment and pay for Shares pursuant to the
Offer, and at the Effective Time, Parent and Purchaser collectively, will have
sufficient cash resources available to pay for the Shares that Purchaser becomes
so obligated to accept for payment and pay for pursuant to the Offer and to pay
the aggregate Merger Consideration pursuant to the Merger and to pay all fees
and expenses related to the Transactions payable by them.
SECTION 4.05. Offer Documents; Proxy Statement. The Offer
Documents shall not, at the time the Offer Documents are filed with the SEC or
are first published, sent or given to shareholders of the Company, as the case
may be, 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 made therein, in the light of the circumstances under which they are
made, not misleading. The information supplied by Parent for inclusion in the
Proxy Statement shall not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to shareholders of the Company, at the time
of the Shareholders' Meeting and at the Effective Time, contain any statement
which, at the time and in light of the circumstances under which it was made, is
false or misleading with respect to any material fact, or omits to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meeting which
shall have become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any
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information supplied by the Company or any of its representatives for inclusion
in any of the foregoing documents or the Offer Documents. The Offer Documents
shall comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
SECTION 4.06. Absence of Litigation. There is no Action pending
or, to the knowledge of Parent and Purchaser, threatened against Parent or
Purchaser or any of their respective properties or assets before any court or
arbitrator or Governmental Authority which seeks to delay or prevent or would
result in the material delay of or would prevent the consummation of any
Transaction. Neither Parent nor Purchaser or any property or asset of Parent or
Purchaser is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority which would, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of Parent or Purchaser to perform their obligations hereunder, or
prevent or materially delay the consummation of the Transactions.
SECTION 4.07. No Prior Activities. Since the date of its
incorporation, Purchaser has not engaged and will not engage prior to the
Effective Time or termination of this Agreement in any activities other than in
connection with or as contemplated by this Agreement.
SECTION 4.08. Parent Not an Interested Stockholder. (i) neither
Parent nor any of its affiliates is, with respect to the Company, an "interested
stockholder" as such term is defined in Section 14A:10A-3(j) of New Jersey Law
and (ii) none of Parent, Purchaser or any of their respective affiliates
beneficially own any Shares.
SECTION 4.09. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. Except (i) as otherwise contemplated by this Agreement, (ii) as set
forth in Section 5.01 of the Disclosure Schedule, or (iii) as required by
applicable Law, the Company agrees that, between the date of this Agreement and
the Effective Time, unless Parent shall otherwise agree in writing, the Company
shall, and shall cause its Subsidiaries to (A) use all reasonable efforts to
preserve substantially intact the business organization of the Company and the
Subsidiaries, preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations and (B) conduct its
business in the usual, regular and ordinary course consistent with past
practice. Without limiting the generality of the foregoing, and except (i) as
expressly contemplated by this Agreement, (ii) as set forth in Section 5.01 of
the Disclosure Schedule, or (iii) as required by applicable Law, neither the
Company nor any Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or propose to do, any of the
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following without the prior written consent of Parent which shall not be
unreasonably withheld or delayed:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i)
any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
Shares issuable pursuant to Company Stock Options outstanding on the
date hereof) or (ii) any assets of the Company or any Subsidiary for
consideration in excess of $10 million in the aggregate, except in the
ordinary course of business and in a manner consistent with past
practices;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than dividends from any
subsidiary to the Company), except for (x) the year 2000 fourth quarter
extra cash dividend on the Shares in an amount not to exceed 12 cents
per Share and (y) regular cash dividends on the Shares declared and
paid quarterly in amounts not to exceed 21 cents per Share and at times
consistent with past practices;
(d) reclassify, combine, split, subdivide or redeem, or purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any material amount of assets other than
acquisitions of materials, equipment, supplies or services in the
ordinary course consistent with past practice; (ii) except for
borrowings under existing credit facilities, incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances (other than
loans between the Company and its Subsidiaries) or capital
contributions or investments in any person other than the Company or
its Subsidiaries for an amount in excess of $10 million in the
aggregate; (iii) authorize capital expenditures which are, in the
aggregate, in excess of $10 million for the Company and the
Subsidiaries; provided that any capital expenditure shall be only in
the ordinary course of business or in connection with the restructuring
of manufacturing and distribution facilities of the Company disclosed
in the SEC Reports filed prior to the date hereof; or (iv) enter into
or amend any contract, agreement, commitment or arrangement with
respect to any matter set forth in this Section 5.01(e); provided that
the foregoing shall not restrict the Company from merging any of its
wholly owned Subsidiaries with any of its other wholly owned
Subsidiaries or with and into the Company;
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(f) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases (i) in accordance with past practices in salaries or wages of
employees of the Company or any Subsidiary who are not directors or
officers of the Company or (ii) pursuant to employment, severance or
other agreements with directors, officers or employees in effect as of
the date of this Agreement, or grant any severance or termination pay
to, or enter into any employment or severance agreement with, any
director, officer or, other than in accordance with past practices,
other employee of the Company or of any Subsidiary or establish, adopt,
enter into or amend (other than any amendments which are required by
Law) any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance, change of
control, health, welfare or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee;
(g) other than as required by GAAP to be implemented following the
date of this Agreement, make any material change to its accounting
policies or procedures;
(h) take any action that would, or is reasonably likely to, result
in any of the representations and warranties of the Company in this
Agreement becoming untrue, or in any of the conditions to the Merger
set forth in Article VII not being satisfied;
(i) except in the usual, regular, and ordinary course of business
and consistent with past practice, make any tax election or settle or
compromise any federal, state, local or foreign income tax liability;
(j) except as set forth in Section 6.05, waive or fail to enforce
any provision of any confidentiality or standstill agreement to which
it is a party; or
(k) make any commitment to take any of the actions prohibited by
this Section 5.01.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Shareholders' Meeting. (a) If required by applicable
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Certificate of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold an
annual or special meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the Merger (the "Shareholders' Meeting") and (ii) except as
required by its fiduciary duties under applicable law after having received
advice from outside legal counsel, (A) include in the Proxy Statement the
recommendation of the Board that the shareholders of the Company approve this
Agreement and the Merger and (B) use all reasonable efforts to obtain such
approval. At the Shareholders' Meeting, Parent and Purchaser shall cause
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all Shares then owned by them and their subsidiaries and affiliates to be voted
in favor of the approval of this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 14A:10-5.1 of New Jersey Law, as soon as reasonably
practicable after such acquisition, without a meeting of the shareholders of the
Company.
SECTION 6.02. Proxy Statement. If required by applicable law, as
soon as practicable following the consummation of the Offer, the Company shall
file the Proxy Statement with the SEC under the Exchange Act, and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC. Parent,
Purchaser and the Company shall cooperate with each other in the preparation of
the Proxy Statement, and the Company shall notify Parent of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC. The Company shall give
Parent and its counsel the opportunity to review the Proxy Statement, including
all amendments and supplements thereto, prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. Each of the Company, Parent and Purchaser
agrees to use all reasonable efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Shareholders'
Meeting at the earliest practicable time.
SECTION 6.03. Company Board Representation; Section 14(f). (a)
Promptly after (i) the purchase of and payment for any Shares by Purchaser or
any of its affiliates pursuant to the Offer as a result of which Purchaser and
its affiliates own at least two-thirds of the Shares outstanding on a fully
diluted basis on the date of purchase, and (ii) compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur
later, Purchaser shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board as shall give Purchaser
representation on the Board equal to the product of the total number of
directors on the Board (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser following such
purchase bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all actions necessary to cause Purchaser's
designees to be elected or appointed as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors, or both.
(b) The Company shall promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder to
fulfill its obligations under this Section 6.03, and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and
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Rule 14f-1 to fulfill such obligations. Parent or Purchaser shall supply to the
Company, and be solely responsible for, any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(c) Notwithstanding anything in this Section 6.03 to the contrary,
until the Effective Time, the Company shall retain as members of its Board at
least two directors who are directors of the Company on the date hereof.
Following the election of designees of Purchaser pursuant to this Section 6.03,
prior to the Effective Time, any amendment of this Agreement or the Certificate
of Incorporation or By-laws of the Company, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or Purchaser, or waiver of any of the
Company's rights or remedies hereunder, shall require the concurrence of a
majority of the directors of the Company then in office who were not designated
by Purchaser.
SECTION 6.04. Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser reasonable access at all reasonable times and upon
reasonable notice to the officers, employees, agents, properties, offices,
plants and other facilities, books and records of the Company and each
Subsidiary, and shall furnish Parent and Purchaser with such financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request; provided, however, that
nothing herein shall require either the Company or any of its Subsidiaries (i)
to disclose any information to Parent or its representatives if such disclosure
would be in violation of applicable laws or regulations of any Governmental
Authority or (ii) disclose any information about any person (other than the
Company and its Subsidiaries) to Parent or its representatives if such
disclosure would be in violation of the terms of any confidentiality agreement
or provision in effect on the date of this Agreement and to which the Company or
any Subsidiary is a party.
(b) All information obtained by Parent or Purchaser pursuant to
this Section 6.04 shall be subject to the provisions of the confidentiality
agreement, dated October 24, 2000 (the "Confidentiality Agreement"), between
Parent and the Company.
(c) No investigation or receipt of information by Parent or
Purchaser of the Company and any of its Subsidiaries shall affect the
representations, warranties, covenants or agreements of the Company set forth
herein.
SECTION 6.05. No Solicitation of Transactions. (a) Upon the
execution of this Agreement, the Company shall immediately cease any discussions
or negotiations with any parties (other than Parent or any of its affiliates or
representatives) that may be ongoing with respect to an Acquisition Proposal.
From the date hereof, the Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its officers,
directors, or employees or any affiliate, investment banker, financial advisor,
attorney, accountant or other advisor or representative retained by it or any of
its Subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
encourage any inquiries relating to, or the submission of any
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proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as hereinafter defined), or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal, or, in
connection with any Acquisition Proposal, furnish to any person any information
or data with respect to or access to the properties of the Company or any of its
Subsidiaries, or take any other action to facilitate the making of any proposal
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal. Notwithstanding the foregoing, if, prior to the purchase of Shares
pursuant to the Offer and following the receipt of an Acquisition Proposal that
constitutes, or in the good faith judgment of the Board would reasonably be
expected to lead to, a Superior Proposal (as defined below) that was unsolicited
and made after the date hereof and the Company is not in material breach of any
of its obligations under this Section 6.05, the Company may, in response to such
Acquisition Proposal and subject to compliance with Section 6.05 (c), (x)
furnish information with respect to the Company and its Subsidiaries to any
person making such Acquisition Proposal pursuant to a customary confidentiality
agreement, provided that (1) such confidentiality agreement shall include a
provision prohibiting solicitation of key employees of the Company, such
provision lasting at least three years, and may not include any provision
calling for an exclusive right to negotiate with the Company and (2) the Company
advises Parent of all such nonpublic information delivered to such person
concurrently with its delivery to the requesting party, and (y) participate in
discussions or negotiations regarding such Acquisition Proposal, provided that,
prior to taking any such action, the Company provides reasonable advance notice
to Parent that it is taking such action; provided, however, that as to each of
clauses (x) and (y), the Board determines in good faith, after consultation with
its financial advisor and outside counsel, that the failure to take such actions
would be inconsistent with its fiduciary duties to the Company's shareholders
under applicable Law. It is agreed that any material violation of the
restrictions set forth in the second sentence of this Section 6.05(a) by any
officer of the Company or any Subsidiary or any affiliate, director or
investment banker, attorney or other advisor or representative of the Company or
any Subsidiary shall be deemed to be a breach of this Section 6.05(a) by the
Company except where such violation of the restrictions set forth in the second
sentence of this Section 6.05(a) by any such person is not related to the
transaction, proposal or offer constituting a Superior Proposal which the
Company engages in discussions or enters into any agreement with respect thereto
pursuant to the terms of this Section 6.05(a). For purposes of this Agreement,
"Acquisition Proposal" means (i) any proposal or offer from any person relating
to any direct or indirect acquisition or purchase of (A) 15% or more of the
assets of the Company or (B) over 15% of any class of equity securities of the
Company; (ii) any tender offer or exchange offer as defined pursuant to the
Exchange Act that, if consummated, would result in any person beneficially
owning 15% or more of any class of equity securities of the Company; or (iii)
any merger, consolidation, business combination, share exchange, sale of all or
a substantial part of the assets,
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recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the Transactions. For purposes of
this Agreement, "Superior Proposal" means (i) a bona fide written proposal or
offer from any person for a direct or indirect acquisition or purchase of (A)
50% or more of the assets of the Company or (B) over 50% of any class of equity
securities of the Company; (ii) any tender offer or exchange offer that, if
consummated, would result in any person beneficially owning 50% or more of any
class of equity securities of the Company; or (iii) any merger, consolidation,
business combination, share exchange, sale of all or a substantial part of the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the Transactions, (x) which, if consummated,
would result in a transaction more favorable to the Company's shareholders than
the Offer and the Merger (taking into account all relevant factors, including
the likelihood of such offer resulting in a consummated transaction), and (y)
for which there is no financing contingency and the third party has demonstrated
that financing is reasonably likely to be obtained, in each case as determined
by the Board in its good faith judgment (after consultation with its financial
advisor and outside counsel). Any Superior Proposal is an Acquisition Proposal.
(b) Neither the Board nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent or Purchaser, the approval, determination of advisability or
recommendation by the Board or any such committee of the Offer, the Merger or
this Agreement unless the Board shall have determined in good faith, after
consultation with its financial advisor and outside counsel, that the Offer, the
Merger or this Agreement is no longer in the best interests of the Company's
shareholders and that such withdrawal or modification is, therefore, required in
order to satisfy its fiduciary duties to the Company's shareholders under
applicable Law, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into any
agreement with respect to any Acquisition Proposal (an "Acquisition Agreement").
Notwithstanding the foregoing, in the event that the Board determines (after
consultation with its outside counsel), prior to the purchase of Shares pursuant
to the Offer, that the failure to take such action would be inconsistent with
its fiduciary duties to the Company's shareholders under applicable Law and the
Company is not in material breach of any of its obligations under this Section
6.05, the Board may, in response to a Superior Proposal that was unsolicited and
made after the date hereof, take any of the actions described in clauses (ii) or
(iii) above; provided, however, that in no event may the Board take any such
action described in clauses (ii) or (iii) above earlier than the third business
day following Parent's receipt of written notice of the intention of the Board
to do so, including the identity of the person making such Acquisition Proposal,
and with respect to the action described in clause (iii) only, attaching the
most current version of any such Acquisition Proposal or any draft of an
Acquisition Agreement.
(c) The Company shall promptly advise Parent orally and in writing
of any Acquisition Proposal or any request for confidential information, the
material terms and conditions of such request or the Acquisition Proposal and
the identity of the person making such request or the Acquisition Proposal. The
Company thereafter shall keep Parent reasonably informed of the status and terms
of any such Acquisition Proposals or inquiries and the status of any discussions
or negotiations relating thereto.
(d) Nothing contained in this Section 6.05 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders required by applicable law.
SECTION 6.06. Employee Benefits Matters. (a) From and after the
Effective Time, Parent shall honor, and shall cause the Surviving Corporation
and its Subsidiaries to honor in accordance with their terms, all contracts,
agreements, arrangements, policies, plans and
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commitments of the Company and its Subsidiaries as in effect immediately prior
to the Effective Time that are applicable to any current or former employees or
directors of the Company or any of its Subsidiaries. Without limiting the
generality of the foregoing, the bonus awards under the Company's Long Term
Bonus Plan will vest and become payable immediately prior to the Effective Date
in accordance with the terms of the plan in the approximate aggregate amount of
$4.63 million in accordance with the terms set forth on Schedule 6.06(a). In
addition, the annual bonus payable under the Company's 2000 Incentive Award Plan
shall be paid out as soon as practicable after December 15, 2000 and otherwise
in accordance with the plan's terms.
(b) Parent hereby agrees that, for a period of two years
immediately following the Effective Time, it shall, or shall cause the Surviving
Corporation and its Subsidiaries to, provide employee benefit and compensation
plans, programs, contracts and arrangements for the benefit of current or former
employees of the Company and its Subsidiaries which, in the aggregate, will
provide benefits and compensation that provide substantially comparable benefit
levels and aggregate compensation value to those provided to such employees as a
group under the employee benefit and compensation plans, programs, contracts and
arrangements of the Company and its Subsidiaries as in effect immediately prior
to the Effective Time; provided, however, that Parent shall not have any
obligation to continue the stock option, stock purchase or other plans involving
the potential issuance of securities of the Surviving Corporation or Parent but
shall provide alternative benefits with substantially comparable value;
provided, however, that nothing contained herein shall limit any reserved right
to amend, modify, suspend, revoke or terminate any such plan; and provided
further, however, that changes may be made to the extent necessary to comply
with applicable law.
(c) Employees of the Company and its Subsidiaries shall receive
credit for purposes of eligibility to participate and vesting (but not for
benefit accruals) under any employee benefit plan, program or arrangement
established or maintained by the Surviving Corporation or any of its
Subsidiaries for service accrued or deemed accrued prior to the Effective Time
with the Company or any of its Subsidiaries; provided, however, that such
crediting of service shall not operate to duplicate any benefit or the funding
of any such benefit.
SECTION 6.07. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Effective Time, Parent shall cause the
Surviving Corporation as its sole shareholder to exculpate and indemnify,
defend, protect and hold harmless any person who is now, or has been at any time
prior to the date hereof, or who becomes prior to the Effective Time, an
officer, director, employee or agent (the "Indemnified Party") of the Company or
any of its Subsidiaries against all losses, claims, damages, liabilities, costs
and expenses (including attorneys' fees and expenses), judgments, fines, losses,
and amounts paid in settlement in connection with any actual or threatened
action, suit, claim, proceeding or investigation (each, a "Claim") to the extent
that any such Claim is based on, or arises out of, (i) the fact that such person
is or was a director, officer, employee or agent of the Company or any of its
Subsidiaries or is or was serving at the request of the Company or any of its
Subsidiaries as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) this Agreement,
or any of the transactions contemplated hereby, in each case to the extent that
any such Claim pertains to any matter or fact arising, existing, or occurring
prior to or at the
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Effective Time, regardless of whether such Claim is asserted or claimed prior
to, at or after the Effective Time, to the full extent permitted under
applicable Law or the Company's Certificate of Incorporation, By-laws or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit; provided, however, that the Surviving Corporation shall not be liable for
or otherwise be required to indemnify an Indemnified Party with respect to any
amounts paid in settlement of any Claims without the written consent of
Surviving Corporation (which consent shall not be unreasonably withheld or
delayed). Without limiting the foregoing, in the event any Indemnified Party
becomes involved in any capacity in any Claim of the type described above, then
from and after the Effective Time, Parent shall cause the Surviving Corporation
as its sole shareholder to periodically advance (such advancement to be
mandatory rather than permissive) to such Indemnified Party its legal and other
expenses (including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto. Any Indemnified Party wishing to
claim indemnification under this Section 6.07, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Surviving
Corporation. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict of interest or a
potential conflict of interest on any significant issue between the positions of
any two or more Indemnified Parties.
(b) All rights to indemnification and all limitations of liability
existing in favor of the Indemnified Party as provided under applicable Law or
the Company's Certificate of Incorporation, by-laws or indemnification
agreements in effect at the date hereof shall survive the Merger and shall
continue in full force and effect, without any amendment thereto, for a period
of six years from the Effective Time; provided, however, that in the event any
Claim or Claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such Claim or Claims shall continue until
disposition of any and all such Claims; provided further, however, that any
determination required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under applicable Law, the
Company's Certificate of Incorporation or by-laws or such agreements, as the
case may be, shall be made by independent legal counsel selected by the
Indemnified Party and reasonably acceptable to Parent.
(c) For a period of six years after the Effective Time, Parent
shall cause the Surviving Corporation as its sole shareholder to maintain in
effect the current policies of directors' and officers' liability insurance
maintained by the Company (provided that Parent may substitute therefor policies
with reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous to the
insured parties) with respect to claims arising from or related to facts or
events that occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to cause the Surviving Corporation to make annual
premium payments for such insurance to the extent such premiums exceed 200% of
the annual premiums paid as of the date hereof by the Company for such insurance
(such 200% amount, the "Maximum Premium"). If such insurance coverage
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cannot be obtained at all, or can only be obtained at an annual premium in
excess of the Maximum Premium, Parent shall cause the Surviving Corporation to
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium; provided further,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available run-off insurance policies with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
Section 6.07(c), does not exceed the Maximum Premium. The Company acknowledges
that policies of directors' and officers' liability insurance provided by
National Indemnity Company upon the terms set forth in this Section 6.07(c) may
be substituted for the current policies of directors' and officers' liability
insurance maintained by the Company. The Company represents to Parent that the
current annualized premium on current policies of directors' and officers'
liability insurance maintained by the Company is no more than $142,700 in the
aggregate.
(d) In the event the Company, the Surviving Corporation or Parent,
or any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Company, the Surviving Corporation or Parent, as the case may be, shall assume
the obligations set forth in this Section 6.07. This Section 6.07 is intended to
benefit, and shall be enforceable by, the Indemnified Parties.
SECTION 6.08. Further Action; Consents; Filings. (a) Each party
hereto will use its reasonable best efforts (i) to take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the Transactions as promptly as possible, (ii) to make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Transactions required under applicable Law and (iii) to
obtain all authorizations, consents, orders and approvals of all Governmental
Authorities that may be or become necessary in connection with its execution and
delivery of, and for the performance of its obligations pursuant to, this
Agreement. The Company and Parent each agree to use their reasonable best
efforts to contest and resist any action, including legislative, administrative
or judicial action, and to have vacated, lifted, reversed or overturned any
Governmental Order that is in effect and that restricts, prevents or prohibits
the consummation of any of the Transactions.
(b) Each party will cooperate fully with the other party in
promptly taking the actions referred to in Section 6.04(a), including, without
limitation, by (i) making an appropriate filing of a Notification and Report
Form pursuant to the HSR Act and the Canadian Competition Act with respect to
the Transactions within seven business days of the date hereof and by supplying
promptly any additional information and documentary material that may be
requested pursuant to the HSR Act and (ii) providing copies of all filings and
similar documents to the other party and its advisors prior to filing and, if
requested, by accepting all reasonable additions, deletions or changes suggested
in connection therewith. The parties hereto will not take any action that will
have the effect of delaying, impairing or impeding the receipt of any required
approvals.
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SECTION 6.09. Public Announcements. The initial press release with
respect to the execution of this Agreement shall be a joint press release
reasonably acceptable to Parent and the Company. Thereafter, until the earlier
of the Effective Time or the date on which this Agreement is terminated in
accordance with its terms, Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or any Transaction and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or any listing agreement with a national securities
exchange to which Parent or the Company is a party.
SECTION 6.10. Minority Shares of Benjamin Moore & Co., Limited.
As soon as practicable after the Effective Time, but in no event later than ten
business days after the Effective Time, Parent shall offer to acquire or shall
cause any of its affiliates, including, without limitation, the Surviving
Corporation, to offer to acquire, through a merger, tender offer or other
transaction ("Minority Purchase Transaction"), all outstanding shares of
Benjamin Moore & Co., Limited, a Canadian corporation (the "Canadian Sub"), not
owned by the Surviving Corporation ("Minority Shares") for cash in an amount per
share equal to CDN$93.55 ("Canadian Per Share Price"). In addition,
simultaneously with the consummation of the Minority Purchase Transaction,
Parent shall cause Surviving Corporation to take all necessary action to ensure
that each outstanding stock option (a "Canadian Sub Stock Option"), whether or
not exercisable and whether or not vested, under the Canadian Sub's Stock Option
Plan, any stock option agreement or employment agreement, shall be canceled by
the Surviving Corporation simultaneously with the consummation of the Minority
Purchase Transaction, such that each holder of a canceled Canadian Sub Stock
Option shall be entitled to receive at the time of such consummation or as soon
as practicable thereafter from the Canadian Sub in consideration for the
cancellation of such Canadian Sub Stock Option an amount (the "Canadian Sub
Option Spread") equal to the product of (i) the number of shares of Canadian Sub
previously subject to such Canadian Sub Stock Option and (ii) the excess, if
any, of the Canadian Per Share Price over the exercise price per share of the
Canadian Sub previously subject to such Canadian Sub Stock Option. The Canadian
Sub Option Spread, after reduction for applicable tax withholding, if any, shall
be paid in cash. The aggregate purchase price for the purchase of the Minority
Shares and the cash-out of the Canadian Sub Stock Options is equal to
approximately CDN$17,542,673.
SECTION 6.11. Notification of Certain Matters. 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
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company, its
Subsidiaries 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, the delivery of any notice pursuant to this
Section 6.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; provided further that this Section
6.11 shall not constitute a covenant or agreement for the purpose of clause (c)
or (d) of Annex A.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger. The respective obligations
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved by the affirmative vote of the shareholders of the
Company to the extent required by New Jersey Law and the Certificate of
Incorporation of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act and the
Canadian Competition Act shall have expired or been terminated;
(c) No Order. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law or
injunction (whether temporary, preliminary or permanent) which is then
in effect and has the effect of making the Merger illegal or otherwise
prohibiting, precluding, restraining or enjoining consummation of the
Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable
to the obligations of Parent or Purchaser if, in breach of this
Agreement, Purchaser fails to purchase any Shares validly tendered and
not withdrawn pursuant to the Offer.
SECTION 7.02. Conditions to Obligations of Parent and Purchaser to
Effect the Merger. The obligations of Parent and Purchaser to effect the Merger
are subject to the satisfaction of the further condition (which may be waived in
whole or in part by Parent) that the Company shall have performed in all
material respects all material obligations required to be performed by it under
the Agreement on or before the earlier of (i) such time as Parent's or
Purchaser's designees shall constitute at least a majority of the Board pursuant
to Section 6.03 and (ii) the Closing held pursuant to Section 2.02; provided,
however, that Parent or Purchaser shall waive this condition if Parent or
Purchaser shall not designate their nominees as directors on the Board promptly
after the purchase of and payment for any Shares by Purchaser or any of its
affiliates pursuant to Section 6.03.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and
the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time,
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notwithstanding any requisite approval of this Agreement and the Merger by the
shareholders of the Company:
(a) By mutual written consent of each of Parent, Purchaser and
the Company; or
(b) By either Parent, Purchaser or the Company if:
(i) the Offer shall not have been consummated on or prior to
March 7, 2001 (the "Outside Date"); provided, however, that the
right to terminate this Agreement under this clause (i) shall not
be available to any party whose failure to perform or fulfill any
obligation under this Agreement has been the cause of, or resulted
in, the failure to complete the Offer on or prior to such date;
provided further that the passage of such period shall be tolled
for any part thereof during which any party shall be subject to a
nonfinal injunction, order, decree, ruling or other action
restraining, enjoining or otherwise prohibiting the consummation
of the Offer and the Outside Date shall be extended day-by-day for
each day tolled; provided further, however, that the Outside Date
shall not be extended past May 7, 2001; or
(ii) any Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any injunction, order, decree or ruling which is then in
effect and has the effect of making consummation of the Merger
illegal or otherwise prohibiting consummation of the Merger, which
injunction, order, decree or ruling has become final and
non-appealable; provided, however, that the party seeking to
terminate this Agreement shall have used its reasonable best
efforts to remove or lift such injunction, order, decree or
ruling; or
(iii) the Offer shall have expired, terminated or been
withdrawn pursuant to its terms without any Shares being purchased
therein; provided, however, that the right to terminate this
agreement under this clause (iii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of Parent or
Purchaser to purchase Shares in the Offer.
(c) By Parent if:
(i) due to an occurrence or circumstance that, if occurring
after the commencement of the Offer, would result in a failure to
satisfy any condition set forth in Annex A hereto, Parent and
Purchaser shall have failed to commence the Offer on or prior to
the seventh business day after the public announcement of the
execution of this Agreement; provided that Parent may not
terminate this Agreement pursuant to this clause (i) if Parent or
Purchaser is in material breach of this Agreement; or
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(ii) (A) the Company or the Board, or any committee thereof,
prior to the purchase of the Shares pursuant to the Offer, shall
have (I) withdrawn, modified or changed, or proposed publicly to
withdraw, modify or change, its approval or recommendation of the
Offer, this Agreement or the Merger in a manner adverse to Parent,
or failed to reconfirm its recommendation within four business
days after a written request to do so, or (II) approved or
recommended, or proposed publicly to approve or recommend, to the
shareholders of the Company an Acquisition Proposal; or (B) the
Board or any committee thereof shall have resolved to take any of
the foregoing actions; or
(d) By the Company if:
(i) Purchaser shall have failed to commence the Offer within
seven business days after the public announcement of the execution
of this Agreement provided that the Company may not terminate this
Agreement pursuant to this clause (i) if the Company is in
material breach of this Agreement; or
(ii) it concurrently enters into a definitive agreement
providing for a Superior Proposal entered into in accordance with
Section 6.05; provided that (A) prior thereto or simultaneously
therewith, the Company shall have paid the Fee pursuant to Section
8.03, and (B) the Company shall have complied with the provisions
of Section 6.05(b) and (c).
SECTION 8.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.01, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement (other
than Sections 6.04, 8.02, 8.03, 9.02, 9.04, 9.05, 9.07 and 9.08) shall forthwith
become void, and there shall be no liability on the part of any party hereto,
provided, however, that nothing herein shall relieve any party from liability
for any breach hereof.
SECTION 8.03. Fees and Expenses. (a) In the event that this
Agreement is terminated pursuant to Section 8.01(d)(ii), the Company shall pay
Parent a fee of $25 million (the "Fee"), which amount shall be payable in
immediately available funds, prior to or simultaneously with the entering into
of a definitive agreement as specified in such Section 8.01(d)(ii). In the event
that (i) (x) (I) this Agreement is terminated pursuant to Section 8.01(c)(ii),
(II) this Agreement is terminated by the Company pursuant to Section 8.01(b)(i)
or (III) the Offer has remained open for at least 20 business days and the
Minimum Condition has not been satisfied (and none of the events described in
paragraphs (a), (e) or (f) of Annex A shall have occurred so as to result in a
condition to the Offer not being satisfied and Parent shall not have theretofore
invoked any of the other conditions set forth in Annex A) and this Agreement is
terminated by Parent pursuant to Section 8.01(b)(iii), (y) at the time of such
termination (1) a third party shall have publicly made an Acquisition Proposal
and such Acquisition Proposal shall not have been withdrawn or (2) a bona fide
Acquisition Proposal shall have been made to the Company, and (z) on the date of
such termination, Parent is not in material breach of this Agreement and the
Minimum Condition has not been satisfied and (ii) a definitive agreement is
entered into providing for an Acquisition Proposal within one year of the date
of such
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termination pursuant to clause (i), then the Company shall pay Parent promptly
(but in no event later than three business days after the entering into of such
agreement referred to in clause (ii) above) the Fee, which amount shall be
payable in immediately available funds.
(b) In the event that the Company shall fail to pay the Fee when
due, the Company shall reimburse Parent and the Purchaser for the costs and
expenses actually incurred or accrued by Parent and Purchaser (including,
without limitation, reasonable fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 8.03, together with
interest on such unpaid Fee, commencing on the date that the Fee became due, at
a rate equal to the prime rate of interest publicly announced by Citibank, N.A.,
from time to time, in The City of New York, as such bank's Base Rate.
(c) Except as set forth in this Section 8.03, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses, whether or not any transaction is
consummated.
SECTION 8.04. Amendment. Subject to Section 6.03, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval of this Agreement by the
shareholders of the Company, no amendment may be made that would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties of another party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any agreement
or condition of another party contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered by the parties pursuant to this Agreement
shall survive the Effective Time. This Section 9.01 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by an
overnight or expedited courier
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service, by telecopy (provided that any notice received by telecopy at the
addressee's location on any business day after 5:00 p.m. (addressee's local
time) shall be deemed to have been received at 9:00 a.m. (addressee's local
time) on the next business day), or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.02):
if to Parent or Purchaser:
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Facsimile: (402) 346-3375
Attention: Marc D. Hamburg
with a copy to:
Munger, Tolles & Olson LLP
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071-1560
Facsimile: (213) 687-3702
Attention: Robert E. Denham, Esq.
if to the Company:
Benjamin Moore & Co.
51 Chestnut Ridge Road
Montvale, New Jersey 07645
Facsimile: (201) 573-6654
Attention: Yvan Dupuy
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: John J. Madden, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person;
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(b) "beneficial owner", with respect to any Shares, means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only
to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks
are not required or authorized to close in The City of New York;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "knowledge of the Company" means the actual knowledge of the
senior executive officers of the Company;
(f) "person" means an individual, corporation, partnership,
limited partnership, limited liability partnership, limited liability
company, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, estate,
association or other entity or any government, political subdivision,
agency or instrumentality of a government; and
(g) "subsidiary" or "subsidiaries" of a person shall mean any
other person of which (i) the first mentioned person or any subsidiary
thereof is a general partner, (ii) voting power to elect a majority of
the board of directors or others performing similar functions with
respect to such other person is held by the first mentioned person
and/or by any one or more of its subsidiaries, or (iii) at least 50% of
the equity interests of such other person is, directly or indirectly,
owned or controlled by such first mentioned person and/or by any one or
more of its subsidiaries.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, the application of such term or provision to other persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the
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validity or enforceability of such provision, or the application thereof, in any
other jurisdiction, and all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement, the
Confidentiality Agreement and the Disclosure Schedule constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersedes, except as set forth in Section 6.04(b) all prior agreements,
undertakings, understandings, representations and warranties both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. References herein to this Agreement shall for all purposes be deemed to
include references to the Disclosure Schedule. This Agreement shall not be
assigned, except that Parent and Purchaser may assign all or any of their rights
and obligations hereunder to any wholly owned subsidiary of Parent, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Sections 6.07 and 6.10 (which is intended to be
for the benefit of the persons covered thereby and may be enforced by such
persons and their successors, personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees and permitted assigns).
SECTION 9.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State, provided, however,
that any of the provisions contained herein with respect to the Merger shall be
governed by, and construed in accordance with, the laws of the State of New
Jersey applicable to contracts executed in and to be performed in that State.
SECTION 9.08. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the Transactions.
Each of the parties hereto certifies and acknowledges that (a) no
representative, agent or attorney of such party has been authorized by such
party to represent or, to the knowledge of such party, has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce that foregoing waiver, (b) each such party
understands and has considered the implications of this waiver, (c) each such
other party makes this waiver voluntarily, and (d) each such party has been
induced to enter into this Agreement and the Transactions, as applicable, by,
among other things, the mutual waivers and certifications in this Section 9.08.
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SECTION 9.09. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof for which money damages would
not be an adequate remedy and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or in
equity. Each of the parties further agrees that in any proceeding seeking
specific performance such party will waive (a) the defense of adequacy of a
remedy at law and (b) any requirement for the securing or posting of any bond.
SECTION 9.10. Disclosure Schedule. The Disclosure Schedule shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein. Any matter disclosed pursuant
to the Disclosure Schedule shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
SECTION 9.11. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.12. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
BERKSHIRE HATHAWAY INC.
By
------------------------------------
Name: Warren E. Buffett
Title: Chief Executive Officer
B ACQUISITION, INC.
By
------------------------------------
Name: Warren E. Buffett
Title: President
BENJAMIN MOORE & CO.
By
------------------------------------
Name: Yvan Dupuy
Title: President and Chief
Executive Officer
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ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any Shares tendered pursuant to the Offer,
and may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer, the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act or the Canadian Competition
Act shall not have expired or been terminated prior to the expiration of the
Offer, or (iii) at any time on or after the date of this Agreement and prior to
the expiration of the Offer, any of the following conditions shall exist:
(a) (I) there shall have been any statute, rule, regulation,
judgment, order or injunction entered, passed, promulgated, enforced,
enacted or issued, or applicable to the Offer by any Governmental
Authority of competent jurisdiction that (i) makes illegal, prohibits
or materially limits the ownership or operation by Parent, Purchaser or
the Company of all or a material portion of the business or assets of
the Company and the Subsidiaries, taken as a whole, as a result of the
Transactions; or (ii) imposes limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer on all matters properly
presented to the Company's shareholders, including, without limitation,
the approval of this Agreement and the Transactions; or (iii) prohibits
or makes illegal the acceptance for payment, payment for, or purchase
of Shares by Parent or Purchaser or the consummation of the Offer or
the Merger; or (iv) otherwise renders Parent or Purchaser unable to
accept for payment, pay for, or to purchase some or all of the Shares;
or (II) there shall have been any action or proceeding instituted by
any Governmental Authority and such action or proceeding is pending
before a Governmental Authority of competent jurisdiction that (i)
seeks to make illegal, prohibit or materially limit the ownership or
operation by Parent or Purchaser of all or a material portion of the
business or assets of the Company and the Subsidiaries, taken as a
whole; or (ii) seeks to impose limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer on all matters properly
presented to the Company's shareholders, including, without limitation,
the approval of this Agreement and the Transactions; or (iii) seeks to
prohibit or make illegal the acceptance for payment, payment for, or
purchase of Shares by Parent or Purchaser or the consummation of the
Offer or the Merger; or (iv) is reasonably likely to result in a
material delay in or seeks to restrict the ability of Parent or
Purchaser, or render Parent or Purchaser unable to accept for payment,
pay for, or to purchase some or all of the Shares;
(b) a Material Adverse Effect shall have occurred and be
continuing;
<PAGE>
(c) any representation or warranty of the Company in the Agreement
that is qualified by a reference to Material Adverse Effect shall not
be true and correct or any such representation or warranty that is not
so qualified shall not be true and correct in all material respects, in
each case as if such representation or warranty was made as of such
time on or after the date of this Agreement (except for representations
and warranties made as of a specific date which shall be true and
correct as of such date;
(d) the Company shall have failed in any material respect to
perform, or to comply with, any material agreement or covenant of the
Company to be performed or complied with by it under the Agreement
(including, without limitation, its agreements or covenants under
Section 6.05);
(e) the Agreement shall have been terminated in accordance with
its terms; or
(f) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted or waived by either of them, in whole or in part,
at any time and from time to time, in the sole discretion of Parent or
Purchaser.
ii
